Originally published on Mumbrella.com.au
With the intensifying VOD competition and inflation’s effect on players in the industry and their subscriber base, Mumbrella’s Emma Shepherd speaks to Ori Gold, CEO, and co-founder of Bench Media to share insights on what will impact the future of VOD in Australia, as well as the implications of the rising popularity of AVOD on SVOD’s growth in Australia.
For the Video-On-Demand (VOD) industry, the future has become uncertain, as industry players face fierce competition and rising subscriber abandonment, with consumers ditching their subscriptions amidst rising inflation.
Netflix’s recent disclosure of its first quarterly drop in subscribers in more than a decade has thrust the industry into turmoil as the streaming giant warned that subscriber losses would continue in the near term.
With consumers increasingly likely to cancel their subscriptions or turn to less expensive ads-based options, how then, can Streaming Video-on-Demand (SVOD) providers such as Netflix, Disney Plus, Stan, and Foxtel position themselves against advertising-supported video-on-demand (AVOD) providers? How will the current VOD landscape affect brands’ marketing and advertising campaigns on these platforms?
Speaking to Mumbrella, Bench Media’s Ori Gold says,
We already see a slowdown in all the regions and players in terms of subscription growth. It’s so easy today to do so and this is the main driver for all large players looking at ad-supported models. This is definitely a sign of maturity after many years of disruption.
While this competition remains to increase at a rapid rate, Gold says this also makes it harder to monetise these platforms while keeping up with the increasing cost of content production and technology development.
“Without sponsors or advertisements, the company’s profitability will keep eroding,” Gold admits. “This means that large streaming platforms, with their huge investment in tech and content, will have to continue to raise prices on their subscription plans, continue to crack down on different users sharing one plan, and as we see happening on all global platforms besides Apple TV, introducing ad-supported tiers as a gateway for these users.”
In April, this year, Netflix said it was set to introduce an advertising-supported subscription offering. During the company’s quarterly earnings call in the US, the CEO said the company was open to an advertising-supported subscription model in the near future after years of rejecting calls for an ad-supported streaming tier.
As for the future of VOD in Australia, since Netflix entered the Australian market in 2015, VOD services have become more and more popular.
The 2021 Media Consumption Survey by the Department of Communications, reported in January that SVOD services had overtaken commercial free-to-air television as the most popular way to consume screen content, with 62% of respondents using SVOD services compared to 58% using commercial free-to-air TV.
But this led to a significant drop in viewership of Australian content and productions. Gold thinks the entry of local players into the streaming marketplace improved it slightly, but not near what it was before.
Read the full article which appeared on Mumbrella.