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And in November, We Streamed with Ads

In November, advertisers were thankful for streaming.

Though we’re not exactly in the golden age of video advertising, the second-to-last month of 2023 provided a beacon of hope for streaming’s new revenue stream. Antenna, a research firm dedicated to the subscription economy, says November 2023 was the first month ever that most premium-SVOD (subscription video on-demand) signups were for an ad-supported tier (as opposed to a commercial-free plan).

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It is an “important milestone,” they note. Indeed.

What is was not was a landslide: 51 percent of the category’s signups went to a plan with ads. (By comparison, the October 2023 split was 60/40 in the other direction.)

In all, November tallied 11.2 million industry-wide signups to ad-supported streaming plans — itself a record high. All of this two months ahead of Amazon Prime Video, one of the streaming industry’s leaders, launching its own advertising-supported tier. (There, the default option — for existing subscribers at least — will include commercials.)

But why November? A few reasons. First, ad-supported tiers have just been around long enough — and exist as an option on enough services — now. Adoption of any new technology (or new concept within that technology) takes a while. Plus, you can’t select any option if you don’t know it exists.

Second: the holidays are simultaneously a time for literal belt-loosening and financial belt-tightening. If every pound does not count from Thanksgiving to Christmas, every dollar certainly does.

The day after Thanksgiving, Black Friday, individually loomed large here. Black Friday and Cyber Monday 2023’s streaming promotions were (almost) all about the ad tiers. With the notable exceptions of Netflix and Discovery+, every service that offered both ad-supported and ad-free plans slapped the promotions on their ad-supported tiers. (Netflix has a non-monetary ad-supported incentive going now — see here.)

Peacock (3.3 million new ad-supported signups in November) and Hulu were the big winners; the two combined for nearly one-third of all premium-SVOD signups. NBCUniversal’s Peacock was the fastest-growing service of the year; see below.

Consumers dug the Black Friday deals — and the streaming services were fine with them too.

Streamers tend to prefer customers select an ad-supported subscription over their higher-priced commercial-free counterparts. That may seem counterintuitive — and almost generous on the part of the streamers — but it’s not.

Despite an ad-free plan costing a consumer more money per month, streaming services tend to make more overall from an ad-supported subscription. Your (lower) month subscription price + your ad load = more money on the top line of a streamer’s income statement. This key metric is known as ARPU, or the average revenue per user. (Netflix calls it ARM: average revenue/member. They get to be different because they’re Netflix.)

Streamers generally seek the highest ARPU possible, regardless of how they get it. (The comp can get a bit more cloudy if there is an advertising partner involved in a revenue split.)

Antenna’s November findings do not signal the death of ad-free streaming. Rather, they are just the latest data point in streaming users choosing to diversify their portfolios. As any investment adviser will tell you, it’s the right way to go.

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