The irony of TV’s future: we’ve now come full circle
Opinion
We’re once again in a landscape where some content is free and some is paid for, and that’s a good thing.
A year ago, when Netflix launched its ad-supported subscription tier and fundamentally shifted its business strategy after spending years insisting it would never introduce ads, speculation was rife that the streaming giant would dominate this emerging sector.
A year later, with Disney+ as the latest to roll-out its own ad-supported tier, this conversation has evolved. The SVOD streaming model entirely disrupted the way we watch TV because it offered viewers an experience that was missing — one that gave them complete control over what they watch and when.
As SVOD ad-tiers grow in popularity, is an excellent viewer experience still part of the offering?
Well, so far 15 million people across the globe have chosen to take Netflix up on their offer of premium content at a cheaper price in exchange for watching ads. This in itself is a fairly impressive endorsement.
The behaviour by the rest of the industry would suggest that Netflix is onto something too. In just the past few months, as well as the recent Disney+ ad-tier launch, Amazon Prime and Paramount+ have both announced the development of ad-supported tiers of their own.
The SVOD streamers see so much potential in the new model that ad tiers are set to become the new normal. So, the question these platforms should be asking themselves is, how can they continue to compete for viewers once the ad-tier no longer offers them an advantage?
TV becomes an experience economy
The most recent news to come out of Netflix and Disney+, respectively, outlines each streamer’s plan to do just that.
It appears that Netflix’s strategy will be to double down on the ad-supported viewer experience, recently announcing plans to further innovate how advertising is integrated into its ad-tier. QR codes and sponsorships will offer marketers the chance to increase brand awareness while viewers continue to enjoy Netflix’s most popular shows. The streamer has even gone as far as to gamify binge watching — many viewers’ favourite way to consume their favourite programmes — by offering an ad-free episode after a certain number of episodes have been watched in a row.
Meanwhile Disney has taken a different approach, announcing that it will acquire the remainder of US-only streamer Hulu. Disney has had majority control of Hulu (the sixth most popular streaming service in the US) since its acquisition of 21st Century Fox in 2019; however, it will spend roughly $8.6 billion for a 33% percent stake and full control, to “further Disney’s streaming objectives.”
The implication here is that Disney’s plan to remain competitive is simple: own the best (and perhaps, the most) content.
These moves are an indicator of the latest evolution not just in SVOD, or in CTV, but in TV in general. We’re moving away from what Harvard Economists B. Joseph Pine II and James H. Gilmore called the “service economy” and toward what they called the “experience economy,” in which winners are determined not just by their ability to provide in-demand services but their ability to offer unique experiences alongside them.
With more players in the landscape than ever before, TV viewers have many ways to access content they want to watch, so TV providers are setting themselves apart through experiences, and through choice.
This doesn’t just include digital streaming. Even linear’s role is being redefined in this new landscape as an excellent way to collectively enjoy large scale moments in TV, such as live sports. Providers of FAST, AVOD and BVOD, too, are tapping into these unique ways for viewers to access specific content at their leisure.
What these most recent developments make clear, however, is that competitive viewer experiences don’t mean the exclusion of ads.
Reaching the ‘unreachable’
While TV fans previously priced out of the most popular SVOD services are gaining new ad-supported offerings to take advantage of, there will inevitably always be those who choose to pay higher subscription fees for ad-free services. Previously thought of as “unreachable,” today’s rich, experience-based TV landscape is encouraging these viewers to change their behaviour, making them not so impossible to reach after all. Our latest Behind the Screens study found this trend was leading to an end of the decade-long ad-free TV streaming experience.
According to our data, while most UK households still subscribe to multiple SVOD services, they also regularly use at least one AVOD or FAST service as well, with 14% returning to the same app every time they turn on the TV.
The good news for advertisers is that the concept of an “unreachable” streamer audience is slowly fading away. The challenge with today’s fragmented CTV landscape has now become identifying where key audience members are going for their entertainment.
The research suggests that this is worth doing, however. Our recent report, Is TV Just TV? found that brands whose ads are viewed on CTV are five times more likely to be perceived as “modern” and “innovative” as opposed to brands seen on traditional TV, so advertisers should be looking to leverage data to find out which platforms their target audiences are using and develop strategies to reach them.
TV has come full circle
When thinking about the future of TV, it’s difficult to ignore the inherent irony. CTV’s dramatic rise in popularity was driven by a desire to disrupt the traditional model, but in many ways we have come full-circle.
We’re once again in a landscape where some content is free and some is paid for, with on-demand movies and boxsets as well as linear scheduled programming. And viewers are firmly in the driving seat, switching between different platforms according to where their favourite entertainment is, no longer restricting themselves to only subscription services and showing an even greater receptiveness to ads.
There are differences of course, like scale; more providers, more content and more viewers, and the increased number of devices we can access TV on.
But what is consistent is that advertising doesn’t have to be a detriment to the experience. In fact, advertising is proving its worth to viewers once more through making the inaccessible an option.
Alex Hole is vice-president of Samsung Ads