MediaRadar Blog

OTT is becoming more important in the media mix

OTT is becoming more important in the media mix

The streaming wars intensified this year.  

According to MediaRadar data, the amount of money spent by OTT services to promote themselves is up 223% YoY between January and August. 

This is boosted by entrants to the market like Disney+, HBO MAX, and Peacock. However, ad spend among the pre-existing services is up 138%. A large driver of this is the pandemic that drove Americans inside. 

Over-the-top (OTT) platforms are marketing themselves with little restraint because they believe it’s where TV viewership is going. Over the next five to ten years, we will likely see the evolution and collapse of many of these platforms as they fight to make their business model profitable. 

To make their business sustainable, they will need to run ads. Will it be possible for streaming services to grow, while giving consumers the ad-free (or ad-minimal) experience they want? How will ad-supported streaming services fit into all of this?

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State of OTT: Streaming Wars Truly Began With the Release of Peacock

Peacock was the final major streamer that the public was waiting for—and despite no Olympic sports to accompany the launch, it went ahead as planned in July this year. This signaled the end of the era of waiting for the next big launch.

“The largely free, somewhat confusing service feels most significant for the era its presence effectively ends,” wrote Alison Herman at The Ringer. “But while the opacity of streaming companies makes some speculation inevitable, our days of reading the tea leaves by way of press releases and trade reports are effectively over. Peacock was the final chess piece to show up on the board. Now, the game can begin.”

Where each platform stands

With the crowded playing field, consumers have to choose which streaming platforms they want to pay for. Their choices often come down to what type of content they enjoy, price, and what they already subscribe to. 

  • Netflix: The clear market leader of streaming platforms was the first to bring streaming of its type to consumers. More than half of U.S. households pay for a Netflix subscription. At the end of March 2020, Netflix reported that it had more than 183 million subscribers.
  • Disney+: The platform now has over 50 million subscribers (gaining roughly 22 million between February and April, thanks to the stay-at-home orders). 
  • HBO and HBO Max: HBO and HBO Max have a combined 36 million subscribers. The structure of HBO Max is more complex than other streaming services. For a simple breakdown of HBO’s offerings, read here
  • Peacock: The newest platform gained 10 million subscribers in its first three months. 

While millions of households subscribe to streaming services, consumers experience streaming fatigue and are not willing to shell out more money for endless subscriptions. 59% of Americans are not willing to pay more than $20 a month for streaming.

This is a challenge for new platforms because the business model hasn’t been proven yet. To overcome this financial challenge, new contenders are experimenting with advertising options.

Experimenting with ad-supported OTT

As the last to enter the streaming wars, Peacock had no other option to offer ad-supported video on demand (AVOD). It looks like other streaming services will follow suit. 

HBO Max will be offering a free, ad-supported plan in a few months. 

This is good news for advertisers, because brands need to go where audiences are shifting. According to Cadent’s Viewer Intelligence Graph of holistic deduplicated cross-screen viewership, brands may “miss up to 40 percent of its desired audience reach by ignoring CTV/OTT in its media plan, depending on the target audience segment.” 

At first brands may feel like they are advertising blind, but OTT advertising offers data and scalability that companies can learn from to meet goals. 

This is a new frontier of advertising—ranging from ad stills when a viewer pauses the show to shoppable ads with QR codes. OTT will soon be big in the world of programmatic and virtual product placement is taking off. 

OTT media is going to be essential to the evolving streaming market. We’re excited to see the latest developments.

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