Is streamvertising the future of advertising

Streaming media giants are expanding to incorporate commercial breaks into their content by offering cheaper subscription models

Streaming media giants, in their quest for growth, have realised that increasing their subscriber counts is becoming harder and harder to do
Streaming media giants, in their quest for growth, have realised that increasing their subscriber counts is becoming harder and harder to do.

By Harsha Razdan 

The streaming industry was racing away from commercial breaks to enter a new age of content consumption. However, today it has made a sharp turn in the opposite direction. To consumers this is a regression. After all, who doesn’t enjoy uninterrupted, ad-free movie and TV viewing? However, to the companies themselves, advertisement-supported content is the only step in the path towards growth and success. Hence today, consumption of media over streaming platforms is witnessing a transformation in what should be looked at as a new age of advertising. 

With billions of viewers worldwide, over-the-top (OTT) media services today are some of the most popular content providers in the world. The OTT segment in India generated revenues of Rs 218 billion with a CAGR of 35% for FY16-20 period. Today a wide variety of high-quality regional content along with penetrative pricing is enabling OTT platforms in India to gain traction in every household, especially in tier-II and tier-III cities. However, as customers are reaping the joys of uninterrupted media consumption, many streaming giants are gradually announcing lower-priced tiers in their subscription models featuring ad-supported content. So now your favorite movie or TV show might feature commercial breaks with a view to introducing advertisements on streaming platforms. 

So, why are we seeing a shift? 

Streaming media giants, in their quest for growth, have realised that increasing their subscriber counts is becoming harder and harder to do. With an array of new shows and films being announced consistently, financing productions is becoming increasingly difficult to execute without resorting to advertising revenue. In the old days, networks and studios had multiple avenues of revenue – advertisements, cable TV fees, syndication. All of these were replaced by a single fee with the advent of streaming. However, fighting the streaming war is expensive as all major players in the industry burn money to create new films and shows and expand their content libraries. Adding back commercial breaks to generate advertisement revenue makes sense to remain profitable and keep investors happy. 

Impact on viewers

Understandably, many viewers will not be pleased to sit through advertisements in the middle of their new favorite series. However, there is a silver lining. Companies have made this shift for two main reasons: 1) to reap the benefits of advertisement revenue, and 2) to increase their subscriber base by offering cheaper subscriptions. While they will be forced to view commercials during their favorite shows, the latter will burn a smaller hole in their pockets, especially as their bank accounts buckle under the weight of five to six subscriptions. 

Impact on brands and advertisers: 

This will certainly benefit brands in their marketing strategies with digital advertising gaining clout. A fresh concept, streaming advertising, or “Streamvertising,” offers a lot of room for experimentation. For instance, a key player in the streaming industry asks its viewers whether they want to watch longer ads earlier in their programming in exchange for fewer ads later, or sequential ads spread over multiple breaks. The media company is also looking at another unique form of advertising: interactive trivia-type commercials to run during movies. With innovations like these, things remain interesting for both viewers and brands. Traditional TV advertising utilises ratings and time of the day to target their customers. 

With streaming, data analytics can be leveraged to understand demographics and interests, which in turn allow advertisers to extract higher rates of engagement as they target relevant audiences. One popular streaming service utilises the technology on smart TVs to track what people are watching, allowing for the creation of personalised ad experiences based on data analytics. Real time analytics allow for better measurement capabilities, enabling advertisers to understand how their ads are performing. This in turn aids in focused targeting of advertisements, saving resources and improving efficiency. OTT advertising can also be more accessible to small and medium sized businesses, unlike TV advertising, which is seen as a premium platform to market. However, with the rise of streaming platforms, advertising can become cheaper. For instance, a key player in the OTT sector offers self-service advertising platforms to make it easier for brands to have their own TV-ready commercials. 

 A new dawn is rising in the world of advertising. Streaming media giants are expanding to incorporate commercial breaks into their content by offering cheaper subscription models. This is poised to open a new source of revenue and widen their subscriber counts. While viewers may not be entirely convinced by this development, brands and advertisers should be eager to embrace this new platform and the dynamic advantages it brings. 

The author is partner and head, consumer markets and internet business, KPMG India

Also Read: Esports Collective launches Esports fan engagement platform FanSpace

Follow us on TwitterInstagramLinkedIn, Facebook

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Photos