Streaming services see surge in ad-supported plans amid market shifts

By NewscastStudio

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As the streaming industry matures and companies focus on profitable growth, efforts have notably increased to optimize performance and enhance offerings. Recent months have seen a flurry of new plans, bundles, promotions, and price adjustments as streaming services aim to attract new subscribers and retain existing ones.

Antenna data reveals significant Premium and Specialty SVOD market activity, with over 50 million gross additions in the past two quarters. The first quarter of 2024 saw a 22 percent increase in gross additions compared to the same period in 2023 and a 36.5 percent increase compared to 2022. Despite the healthy top-of-funnel, the quarter also experienced a record number of cancellations, totaling 50.4 million.

In response to the competitive landscape, streaming services are adopting various strategies, including new plans, packages, pricing models, and promotional efforts. Ad-supported service tiers have gained prominence, with Antenna noting that more than 50 percent of gross additions in both Q4 2023 and Q1 2024 were to ad-supported plans.

The Q2 2024 “State of Subscriptions Report” by Antenna delves into the impact of different pricing and packaging strategies.

Key findings from the report include:

  • Ad-Supported Tiers: Over 50 percent of new subscribers in late 2023 and early 2024 opted for ad-supported plans, indicating a growing acceptance of advertisements in exchange for lower subscription costs.
  • Bundling Strategies: Bundles have proven effective in reducing churn. For instance, Disney+ and Apple One have 2-6 points lower churn rates compared to their standalone offerings. Bundling can provide substantial benefits, especially for services with a high ratio of curious to committed customers.
  • Price Promotions and Annual Plans: Promotions and free trials significantly impact subscriber acquisition. However, sign-ups at full price yield higher customer lifetime values. Annual plans, although modestly adopted, could see increased uptake with further discounts.
  • Price Increases: Contrary to concerns, price increases have not notably disrupted subscriber acquisition or retention. Net additions remained positive across multiple services before, during, and after price hikes.

These findings underscore the evolving strategies in the SVOD market, where balancing growth, churn, and profitability through diverse pricing and packaging tactics is crucial. For more detailed analyses, Antenna’s full report is available for download, offering insights into the current state and future trends of the subscription video on demand industry.

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