While smaller players HBO Now and Amazon Video, among others, have managed to secure a modest piece of the video-streaming market, the battle for sector dominance has long been considered a two-horse race between Netflix and Hulu.
Finally, though, that may soon change. New services are launching, while others are preparing their go-live dates.
As fresh competitors prepare to challenge incumbents, we can expect the start of the real “streaming wars.†I would even bet that the entire marketplace is up for an overhaul as every player, big and small, looks for ways to maximize profit, stand out from the competition and attract more customers.
Indeed, the space is getting crowded.
Coming online are Apple TV+Opens a new window , Apple’s soon-to-be-released premium video streaming service, Disney’s and WarnerMedia’s much-anticipated subscription streaming services and an increase in free choices – with growing audiences – such as the Roku Channel, Pluto TV and Xumo, which already have 27 million, six million and 3.4 million monthly active users respectively.
The cord-cutting trend is only growing and with it, a substantial uptick in recent years of over-the-top (OTT) streaming services, which refers to film and television content provided via a high-speed Internet connection. From Sony PlayStation Vue to Sling TV to YouTube TV, options abound to suit specific personal preferences.
The relevance to marketers? Advertising opportunities likely will become increasingly available through most, if not all, these platforms in their search to increase profits without raising subscription fees in a battle for eyeballs.
In fact, many already offer a variety of options for advertisers, and are earning significant profits as a result.
Magna Global estimatesOpens a new window that OTT-based advertising revenue in the US reached $2.7 billion last year, a 54% year-on-year growth. Hulu alone generated $1.5 billion of that total, while most of Roku’s $416 million earned from “platform revenue†came from advertising.
Meanwhile, industry experts are predicting that Netflix, which has long prided itself on being ad free, will soon offer an ad-supported version of its serviceOpens a new window at a discounted rate to users.
So let’s look at why marketing leaders should consider exploring advertising opportunities via these platforms.
Digital video for digital audiences on a digital platform
The way viewers consume video content is evolving.
As of 2017, 59% of all U.S. homes with broadband connections were using some form of OTT service, according to market research and consulting company Parks Associates.Opens a new window
Streaming services have changed the game, inspiring the cord-cutter movement that is taking audiences from traditional TV viewing to streaming on connected devices. Apps are the channels of the future, and they’re impacting the approach marketers must adopt to reach these audiences.
What makes these streaming platforms so attractive to consumers – the on-demand access to the programs they want coupled with the customizable nature of these services that allow users to shape a more personal experience – can be equally valuable to advertisers.
It all comes back to the data revolution: The systems running these video-on-demand services automatically amass vast amounts of individual user data, analyzing media consumption preferences and behaviors. The more subscribers one of these platforms has, the more data it can collect and therefore use to build an in-depth understanding of the buyer personas of their many audience segments.
It’s audience targetingOpens a new window at a granular level, paired with a deeper understanding of the most effective ways to reach each individual user.
As Adam Rubins writes for The DrumOpens a new window , these services “know what their audiences want and successfully targets them through online marketing and native advertising, promoting on social networks and mobile apps. Not only does this attract the cord-cutter demographic, it increases many advertisers’ desire to leverage their audiences with streaming services.â€
Rubins points out that “because of the nature of streaming, advertisers often receive more exposure as well. For example, instead of running an ad on a show that airs once a week, you can run an ad on a show that can be streamed at any time…You’ll also be able to target more niche shows, podcasts or musicians that you know your specific target audience is more likely to be engaged with.â€
It’s guaranteed exposure with a marketer’s most valuable audience segment.
The battle for ad-supported streaming supremacy
n brief, streaming wars will be waged on the ad-supported battlefield.
Ultimately, it seems that most consumers’ demand for cheap video streaming outweighs their demand for ad-free viewing on these platforms.
No wonder, then, that so much investment is heading into ad-supported streaming: It’s a straightforward means to an end for service providers and a seemingly worthy tradeoff for consumers.
The cheaper version of Hulu – which runs ads – has 25 million subscribers, evidence that audiences are willing to put up with ads for their OTT services.
Similarly, CBS rakes in hundreds of millions in annual revenue from the ad-supported tier of its CBS All-Access subscription service.
Meanwhile, Viacom poured $340 million earlier this year into the purchase of free video streaming service Pluto TV, while TV manufacturers including Samsung, LG and Vizio have developed free video streaming options for their customers.
Personalized advertising through these platforms can deliver targeted and relevant marketing material to audiences – an awesome opportunity that marketers won’t want to miss.