Three business models are emerging in the connected TV space including:
1) Advertising only (Crackle, etc.)
2) Subscription only (Netflix, etc.)
3) Advertising + subscription (Hulu, etc.)
Quick math: An ad-supported network with $25/CPMs generates$5/month in revenue for every 4 hours of view time.
Big idea: Most of these premium streaming services will offer addressable advertising against customer data which will command CPMs closer to $100. That would change the above to $20 in revenue for every 4 hours of view time.
The big question: How many unique streaming services can be supported with subscriptions compared to those that have to survive off of ad revenue alone?
% of Netflix subscribers who also subscribe to Amazon/Hulu:
1) 2014: 10%
2) 2017: 21%
Some are projecting that advertising exposure could decline 30% over the next 5 years.
Quote from Rishad TobaccowalaâââChief Growth Officer @ Publicis Groupe:âWe are so disrespecting peopleâs time that they are spending more and more time in advertising-free environmentsâĶ We donât value their timeâĶ Youâre asking me to give you my time for less than minimum wages, which is not worth my time,â
Current/Proposed ad time per hour (% change):
1) 2018â13m
2) 2020â2m (â 85%)
The big question: How much will a reduced ad supply impact pricing?
Facebook changes for January 2018:
1) Impressionsââââ 3%
2) Ad pricesââââ 122%
Average view times for NBCâs âThe Voiceâ:
1) Video-on-demandâââ51m
2) DVRâââ48m
3) Connected-TVâââ43m
4) Live/linearâââ35m
Quote from Mark MarshallâââEVP of Entertainment Ad Sales @ NBCUniversal :âItâs the same show, itâs the same piece of glass, so why are they watching longer on digital properties? Part of it is because thereâs a lower ad load on that sideâĶ The whole goal is to make TV look more like digital TV.â
The post The Great Connected TV Debate: Subscription- vs. Ad-Supported Models appeared first on Cross Screen Media.