Content comes at a high price. However,not every media company secures the corresponding level of attention for such a massive investment. An interesting comparison is provided by a look at the spending of the world’s largest TV and streaming platforms. On average, they spend two billion dollars on content for every 1% of TV airtime.
A comparison of content spending against TV airtime share for the 10 leading media companies yields interesting results. YouTube and Fox spend approximately one billion dollars for every percentage point of TV airtime. Netflix, Paramount and Warner Bros. Discovery are in the region of two billion dollars. Disney spends three billion dollars. Amazon and Comcast each reach five billion dollars. And then there is Apple, which spends as much as 20 billion dollars for a 1% share.
What does this tell us? Higher spending does not guarantee greater attention. The real winners, therefore, are those who understand where their audience actually is, and not just how much content they can produce.
These comparisons should be of interest to any advertiser allocating their budget across these platforms. The real question is not how much content exists. It is about how effectively this content captures attention. Moreover, as further figures show, attitudes towards subscriptions are slowly changing in the streaming world. Individual companies are finding that their most valuable customers are not necessarily those who pay the most. Increasingly, they are , on the contrary , the viewers who watch the most content.
Advertising in streaming will have the same impact as on traditional television
Advertisements are sold based on viewing figures – in other words, the more time a subscriber spends watching, the more revenue that viewer generates. “It’s a double win,” said Kevin Krim, President and CEO of EDO, a company that measures the impact of advertising on both streaming services and linear television. “If a subscriber engages with both the content and the adverts, they will have at least the same, if not greater, value than subscribers without adverts,” added Krim.
After years of resisting advertising, Netflix is now focusing heavily on this model and rapidly expanding its advertising activities alongside its subscription service. In March, Netflix in the US raised prices for the second time in just over a year, bringing the price of its standard ad-free plan to around $20 a month, compared to the ad-supported plan at $9.
According to an analysis by EDO, a subscriber with adverts who pays $8.99 a month can generate total monthly revenue of approximately $12.89 after 10 hours of viewing, $16.79 after 20 hours, and approximately $20 after roughly 28.5 hours. With approximately 41 hours of viewing, this subscriber can generate monthly revenue of nearly $25, which is significantly more than the payment for an ad-free subscription.
The growing importance of viewers watching adverts was recently confirmed by one of Netflix’s directors, Greg Peters, who stated that one of the company’s main goals is to narrow the gap between ad-free subscribers and viewers with adverts.
Source: mediaguru.cz