Streaming Wars: Why SVOD Services and On...

While cable services may be on life support, the simple truth is that live TV captivates audiences in ways on-demand content can’t. Maybe it was the anticipation that came with watching Roy Halladay fan 11 Marlins hitters in a perfect game for the Phillies back in 2010, or the anxiousness that occurs watching state-by-state election results roll in on a Tuesday night in November. The bigger point is that while on-demand content has become a big part of our daily viewing habits, live television and the revenue companies generate from those audiences is undergoing a renaissance.

“In order to do business, in order to have the things we need, we need to generate revenue somehow. So the payment for what happens, and the ability to create content, pay artists, funding great content has to come from somewhere. Either people have to pay for it through subscriptions directly, which is the SVOD space, that’s Disney+, Netflix, and the HBO Max, or they have to be willing to accept advertising because the advertisers are paying for the value there. These are the tensions in the trade-offs.”

Those tensions are creating an interesting dichotomy between traditional cable viewers and the trendiness that comes with being a cord cutter. But it's also generating an even larger divide in how media companies distribute their advertising dollars. On this episode of Marketing Trends, Mike Woods, the SVP of Product for Amagi Corporation, joined me on Marketing Trends to discuss how media companies are approaching their ad buys when it comes to live streaming services, and why SVOD services such as Netflix and Disney+ are bucking traditional advertising with subscription based models. Enjoy this episode!

Main Takeaways

• Can We Just Drop That In?: Dynamic ad insertion is providing advertisers with the ability to insert advertisements within movies and television shows that was not possible on traditional cable networks. With traditional cable advertisements, media companies had to buy based on show demographics, which drastically limited their reach. With streaming services, advertisers now have the ability to drop in quick mid-rolls and post-roll advertisements that they are able to strategically target to various homes or audiences.
• Digital Divide: While streaming services have made dynamic advertisement a core component of their business model, there is still a big divide between how advertisements are sold on live streaming platforms. Oftentimes, agencies will have specific departments devoted to cable TV and another to digital advertising, which is causing companies to skew their decision making one way or another. Until these two areas are housed together, media buying for these companies will continue to not deliver a holistic audience.
• Is It Worth It?: The general assumption when SVOD services such as Netflix were born is that consumers were paying less for individual subscriptions than they were for entire cable subscriptions. But as companies have adopted similar models and invested in streaming services with their own platforms, the cable TV model of paying for individual channels has been replicated, with consumers often paying more for individual subscriptions as a whole than they were for their cable subscriptions.

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