Sure, Netflix rose to fame in 1997, and Hulu said hello for the first time ten years later. Still, one could argue that OTT didn’t achieve mainstream status until the pandemic, when global streaming subscriptions topped 1b.

OTT ad spending hasn’t been a “no-brainer” for advertisers, either. In fact, OTT ad spending currently represents roughly 3% of total digital spending per month.

Either way, the rise of OTT is impossible to ignore from both a consumer and advertising standpoint.

The number of OTT users is expected to reach 4.2b by 2027 (a user penetration rate of 53%, up from a projected 45.7% in 2023).

OTT ad spending will certainly follow; OTT ad spending was predicted to end last year about 20% higher than last year.

This is boosted by entrants to the market like Disney+, HBO MAX, and Peacock.

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—we’ve already seen that with Quibi. 

Every OTT platform will need to run ads to make their business sustainable. Even Netflix is realizing that.

Disney+ also introduced ads.

Kareem Daniel, the chairman of Disney Media and Entertainment Distribution, said in a statement, “Expanding access to Disney+ to a broader audience at a lower price point is a win for everyone – consumers, advertisers, and our storytellers.” He continued, “More consumers will be able to access our amazing content. Advertisers will be able to reach a wider audience, and our storytellers will be able to share their incredible work with more fans and families.”

This sentiment won’t change—and neither will OTT’s role in big and small brands’ media mixes.

State of OTT: Peacock Officially Kicks Off the Streaming Wars

When Peacock launched in 2020, it not only brought NBCUniversal’s take on OTT to the table but also officially kicked off the OTT streaming wars.

As of that day in July, all major streaming services were live, and the end of the era of “waiting for the next big launch” was over.

“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.”

The race to the top of OTT’s proverbial mountain is underway, but where do all the platforms stand?

Where each OTT platform stands in 2023

With the crowded playing field, consumers have to choose which streaming platforms they want to pay for. While most people are fine dishing out a few extra bucks for multiple platforms—75% of Americans have 2 or more OTT subscriptions—favoritism remains.

In reality, their “favorite child” often comes down to what content they enjoy, the 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. At the end of 2022, Netflix reported 231mm subscribers, up from 183mm in 2020. That said, the OTT OG announced its largest quarterly loss in subscribers ever in mid-2022.
• Disney+: As of Q4 2022, Disney+ had more than 164mm subscribers, representing a more than 166% increase from April 2022, thanks mainly to stay-at-home orders.
• HBO and HBO Max: HBO and HBO Max have a combined 46mm subscribers in the U.S. as of Q1 2022.
• Peacock: The newest platform has 15mm paid subscribers and 30mm monthly active users (MAUs). According to NBCUniversal’s chief executive, Jeff Shell, Peacock has grown paid subscribers by 70% since the start of 2022.

While millions of households subscribe to streaming services, consumers experience streaming fatigue and are unwilling to shell out more money for endless subscriptions. In fact, 59% of Americans are unwilling to pay more than $20 a month for streaming. The down-and-out economy certainly won’t help.

This is a challenge for new platforms because the business model hasn’t been proven. To overcome this financial challenge, new contenders are experimenting with advertising options to offer consumers the most competitive price possible.

OTT Platforms Experiment with Ad-supported Options

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

We know HBO Max did with its own free, ad-supported plan. At the time, WarnerMedia (the company that owns HBO Max) said that an ad-supported version of HBO Max could potentially carry between two to four minutes of advertising per viewing hour.

In contrast, viewers see 4-9 ads per hour on Peacock and almost always 10 or more on Hulu (as of 2021).

The biggest shakeup in ad-supported OTT came in late 2022 when Netflix entered the fray. While the ad-supported tier is priced 30% less than its previous least-expensive tier, adoption has been slow.

According to independent research, about 9% of Netflix’s sign-ups were for the $6.99/month ad-supported package the month following the launch, making it the least popular among its plans.

In contrast, when HBO Max launched its ad-supported option in 2021, 15% of the platform’s sign-ups that month were for HBO Max With Ads.

Additionally, Netflix initially fell short of viewership guarantees made to advertisers and subsequently allowed advertisers to take their money back for ads that hadn’t run.

Still, Netflix execs are celebrating the push into advertising, with the platform gaining more than 7mm subscribers in the month following its foray into OTT advertising.

Overall, the embrace of ad-supported OTT is good news across the board for advertisers. As competition inside OTT’s walls continues to heat up, big and small platforms will be forced to evolve their ad offerings to appeal to advertisers and keep consumers happy.

For now, consumers seem to be ok with trading ads for free content; 76% of viewers said they’re willing to watch ads for free video streaming.

That sentiment can change fast, especially if platforms increase ad loads to counteract a potential drop in revenue during the recession.

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MediaRadar data shows that streaming companies spent $935 million advertising their services in the first half of 2021. The bulk of that comes from the expected big players, but there are hundreds of other platforms building dedicated, niche audiences. 

Who are these small players coming up against the Netflixes and Disneys of streaming? And how much do they pay to reach new audiences?

Audiences are dedicated to quality content, not branded platforms

Years ago streaming was all about making blockbuster films and linear network TV more accessible for consumers. Now the name of the game isn’t convenience: it’s content. 

Companies who want to come out of the streaming wars alive are those who can create amazing, binge-worthy content themselves. 

We can see this in this year’s Emmy Awards nominations. Streaming services made up four out of five nomination spots, clearly commanding the space. These nominations primarily came from Netflix, Disney+, and AppleTV+. 

Companies are investing heavily into original content to win over viewers. Afterall, it’s not more advertising that convinces you to sign up for a paid subscription. It’s those quality stories that draw you in and keep hitting ‘Play Next.’ 

Netflix may be investing $17 billion on original content this year, but smaller players are also shelling out the cash. Roku is expected to spend over $1 billion on original content this year, likely outpacing its AVOD competitors. 

Viewers don’t pay for a streaming platform, they pay for stories. This is why smaller streaming platforms can find a place in the competitive streaming market. If they can build the right content library for the right audience, they can have a thriving business.

Platforms like Mubi and Shudder have become successful for drawing in their ideal viewers. 

Mubi is a platform designed for dedicated cinephiles. Fans find more artistic films or cult classics using this service. Shudder, on the other hand, is for horror film lovers.

So even if Netflix and Hulu have wider libraries, smaller streaming services might have something more specific that certain audiences are looking for.

Streaming has been good for independent filmmakers

Many would think that streaming services would harm the independent film industry, but instead it has enabled smaller to mid-sized filmmakers more opportunity to release films. 

“We have a whole slate of movies, smaller action thrillers, horror titles, that we’ve been able to make in the last 18 months because they don’t need to go theatrically, they can be released online only and still have value,” explained Millennium Films president Jeffrey Greenstein to The Hollywood Reporter. 

It’s more financially attainable for small scale productions to release their product online. And they can reach their target audiences at a broader scale using platforms with an enthusiastic audience.

Once audiences discover platforms that deliver these films, they tend to become dedicated fans. But how much do these small platforms advertise to reach new audiences?

MediaRadar Insights

During the first six months of 2021, there were 400 streaming services companies who spent $935mm on advertising. The top 15 spending streaming services advertisers accounted for 85% of all programmatic spend in 2021 so far. 

These brands include companies you’d expect: Disney+, Netflix, Hulu, ESPN+, HBOMax, Amazon Prime Video, etc.

But what about the small and mid-sized services? 

The remaining 385 brands spent $140mm to advertise their subscription services.

Top spending brands in this group include: Shudder, Mubi, People TV, CW Seed, Acorn TV, BritBox, BET+, Pluto.TV, and PBS Living. 

Together, their spending has made up $15mm so far this year. 

Large streaming companies dominate content creation and advertising. However, smaller streaming services fulfill the demand of niche audiences. Programmatic provides a strong advertising solution for these unique platforms because it enables them to get in front of more specific demographics online. 

For more updates like this, stay tuned. Subscribe to our blog for more updates.

Hulu got a new look and sound. CBS All Access became Paramount+. HBO Max launched its ad-supported tier yesterday. 

Companies are distinguishing themselves by bringing back their original content, releasing new hits and by making streaming simpler or more affordable. 

The hope is that by making the complicated world of streaming more enjoyable, companies will attract more viewers and ultimately more ad dollars. And as they do this, they spend ad dollars themselves—mostly programmatically. 

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

Streaming services use new strategies to gain subscribers

It wasn’t long ago when viewers just had a few options to choose from if they wanted to stream video online. The go-to platforms were Hulu and Netflix. 

Now consumers have over 200 options, with at least 15 of those you could consider ‘major’ services in the U.S. 

As the playing field got more crowded, streaming services needed to distinguish themselves through their content and user experience.  

During the pandemic, newly launched streaming services capitalized on people staying at home all day. Disney+ exceeded expectations and gained 100 million subscribers in 16 months. In comparison, it took Netflix 10 years to hit this milestone. 

“The enormous success of Disney Plus, which has surpassed 100 million subscribers, has inspired us to be even more ambitious, and to significantly increase our investment in the development of high-quality content,” said Disney’s CEO, Bob Chapek. The service plans on launching more than 100 titles each year.

Some of these titles will include feature films simultaneously launching in theaters, like the recent Cruella.

With so much emphasis on releasing premium shows and movies, the struggle for consumers is not the lack of high-quality content—it’s too much, everywhere. And the tab on consumer subscriptions is adding up quickly. 

That’s why more companies are rearranging their payment and advertising models to make content more affordable. HBO Max is the most recent to launch an ad-supported plan at $10 a month, adding that it’s the lowest “ad load in streaming.”

Each streaming service has its own branding strategy—niche content, kids programming, sports, live TV, ad-supported tiers and so on—but no matter the approach, each service needs to build awareness via advertising. 

To stay top of mind with consumers, many are turning to programmatic advertising. 

MediaRadar Insights

92% of all streaming buyers are buying programmatic ads in 2021. Their advertisements promote their service or their programming.

Streaming services total investment between January and April 2021 reached over $301 million. The large majority of this (86%) was placed programmatically.

Top programmatic streaming spenders this year through April:

• HBO Max
• Discovery+
• Amazon Prime Video
• Disney+
• SlingTV

Together, the top five represent over 159 million in programmatic investment—62% of programmatic investment from streaming companies.

Even though there were several new streaming service launches last year, advertising is up this year as the competition is tight. 

Programmatic streaming is up over 120% every month January – April compared to last year. By month spending is up YoY as follows:

• January – 174%
• February – 128%
• March – 138%
• April – 124%

HBO Max is consistently the top programmatic spender each month. The other companies that remain in the top five from month to month are Discovery+ and Amazon Prime Video.

*Updated June 2021

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TV viewership rose in March and began to level off in April during stay-at-home orders. After months of watching cable TV, Netflix and Youtube, many viewers are excited for the new content HBO Max has to offer.

Some of the most anticipated content includes a Friends reunion special and the fabled “Snyder Cut” of Justice League.

In March, when the crisis hit, we covered how digital streaming ads surged due to stay-at-home orders. We wanted to check back in to see what’s going on in light of this new launch. 

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

HBO Max Enters the Streaming Wars

HBO will now have three products: HBO Max, HBO Now and HBO Go. They will all coexist at the same time, at least for now. 

Here’s a simple break down:

• HBO Go: If you have HBO via cable or satellite, this is the app that lets you watch HBO on other devices.
• HBO Now: This is the HBO app for people without cable who want to watch HBO content.
• HBO Max: This is like HBO Now, but amped up. It will include old hits, plus new exclusive and original content. 

HBO Now will continue, but customers will be paying the same price for less content. Many HBO customers will be automatically upgraded to HBO Max, but the details are still hazy.

While some agreements are still unfolding, HBO Max has many distribution partners set in place before the launch. 

“Through our expansive distribution pipeline, millions of customers will have immediate access to a best-in-class streaming experience come May 27,” said president of WarnerMedia Distribution Rich Warren. Xbox, PlayStation, Cox, Verizon and Samsung are some of the largest partners to recently come on board. 

HBO Max will feature shows like Friends, The Big Bang Theory, South Park and original movies. It will also feature new kid-friendly shows, like a talk show hosted by Sesame Street’s Elmo. 

Some of HBO’s own employees have doubted this new move, wondering if it will tarnish HBO’s brand marked by pushing TV boundaries. Leaders are not concerned.

“We’re going to have Tiffany aisles within a larger store,” HBO Max boss Kevin Reilly said. The original content on HBO Max is designed to complement, rather than replicate HBO.

HBO doesn’t own the edgy and high-quality corner of media any more. Competitors like Netflix, Amazon and Hulu make similar content. In response, HBO seems to be widening its audience reach by creating lighter shows and movies. There will be over 10,000 hours of content, so viewers probably don’t have to worry about finding something suitable to their interests. 

MediaRadar Insights

Since March, there has been no explicit change in creative among streaming service advertisers, though there has been an increase in spend. 

Spending has remained higher and only boosted by the launch of Quibi and HBO Max in recent weeks. The increase can be seen even more clearly when we look at year-over-year data. 

Spend was already higher due to increased competition like Disney+, and with COVID has only risen higher.

One interesting note is that spending from Quibi has fallen off since its launch. Over the last 4 weeks, its average weekly spend has been down 82% compared to the 4 weeks prior (4/19 – 5/16 vs. 3/22 – 4/18).

When we check in on the major players, this is what we see:

• Netflix has not shifted advertising amid the pandemic or the new competition.

• Disney (making up Disney+ & Hulu) has upped spending amid the pandemic. Their average weekly spend since the week of 3/15 has been 74% higher than the weeks prior (excluding their Oscars ads).

• Amazon prime video has upped their ad spending in recent weeks. Spending the week of 5/10 is nearly double where it was the week of 4/19.

• HBO Max began advertising week of 4/19. But their spend really began the week of 5/10 (it was more than triple where it was just the week prior). We expect a large push right around their launch.

Aside from the drop from Quibi, it seems that the advertising competition between most streaming services has intensified. We will continue to watch the advertising approaches of these brands as HBO Max launches and people start relaxing their social distancing behaviors.  

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.

We oscillate between hard news stories and funny memes. We try to listen to the podcasts we miss from our daily commutes. Tigers and their masters have left their mark on our psyches. 

Our digital habits have changed. 

As people turn to streaming, news publications and social media to cope with this time of grief, advertisers are responding.

We analyzed the data to see how brands are capitalizing on the recent spike in media consumption. Overall digital ad spend was down in March, but many brands escalated their spending. 

Which digital media formats have been impacted most?

We encourage you to subscribe to our blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

How COVID-19 is Changing What We Watch and Listen to Online

Before the coronavirus crisis, Americans were already on their phones, watching TV or consuming digital media most of their days. 

Nielsen reported that before the pandemic, American adults spent almost 12 hours a day on a media platform. That number is likely to increase by 60% on average for those practicing social distancing.

Americans are spending more time consuming media and playing more video games, but they are also engaging with different platforms more (i.e. news) and at different times of the day.

For example, streaming behavior is going every direction. Prime time TV viewership is down. On the other hand, video streaming between 11am and 2pm is up 40%. Twitch streaming increased 23%, while audio streaming (i.e. podcasts) is down despite previous momentum . 

People are not limited by traditional work hours and can watch their favorite shows whenever they want. Professional sports are off the table and turning their fandom elsewhere. 

This new behavior is causing many companies to quickly reallocate their online ad spend.  

MediaRadar Insights: March Spending Across Digital Media Formats

In March, we saw brands collectively spend 3% less on digital media than they did in February. 

The overall dip in spending is not surprising considering the fragile state of the economy. Brands were more selective with the digital formats they invested in and not all formats were impacted equally. 

Native advertising saw the largest hit: there was a 10% drop in ad investment between February and March. Meanwhile, display experienced a 3% drop in spend.

When it came to video, however, brands jumped onboard. Overall video ad spend was up 8%.

In March, over 2500 brands bought online video advertisements. Of these brands, many accelerated their previous spending.

Notable brands that boosted their online video spend include:

• Masterclass spent over $1M in online video in March after doing very little in February.
• Microsoft Teams is up 57% month-over-month.
• Pandora spent over half a million in March on online video — after no online video spending in February. 

For more updates like this, stay tuned. Subscribe to our blog for more updates on coronavirus and its mark on the economy.

But Hollywood and its streaming partners are some of the most influential brands to bolster their ad push. 

The following outlines MediaRadar’s findings and some examples of how companies are moving at lightning-speed to accommodate our new homebound lives.

We encourage you to subscribe to our Blog for the latest data surrounding the advertising industry. We will provide daily updates as COVID-19 continues to make its mark on the US economy.

Subscription streaming dramatically increased spend as March started. 

Just as the month started, subscription streaming services such as Netflix, Amazon Prime Video, and Hulu increased their spend.  The first week of March, starting on Monday, March 2, was the highest single week of spend in the past 6 months. This was 155% more than any of the prior three weeks.

• The primary contributors to this increase are Amazon Prime Video and Hulu. Combined, they’ve spent $29M in advertising to promote their shows during the first two weeks of March.
  
  
• Ad spend during the first two weeks of March 2020 from subscription streaming services was up 34% YoY.
  
  
• Hulu releases new content throughout each month, but unlike Netflix, it’s greatly concentrated at the start of the month.  But Hulu’s concentration has never been so intense as this month.
  
  
• Streaming services have had a surge in downloads from the countries most impacted by Coronavirus (as reported by mobile-insights company Sensor Tower). During the 1st week of quarantine, Amazon Prime Video saw a 2x increase in downloads from the week prior, and Netflix was up 60%. Armed with this knowledge, it’s possible these services will look to up ad spending in the US to capture the attention of viewers stuck at home.

• As theaters are shutting down, new movie releases are rolling out to streaming services earlier than expected. Frozen 2 was introduced on Disney+ early, the latest installment of Star Wars is available for purchase early, and new movies including the The Invisible Man, The Hunt and Trolls World Tour will go direct to rental, approximately 90 days early.
  
  
• Additionally, new streaming services are launching. Quibi is launching April 6 and running TV ads now. Peacock and HBO max ran campaigns a few months ago, but haven’t since. Will they accelerate the launch given everyone is at home?

MediaRadar will continue to share the latest data on how companies quickly adjust their advertising spending in response to Coronavirus. Subscribe to our blog for the most recent information for publishers.