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The future of streaming: How ads are reshaping the entertainment landscape
The rise of ad-supported streaming services
In the ever-evolving world of entertainment, streaming services have become a staple in households worldwide. According to a recent study by PricewaterhouseCoopers (PwC), the landscape of streaming is set to undergo significant changes by 2028. The report, titled “Global Entertainment & Media Outlook 2024-2028,” projects that advertising will constitute nearly 28% of all revenue generated by streaming services, a notable increase from the 20% recorded in 2023.
The numbers behind the shift
The entertainment and media industry is forecasted to reach a staggering $3.4 trillion by 2028. Global subscriptions to Over-The-Top (OTT) services are expected to rise from 1.6 billion in 2023 to 2.1 billion by 2028, reflecting a 5.0% compound annual growth rate (CAGR). However, the average revenue per OTT video subscription is projected to see only a modest increase, from $65.21 in 2023 to $67.66 in 2028. This slow revenue growth is attributed to the overwhelming number of streaming service choices available to consumers, prompting companies to offer lower subscription fees in exchange for ad placements.
The impact of advertising on streaming giants
Streaming behemoths like Disney, Netflix, Warner Bros. Discovery, and Amazon are already adapting to this shift. For instance, Netflix’s recent introduction of an ad-supported tier has garnered significant attention. This move aims to attract budget-conscious viewers who are willing to watch ads in exchange for a lower subscription fee. To explore more about Netflix’s ad-supported tier, check out the trailer and information sheet.
Disney, too, is not far behind. With its vast library of content, Disney+ is exploring ad-supported options to diversify its revenue streams. The introduction of ads on Disney+ could potentially open up new avenues for advertisers to reach a younger, family-oriented audience. For more details, visit the trailer and information sheet.
The future of ad spending
Ad spending, which surpassed consumer spending last year, is estimated to top $1 trillion by 2026, growing at a 6.7% CAGR through 2028. By then, ad spending will be nearly double its 2020 total. Bart Spiegel, a partner at PricewaterhouseCoopers U.S., emphasized the importance of advertising within the streaming ecosystem. ”With advancements in data monetization technologies, the ongoing shift towards digital platforms, and consumers’ willingness to allow advertising to subsidize their entertainment expenses, advertising growth is projected to surpass even consumer spending starting in 2025,” Spiegel noted.
The need for business model reinvention
The PwC report also highlights a critical insight from their Global CEO Survey: 45% of CEOs believe their company will not be viable in ten years if it stays on its current path. This statistic underscores the necessity for businesses to reinvent their models and realign their portfolios with future strategies. As demographics evolve, there is a growing emphasis on live, immersive, and experiential entertainment. This trend is expected to significantly impact user engagement and compete for discretionary time and spending in the entertainment and media sector.
Personal reflections and analysis
As a long-time observer of the entertainment industry, I find these projections both exciting and daunting. The shift towards ad-supported streaming services is a double-edged sword. On one hand, it democratizes access to premium content, making it affordable for a broader audience. On the other hand, it raises concerns about the quality of the viewing experience. Will the intrusion of ads disrupt the seamless storytelling that streaming platforms are known for?
Moreover, the emphasis on data monetization and targeted advertising brings up questions about privacy and data security. As consumers, we must remain vigilant about how our data is used and ensure that our viewing preferences do not compromise our privacy.
The evolving entertainment landscape
the future of streaming is poised for a transformative journey. The integration of advertising into streaming services is not just a trend but a strategic pivot that could redefine the industry. As companies like Disney, Netflix, Warner Bros. Discovery, and Amazon navigate this new terrain, the ultimate winners will be the consumers who benefit from a diverse array of content options.
For those interested in exploring more about the latest trends and offerings in the streaming world, I recommend checking out the trailers and information sheets for some of the most popular series and films:
As we look ahead, it will be fascinating to see how these changes unfold and what new innovations will emerge in the world of streaming entertainment. The journey is far from over, and the best is yet to come.
