With all of the gloom and doom surrounding subscription-based video on demand (SVOD) services and the increasing acceptance of advertising in exchange of no-cost content, Deloitte’s just-released 2023 TMT Predictions report contains some not-so-surprising data that solidify AVOD’s strong position in the streaming universe.
In fact, Deloitte believes that by the end of 2023, “major subscription video-on-demand services in developed markets may have launched an ad-funded tier to complement ad-free options, although these ad-free options aren’t necessarily going away.”
This is on a global scale, mind you, piggybacking on efforts already underway in the U.S.
By the end of 2024, half of these providers may also have launched a free ad-supported streaming TV service, Deloitte forecasts.
Furthermore, by 2030 Deloitte expects that most online video service subscriptions could be partially or wholly ad funded.
“Our recent research showed the churn rate for streaming services in the U.S. was 37%. This means media and entertainment companies should continuously look for ways to generate new revenue while appealing to cost-conscious consumers who have a growing appetite for more compelling and diverse content,” said Jana Arbanas, Deloitte’s U.S. telecom, media and entertainment sector leader. “Advertising video on demand, for example, can satisfy both objectives by giving consumers more options that work within their budget and streaming companies more opportunity for growth by working with eager advertisers, not to mention more lasting relationship with consumers.”
The next arena for the streaming wars: live sports. Deloitte predicts that in 2023, streamers could spend more than $6 billion on major sports rights in the largest global markets.
“This year’s TMT predictions underscore a common theme, both with consumers and businesses-to do more with less- as inflationary pressures, supply chain issues and other world events continue to cause uncertainty,” said Kevin Westcott, Vice Chair of Deloitte LLP and practice leader of the U.S. TMT and global Telecommunications, Media and Entertainment (TME) practice. “Given this, consumers are looking for more cost-effective ways to communicate, to be entertained, and to be productive, while businesses are looking for efficient ways to innovate in order to compete, differentiate and grow revenue. Our thinking on these emerging trends should help guide TMT organizations as they plan for the future and strive to meet their customers’ needs.”
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