Over the past decade, SVOD players have attained their success from ad-free subscription plans: an offer that has revolutionized consumers’ relationship with entertainment.
Recently, however, this formula has reached its limits. In a context of exacerbated competition—where the content war is in full swing—the growth prospects of subscriber bases are no longer sufficient to finance costly production efforts. One thing is clear: the future of OTT platforms will depend on their ability to monetize their audiences with advertisers.
Content creation revenue breakdown*
Source: PHD Report CMUST 2022
A disappointing start
In late 2022, Netflix and Disney+ caused quite a stir with the launch of ad-supported plans. But among users, enthusiasm for these low-cost subscriptions has been mixed, fuelling criticism of a limited catalogue and reduced image quality when it comes to Netflix’s new offering.
Major OTT platforms: Quebecers are resisting
Source: Media In Canada, Ad-supported streaming is a tougher sell in Quebec than the rest of Canada, November 2022
Not everyone has mastered the art of the ad
If the expectations of marketers were high, so too was the level of disappointment in relation to the first advertising performances.
Advertising rates among the most expensive on the market
Regarding Netflix’s offer in particular, several also criticized:
- very limited targeting possibilities;
- the absence of third-party metrics;
- low transparency regarding campaign performance.
To which is added a lack of inventory so significant that at the end of 2022, the platform was forced to compensate several advertisers.
The AVOD audience is not the same as the SVOD audience
Sources: Ad exchanger, Netflix CEO: “We’re Only Just Getting Started” With AVOD, January 2023 / Vividata, Spring 2022, Qc franco, A18+, individus qui sont abonnés à Netflix et qui ne voudront pas payer pour un abonnement sans publicité
All these pitfalls are making the video-on-demand services of traditional broadcasters (BVOD) look good. And the advantages of BVOD are numerous: in addition to offering a secure and premium environment, it is marketed within well-established offers and accompanied by reliable metrics.