Subscription Services and the Demise of Traditional TV
Blockbuster had it’s moments - Going into the video store with New Releases was a huge thing for home entertainment. Being able to walk in, pick out 1 or 2 videos, buy popcorn and candy was essentially saving so much money from taking a whole family to a movie. New release windows increasingly became shorter, and “home entertainment” as we knew it changed. When Redbox and Netflix launched, subscription services felt like the way to go.
The demise of traditional TV and TVOD may have been when subscription services began with Netflix. Wait a second, we can watch a whole movie without “paying” a rental fee? If I watch 3 movies, that would be the cost of one whole month of a subscription fee! That began the end of truly “free” TV as we knew it. No doubt, there is an influx of subscription services out there and it has gotten to a point where cutting cable TV was inevitable.
But with so many subscription services, it has reached a point where paying an extra $4.99 here and there is becoming too much. As AVOD and OTT has become how people view content and Freemium and Free TV came to play, it became the new school TV-Over-the-air. Premium content, once the untouchable on free platforms, have made more revenues on AVOD than it ever did on SVOD and TVOD. Were people willing to sit through 16 mins of ads? The answer is a complete YES. Not only that, it gave a platform for content players that were a little out-of-the-ordinary. The familiarity of watching ads became apart of our DNA thanks to Youtube, and free models, very much like the traditional old school OTA.
As AVOD and OTT become increasingly more popular over-saturation and the rise and fall will surely come… or will it?
This chart from Chartr speaks volumes:
It is clear that we all subscribe to more services than what we would think is “normal”. A cord cutter is more likely paying far less per month for content. Because of this, streaming services will surely begin to bundle content partners as a way to support some of the more niche offerings.
The competition viewing time from these various platforms will follow economic trends… if there’s demand, price will go up. If there’s too much inventory, it will go down.
This Chartr shows that the streaming services landscape is becoming saturated, while a viewer is increasingly willing to have more services. It will hit a tipping point and bundles are next up. The best way to maximize on these bundles is to begin bundling AVOD right now.
Quick personal research showed the real truth on how much I was spending… a total of $114.95 apparently. Below, the first 5 services are what I currently pay for, which I like to believe is general consensus amongst geriatric millennials like myself.
| Platform | Basic plan - cost | Tier 2 - cost | Tier 3 - cost | optional add on |
| DirectTV | 79.99 basic plan | |||
| Disney+ | 7.99/mo | 13.99/mo - disney, hulu, espn bundle | ||
| HBO Max | 9.99/mo with ads | 14.99/mo ad free | ||
| Hulu | 6.99/mo with ads; 12.99/mo ad free | 69.99/mo for live tv, disney, espn bundle | 75.99/mo live tv, disney, espn no ads | |
| Netflix | 9.99/mo - Basic | 15.49/mo - standard | 19.99/mo - premium | |
| Amazon Prime | 8.99/mo without prime | 14.99/mo included in prime subscription | ||
| Apple TV+ | 4.99/mo | |||
| Crunchyroll | Free - basic plan with ads | 7.99 - fan membership | 9.99 mega fan membership | 14.99 ultimate fan membership |
| ESPN+ | 6.99/mo | 69.99/year | ||
| FuboTV | 69.99 Pro - 114 channels | 79.99 Elite 168 channels | 32.99 Latino 40 channels | |
| Funimation | Free - basic plan with ads | 5.99 - premium | 7.99 premium plus | 99.99/year premium plus ultra |
| Paramount+ | 4.99/mo with ads | 9.99/mo ad free | ||
| Peacock | 4.99/mo - premium | 9.99/mo plus (ad free) | ||
| Philo | 25.00/mo - basic plan | 5 movie channel add on - +$3/mo | 3 epix channel add on - +$6/mo | 3 starz channel add on - +$9/mo |
| Plex | Free - basic plan with ads | plex pass - 4.99/mo | ||
| Sling TV | 35.00/mo - blue or orange plan | 50/mo for both | ||
| Spectrum Cable | 49.99/mo - Select 125+ channels | Silver 175+ channels - 79.99 | Gold 200+ channels - 99.99 | |
| Starz | 8.99/mo | |||
| Youtube Premium | 54.99/mo first three months | 64.99/mo thereafter | ||
| Total Spend all Channels | 394,85 |
At this point, what are people willing to pay (or not pay) for content? With the increasing hours watched in OTT, we will definitely see a good mix of everything. AVOD viewers are not exclusive only to AVOD and SVOD the same. It is a good idea to diversify your viewing portfolio and do a mix of offerings for certain audiences.
Here at FAST Channels TV we can help guide you to what makes the most sense for your target audience. If you have a loyal fanbase, it might make sense to incentivize with extra content and behind the scenes content with an AVOD model, but don’t be too quick to discount your content either by having exclusives on an SVOD model. If this is a marketing play, there’s ways to maneuver initiatives there as well.
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