DALLAS—As streaming companies jack up prices in the hopes of staunching large losses, consumers seem to be also watching their pennies by significantly reducing the amount they spend on streaming subscriptions, a trend that could have major implications for the financial health of the streaming industry.
In the runup to a Sept. 19 webinar entitled "AVOD, FAST, Freemium: Effective Advertising in the New Video Landscape," Parks Associates is reporting that internet household spending on streaming subscription services has declined 25% to $73 per month versus $90 in 2021.
Meanwhile, nearly one-third (31%) of households used free ad-based services by the end of 2022 -- posting the fourth consecutive year of market share growth since 2019.
The decline in subscription spending coupled with growing use of ad-supported services makes streaming ad strategies and infrastructures more important than ever, the researchers said.
"Leveraging data to provide relevant content and digital advertisements to keep viewers engaged is crucial, and tricky. Data is fragmented across operating systems and applications, and viewer consent is required," said Jennifer Kent, vice president pesearch, Parks Associates. "The next generation of TV and CTV advertising should not replicate traditional linear, pay-TV ad formats and models but offer interactive, actionable, secure, and enjoyable experiences that engage video viewers and attract ad dollars."
During the Sept. 19 webinar Parks Associates and Adeia will present research and insights from the just-published white paper, Overcoming Complexity: Advertising in a Fragmented Landscape, and discuss how advertising is evolving to accommodate new ad-supported streaming models and privacy practices for a more engaging and targeted experience.
"Concerns around inflation and streaming services price hikes are driving consumers to dynamically choose the streaming services that they subscribe to each month. As a result, AVOD services have risen in popularity, adding to the fragmentation of target audiences for advertisers and brands," said Jean-Yves Couleaud, senior director of advanced R&D for Adeia. "Leveraging first-party data is helpful for advertising; however, this first-party data as well as ad reporting are still locked within each streaming service. We, as industry technologists, are looking for technological solutions that will federate advertising opportunities and reporting across the disparate streaming landscape."
