Antenna Insights On The Subscription Economy

This week welcomed the latest Amazon Prime Day and, in recent years, it’s served as a major marketing moment in the video category with discounts to drive subscriber acquisition. Antenna has previously reported that some streamers have seen as many as 20% of their new customer sign-ups coming through price promotions similar to those offered during Prime Day. But with an increased focus on profitable growth, streaming services need a deeper understanding of the nuanced impact these marketing programs have on acquisition, loyalty, and customer lifetime value.

For the past fifty years in many markets, including the U.S., the video industry has functioned primarily on a dual revenue-stream model. In other words, television networks and pay-TV operators have shared the revenue that consumers paid for access subscriptions, and have also shared the revenue generated by advertisements that ran during the programs.

Ad-supported plans have rapidly become an important part of the streaming video market, currently accounting for 25% of all Premium SVOD subscriptions. And they are especially critical to acquisition: ad-supported plans now make up nearly one-in-three new sign-ups.

Since alerting subscribers in the United States that it would begin to curb password sharing on May 23, 2023, Netflix has had the four single largest days of U.S. user acquisition in the four and a half years that Antenna has been measuring the streaming service.

Last week, some of the biggest media companies presented their planned programming slates to advertisers during the 2023 Advertising Upfronts. Where brands and media buyers ultimately decide to put their money will continue to be hashed out through the summer, but without a doubt the increase in ad-supported streaming plans has created more opportunities for advertisers to reach U.S. consumers. And looking at Antenna data, ad-supported options are likely here to stay.

Conventional wisdom would say that consumers who pay for SVOD services don’t want to sit through advertisements, so here at Antenna we decided to take a closer look at the choices consumers are making around ad-supported and ad-free Premium SVOD.

When most people in the media industry talk about the “streaming wars,” they are referring to the battle between SVOD services for Subscribers. But an increasingly important battle (or is it the war itself?) is the competition for the customer relationship.

More streaming services are offering ad-supported plans -- just this week AMC was the latest to announce its offering -- as the role of advertising continues to grow in importance to Premium SVOD Services and their profitable growth strategies. In 2020, only one in five new Gross Adds were to ad-supported plans; last year, it was nearly one in three.

In our last post we unveiled a new quarterly report series we’re calling “Antenna’s State of Subscriptions,” with the first installment looking at Premium SVOD. As the market for Premium SVOD increasingly looks to focus on profitable growth, pursuing scale will continue to be an important factor.