When streaming services initially hit the market, part of their allure was eliminating the advert experience. Many consumers ditched linear television so they could watch programmes uninterrupted, subscribing to services including Netflix. It revolutionised the media business landscape – and gave consumers a totally new, on-demand experience.
, a professor at University of Virginia Darden School of Business, US. This is due to the cost of content investments, licensing fees and other expenditures these companies have made to expand their libraries and compete with other services on the market. Now, they are looking for a return on those investments – and subscribers will foot the bill. .
This approach marks a big change for these companies, who are making these moves to shift their original business models, says Dave Simon, head of growth initiatives at Moloco, a US-based machine-learning-based advertising company."Most of the large content companies saw an opportunity to go direct-to-consumer, as opposed to going through their typical distribution points, the cable operators," he says.
This change comes as Netflix instituted a crackdown on password sharing and account usage on multiple devices. As many consumers lost access to covertly shared accounts, they opened their own. In the company's most recent earnings report Netflix reported itnew subscribers and raised the price of its ad-supported and premium subscriptions – a stark exception to the cancellation rate of its competitors.
For customers who won't pay ad-free fees, Simon says the advert experience will be different than it was in the cable days. First, consumers may be subjected to fewer ads than if they were watching linear television – gone are the traditional days of 22 minutes of content and eight minutes of ads."Many streaming services are reducing commercial time, some significantly,” he says, pointing to Disney+, which keeps ads to four minutes per hour of content.