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MayoSeitz Media Monitor

An Advertiser’s Guide to the Streaming Wars

The number of streaming services available for on-demand entertainment is a dream come true…until realizing there are way too many options. Besides the early streaming mainstays (Netflix, Hulu, Amazon Prime Video), a barrage of new platforms have emerged since 2019…first AppleTV+ and Disney+, then Peacock and HBO Max, and now discovery+ and Paramount+. For marketers, it can be cumbersome trying to ascertain what streaming services customers are using, and if advertising is even available.

Good news! After years of ad-free subscription services like Netflix dominating the streaming video landscape, ad-supported Video-on-Demand (AVOD) is gaining traction. Most new streaming services have low or no cost ad-supported tiers. HBO Max is the latest to announce an ad-supported option.

So, let’s take a look at the AVOD market and where the opportunities exist for advertisers.

User Statistics

  • Unprecedented streaming growth in 2020 drove user penetration to 68% of the total population
  • The majority of streaming video users (92%) paid for subscriptions
  • The average US household subscribed to four streaming services in 2020, per Juniper Research
  • In January 2021, 34% of video streaming in US streaming capable homes was through ad-supported services, up 6% from the prior year, per Nielsen
  • Data shows that viewers are willing to watch ads in exchange for paying less for streaming video content; ad-supported options offer users an affordable way to subscribe to multiple services

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Main Streamers focusing on those with AVOD offerings

Advertising Opportunities

Hulu is among the most established platforms, considered one of the “Big 4” and accounting for a large share of total streaming viewership. With next-day access to most primetime shows plus a slate of original programming, Disney-owned Hulu touts a strong subscriber base and offers advertisers maximum flexibility with a host of proven commercial formats, continuously unveiling new ad units.

NBCUniversal’s Peacock was introduced on a limited basis on April 15 of last year before launching nationally on July 15. While still unavailable on Amazon’s Fire TV, the streaming service saw strong growth in Q4 adding 11 million sign-ups. Continued growth is expected in 2021 with the addition of high-profile content like "The Office" and the upcoming Tokyo Olympics. Advertisers beware! With five minutes of ads per hour and a variety of special commercial formats, NBCU will seek primetime rates.  

WarnerMedia’s HBO Max had a sluggish start after its May launch, but has since seen an uptick thanks to expanded availability on popular connected TV platforms (Roku, Amazon Fire TV), an exciting content lineup, and the release of Warner Bros. movies at the same time they hit theaters. A lower cost tier will be available in June. Subscribers to this ad-supported version will not have access to theatrical film releases, and HBO programming originally airing without ads will remain commercial-free. The highly anticipated ad-supported option is reported to have $80 million in upfront advertising commitments.

Discovery debuted its standalone streamer, discovery+, on January 4. Discovery+ carries over 50 original programs and a library of over 55,000 previously aired episodes from HGTV, Food Network, TLC, Animal Planet, and other Discovery-owned channels. Magnolia Network, Discovery’s joint venture with home-arts celebrities Chip and Joanna Gaines, will debut on discovery+ on July 15. The ad-supported version of discovery+ runs limited commercials with five minutes of ads per hour.

Paramount+, ViacomCBS’s reimagined CBS All Access platform, launched on March 4, featuring more than 30,000 episodes from BET, CBS, Comedy Central, MTV, Nickelodeon, and others. Paramount+ will bring some theatrical releases straight to streaming during the pandemic, but afterwards it will wait 30 to 45 days, relying instead on its content library to attract users. Initially, the service is available only at the premium tier. An ad-supported tier will be available in June, with users having less access to live news and sports and a smaller content library. If limited content and heavy ad loads detract from the user experience, it could push people to upgrade and lessen advertiser appeal.

And as if this is not enough, Roku announced a new branded content studio for custom ads including short-form, ad-sponsored TV content, interactive video ads, and other branded assets. The streaming platform, with 51.2 million active accounts, will share details during its May 3 NewFronts presentation.

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Mary Tyrrell