The Real Winners in an Increasingly Fragmented Streaming Video Landscape? Ad-Supported On-Demand Platforms

A recent report from eMarketer, their 1Q19 Digital Video Trends dispatch, highlighted impressive projected growth in US streaming video subscribers over the next four years, led largely by several new services intending to debut in the next six to twelve months. The new entrants include Disney, Warner Media, NBC Universal, and Apple, among others yet to be announced. According to IHS Markit, 53 million new paying subscribers are expected to enter the ecosystem by 2023, marking a 25% increase in streaming subscriptions. 

These new subscribers, who have to date effectively spurned the overtures of Netflix, Amazon, and Hulu, are no doubt attracted to the differentiated content that the shiny new services will be able to provide. It’s not unreasonable to imagine that the defection of Disney, Warner, and others from legacy platforms like Netflix may result in other content holders trying their luck with their own services (Forbes’ Alan Wolk refers to the oncoming glut of streaming services as the “Flixcopalypse”). Part of the challenge then quickly becomes understanding the psychology behind how viewers choose which services to add, which services to keep, and which services to cut. And with the ever-expanding dance card of potential partners, we start to enter zero-sum-game territory.

Predicting how specific services will be selected is a challenge due to the personal connection many viewers have with specific content, but there are already high-level estimates being proposed. Magid estimates the theoretical upper limit on total streaming subscriptions to be six, while Ampere Analysis found that the current average is closer to 2.8. From a budgetary perspective, Magid cites $38 per month as the household ceiling, with Morning Consult pegging the ideal price at $10/month for ad-supported services and $12/month for ad-free services. 

These estimates suggest that households will likelyreach a spending limit beyond which they’re not willing to commit. As content fragments across an increasing number of paywall structured platforms, viewers will likely remain price sensitive and mindful of the total cost of their subscriptions, both old and new. It’s highly likely that as more individual services crop up, the legacy aggregators will see their content focus narrow in on homegrown productions, as demonstrated by Netflix’s increasing push to prioritize their original programming over licensed shows and movies. This will ultimately lead to less content than consumers are used to. And that’s where free, ad-supported platforms can really shine.

Research from Price Waterhouse Cooper offers key insights into consumer mindsets; for example, we know that the average streaming TV viewer is a voracious consumer of content, with 55% looking for a new TV show or movie to watch at least once per week, and 65% of their time is spent watching new content vs. repeat. Additionally, aimlessly browsing was also listed as one of the top ways viewers discovered new content. All of these insights suggest that free, ad-supported streaming video on-demand platforms are well poised to fill in the gaps left by content migration to new pay services, offering viewers a clear ad exchange of mid- to long-form content accompanied by one or several targeted video ads. New services like Disney + and Apple TV + may be the buzzworthy properties that bring new streaming service viewers into the fold, but ad-supported properties stand to benefit in the long term from the larger audience pool consuming content.

The combination of RhythmOne and Tremor Video DSP now makes our Advanced TV offering even more robust leveraging dozens of direct publisher and device partnerships to help ensure a diverse breadth and depth of content that may allow us to reach and engage audiences at scale through a variety of targeting tactics, including demographics, behavioral traits, TV targeting, measurement and more. We strive to take the guesswork out of the Advanced TV space and drive real business outcomes for our clients. Connect with your Sales Rep to learn more about how your brand can take advantage of all that Advanced TV has to offer.

Forward-Looking Statements

This article contains forward-looking statements. In some cases, you can identify forward-looking statements by the words “may,” “will,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. All statements other than statements of historical fact are statements that could be forward-looking statements, including, but not limited to, statements about the potential and effectiveness of advanced television marketing. These forward-looking statements are subject to risks and uncertainties, assumptions and other factors that could cause actual results and the timing of events to differ materially from future results that are expressed or implied in the forward-looking statements. Factors that could cause or contribute to such differences include the dynamic and rapidly evolving sector, as well as the highly competitive industry that RhythmOne operates in, which make it difficult to evaluate prospects. These and other risk factors are discussed in RhythmOne’s Annual Report for the period ended March 31, 2018. The forward-looking statements in this press release are based on information available to RhythmOne as of the date hereof, and we assume no obligation to update any forward-looking statements.