Ad-Supported Tiers Are Winning, But Why Are Streamers So Keen?
As a spate of price increases touch all but the ad-supported tiers of most of the major streaming players, it’s clear the streaming world has thoroughly embraced the ad-tier model as a key driver of future streaming growth. But with so many streamers actively pushing new subscribers to their cheaper plans, what’s the secret? And how will this help them achieve that coveted profitability?One of the best entertainment lawyers Los Angeles Brandon Blake, from Blake & Wang P.A, takes a closer look.
Broader Audiences
It’s no news that the wider market- Wall Street in particular- has finally realized that the pandemic-spurred boom in subscription numbers is unsustainable. Premium tiers may deliver premium features, but at a time when most households are looking for ways to cut costs, they’re less attractive than they once were. For many, this means a cheaper offering with only a little less convenience looks a whole lot more attractive. What is quite interesting is that most of the streamers with an ad-supported tier on offer have actively nuked ‘basic’ non-ad plans, effectively forcing new subscribers in search of a deal to take their ad-supported plans.
The Ad-Supported Appeal
Sitting through advertising for a cost cut is a pain many subscribers are willing to endure. After all, it has worked for broadcast models for decades. But how do they work out better for the streamers themselves?
Even in a soft advertising market, they simply work out more lucrative. Instead of accepting a lower fee for a bare-bones tier, the streamers can actively mine advertising revenue as well as that subscription fee. And the total revenue per user goes up, even as the prices don’t. Enter ad-tier incentive, stage left. Some compelling data on the matter suggests that users are willing to eat the pain of watching ads if the savings are high enough- namely in the $5 range.
For now, at least, it seems the ad-supported tier is the way of the future. Offering consumers mobility between tiers, and a hefty incentive to tolerate advertising, may just be the win-win that streamers are looking for when deciding where to subscribe.
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