TV monetisation The third way
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20,000 foot view: The slowing of subscription growth in developed markets means that streaming services have to look both towards post-subscription and post-advertising models. A focus on retention will maintain downward pressure on subscription price elasticity, compounded by the need to ration advertising loads to minimise churn. A ‘third way’ approach to monetisation will drive both incremental revenue streams and additional engagement levers for existing consumers. Ultimately this will deliver both increased retention and revenue as streaming moves into an era of consolidation.
- While the global recession is likely to be short-lived, consumers will be scarred by the cost-of-living crisis and wary of multiple subscriptions bill shock
- This will lead to an increasing search for value, via bundles, telco plans, dynamic pricing and ad-supported services
- Media fusion will become normalised as digitally-savvy audiences increasingly adapt consumption dynamics and expectations across previously-distinct media verticals
- In 2023, North America will account for of global video subscribers and of global streaming revenue. In 2030 North America will account for of global subscribers and of global revenue
- By contrast, over the same period, Asia Pacific will count for of global subscribers and of global revenues in 2023, and of global subscribers and of global subscription revenues in 2030
- Asia Pacific, currently second behind North America, will remain the leading subscriber market over this period and additionally become the largest revenue market by 2030
- As a result, the cultural focus of mainstream streaming TV content will pivot towards Asia (south, southeast, and east)
- Investment in localised content with global appeal will escalate, with the 2020s becoming Asia’s streaming TV moment
- Hybrid streaming IRL release plans for households will allow media majors to retain ‘silver streamers’ while supporting box office engagement and revenue
- Community will be repurposed as watch party dynamics become central to live sports streaming and interactive shopping experiences
- Crucial to the successful ‘third way’ reboot will be in-experience purchases, which are already normalised in gaming experiences
- The monetization third way will comprise four key components: digital merchandise, adaptive pricing, community, and shopping (D.A.C.S.)
Companies and brands mentioned in this report: Comcast, KERV Interactive, Peacock, NBCUniversal, Recurly