Is Ad-Supported the future of streaming?

                                        Brandon Blake- Managing Partner at Blake & Wang P.A

With WarnerMedia announcing the reduced-cost, ad-supported tier for HBO Max rolling out this week, what does this mean for the future of streamers? BLAKE & WANG P.A one of the best entertainment lawyers in Los Angeles looks at the new model- and how it’s not so new after all.

We’ve seen many streamers- exactly like HBO Max- introduce an ad-supported tier after garnering their initial support through subscription only. We’ve also seen services like Hulu and CBS All Access started as ad-supported, and evolve to a full subscription, non-ad tier service later down the line. While Amazon Prime Video, Netflix, and Disney+ have (to date) held to only a subscription tier, many other smaller-scale streamers are opting to allow consumers the choice.

The notion of mining both a subscription and an advertising revenue stream is, of course, far from new. It’s something we have seen throughout the evolution of cable TV. Many view advertising as a time-tested way to keep costs (and viewer frustration, when well-balanced) low, and allow more eyes on your service. 

Overall, we’ve seen a focus shift for the market, from a strict subscription model to hybrid-type AVOD services like the recent HBO offering. On an AVOD model, as hours viewed rise, they make more money, because that’s more eyes on the same ads. Unlike a flat fee service, more viewers mean more ad impressions to sell. While it’s an uncertain variable, it can be a very successful one done right. While 2020, especially, saw the withdrawal of advertising across a wide range of categories, overall it’s generally a steady source of funds. With streaming services now seen as a growth market, instead of an afterthought, in the advertising industry, it’s a model that could hold a lot of potential going forward. 

In a crowded market space, as the streaming world has abruptly become, the AVOD model could well offer a lot of competitive space to grow. As always, BLAKE & WANG P.A entertainment law firms Los Angeles will keep you in the loop with everything you need to know.

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