MediaTech Spotlight – Streaming Maturity part 2

MediaTech Spotlight – Streaming Maturity part 2

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MediaTech Intelligence

MediaTech Spotlight – Streaming Maturity part 2

Wed 21, 09 2022

MediaTech Radar

July – 2nd edition

MediaTech Radar is a bi-weekly newsletter put together by IABM’s Head of Knowledge Lorenzo Zanni. It focuses on a spotlight topic in MediaTech and reflects on a series of past, present, and future business developments in the industry. In this edition, our spotlight topic is Streaming Maturity (Part 2).

MediaTech Spotlight: Streaming Maturity (Part 2)

A spotlight topic in MediaTech.

  • In our last newsletter, I shared some research on streaming maturity. In this newsletter, I wanted to add some thoughts on this topic, focusing on future business models in the streaming industry as well as the potential impact of its maturity on MediaTech.
  • Recent research by Comscore showed that AVOD is growing more significantly than SVOD in the US market. This is a consequence of inflation hitting consumers’ purchasing power, as highlighted by James Muldrow, VP of Product Management at Comscore: “While both ad-supported and subscription-based streaming services are growing in the US, we’re seeing that consumers are being more mindful of their budgets and leaning towards ad-supported services.”
  • Research by The NPD Group is consistent with inflation tilting consumers’ media spending preferences. From October 2021 to April 2022, cost went from the fourth reason for cancelling SVOD services to second according to the research.
  • From a consumer standpoint, inflation of necessities ranging from foods to energy is leading to a rethinking of budget allocation which is inevitably pushing SVOD churn and favoring advertising-based models. The impact of these macroeconomic trends on advertising spend by businesses is less clear-cut. While recessions generally lead to reduced advertising revenues, inflation often has the opposite effect. Insiders have reported an unprecedented price inflation in TV advertising, with the growth of AVOD being one of the factors behind this trend. As a result, price inflation may contribute to making AVOD more attractive to pure SVOD players.
  • Globalization is also a key growth driver for streaming services. Content investment is part of this as demonstrated by increasing spending on local programming – most streaming services are raising their investment in foreign content. For example, Paramount+ has announced that it plans to commission 150 international originals by 2025. We analyzed the importance of media globalization in a Briefing published last year.
  • Demand for localization is not only affecting content, but also other areas such as SVOD payments. Netflix announced plans to include alternative payment methods such as Unified Payments Interface (UPI), digital wallet and direct carrier billing in June 2022. This is to make SVOD payments easier in geographical areas with less developed financial infrastructures.
  • How will these trends shape MediaTech investment? AVOD growth is set to drive increasing investment in content monetization solutions ranging from advertising platforms to data analytics services – this was already growing according to IABM research. Technology that is more closely related to SVOD growth such as subscription management solutions may experience a slowdown in spending. On the content front, investment in localization is bound to continue to rise as globalization remains a key strategic driver of growth for streaming services.

MediaTech Watchlist: Virtual Events, ITV, Avid and more…

A watchlist of selected past, present and future business developments in MediaTech.

Thank you for reading this newsletter. If there are topics you would like me to cover, or have information/ideas you’d like to share, please get in touch with me.

Lorenzo Zanni

Head of Knowledge

IABM

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