Streaming Platform Ought to Focus Extra On Time Spent


Why are there so many loss-leading streaming providers?

Blame it on Bob Iger.

“It was Bob Iger’s fault, and I imply that within the nicest method,” mentioned LightShed Companions Co-Founder Wealthy Greenfield, talking at CTV Join in New York Metropolis on Wednesday.

“He was so darn profitable on Day One,” Greenfield mentioned.

Disney launched ad-free Disney+ within the US on November 12, 2019. Inside 24 hours, it had greater than 10 million subscribers. By Q1, that quantity had doubled after which some.

However one thing else additionally occurred in Q1: The pandemic hit, and folks had been caught at dwelling. Time spent watching streaming content material skyrocketed.

Different broadcasters watched this dynamic play out from the sidelines and wished a few of that magic for themselves. NBCU’s Peacock, HBO Max and Paramount+ all launched in brief order.

Swimming upstream

But it surely grew to become fairly clear fairly rapidly that working a profitable (which is to say, worthwhile) streaming service doesn’t take magic; it takes an enormous ongoing funding.

Infrastructure, content material, licensing, promotion and managing subscriber development prices billions of {dollars}.

“Everybody was like, ‘Oh my god, that is the way you get your inventory to work – you soar into streaming, and so all of those providers soar in,” Greenfield mentioned. “After which everybody realizes this can be a lot tougher.”


AdExchanger Every day

Get our editors’ roundup delivered to your inbox each weekday.

Peacock, for instance, has misplaced within the neighborhood of $8 billion because it launched in 2020. Neither Paramount+ nor Disney+ (which now has an ad-supported tier) are worthwhile. After shedding billions, Warner Bros. Discovery managed to show a modest revenue final yr – its streaming unit earned $103 million in 2023 – however WBD completed this feat by means of ruthless cost-cutting.

And so it’s not stunning that each main streaming service – together with Netflix and Amazon Prime – has launched promoting as a income booster.

The ARPU equation

Again within the day, as within the heyday of linear TV, it was onerous to think about a greater enterprise than the standard multi-channel cable package deal.

Folks pay someplace round $100 a month for entry to a bundle of channels, practically all of which carry roughly 18 minutes of commercials per hour. “That’s an advertiser’s dream,” Greenfield mentioned.

However streaming is a distinct animal. Streaming providers can’t depend on ad-free subscriptions alone to achieve full market penetration, at the very least not at an inexpensive month-to-month value level.

“You want promoting to develop the pie,” Greenfield mentioned.

And to become profitable from promoting, viewers have to spend time truly watching stuff – which may be very totally different from a linear channel that’s a part of a cable package deal.

If somebody subscribes to HBO (as within the linear HBO channel, not the Max streaming service) and solely watches one present the complete yr – or doesn’t even watch a single minute’s price of content material – that individual continues to be a worthwhile subscriber.

However for an ad-supported, on-demand streaming service to generate wholesome common income per consumer (ARPU), it wants engagement, engagement and extra engagement.

Time spent is cash earned

Weirdly, although, most streaming platforms aren’t leaning as closely as they need to be into “time spent” as a key metric, like YouTube and Netflix do, Greenfield mentioned.

And the proof is within the pudding, he mentioned, pointing to the Paramount+ Important plan, which prices $5.99 a month. The ARPU doubtless isn’t a lot increased than that.

“They simply don’t have sufficient day by day engagement,” Greenfield mentioned, “in order that they’re not driving sufficient time spent to have the advert CPM scale up.”

Examine that to Netflix, which has a $6.99 per thirty days ad-supported tier and generates greater than $16 in income per consumer a month within the US and Canada.

“That’s as a result of individuals truly are watching two plus hours each freaking day,” Greenfield mentioned.

If a streaming platform is extra centered on subscriber depend than time spent – and plenty of are – then they’re doing it mistaken.

“Subscriber acquisition is nice,” Greenfield mentioned. “However for those who don’t get individuals to make use of it, does it actually matter?”


Please enter your comment!
Please enter your name here