Several streaming properties and trends are gaining prominence in the television performance space. As we approach the end of 2023, the media team at Modus Direct wanted to review the CTV landscape and identify what is currently “winning” in and gaining traction the space and what industry trends are running into challenges indicating a potential downturn in 2024?
Winning Trends in Connected TV
Below are some key Connected TV properties and trends that are winning in the television performance marketing space:
Ad-Supported Services: Some streaming platforms offered free, ad-supported tiers alongside paid subscriptions. This approach attracted viewers who wanted to access content without a monthly subscription fee.
FAST Channels: Free Ad-Supported Streaming TV have become increasingly popular as viewing behaviors shift from traditional linear television to connected television
Original Content: Streaming platforms like Netflix, Amazon Prime Video, Disney+, and Hulu are investing heavily in creating their original content. The original series and movies are attracting subscribers and critical acclaim.
User-Generated Content (UGC): User-generated content platforms like YouTube, TikTok, and Twitch are experiencing significant growth. These platforms allowed individuals to create and share their content, which resonated with younger audiences.
Personalization and Recommendation Algorithms: Streaming platforms are using sophisticated recommendation algorithms to curate content for individual users. This helped keep viewers engaged and discover new content they might like.
How are advertisers capitalizing on these wins?
FAST channels provide viewers with free streaming content supported by advertisements. As mentioned, advertisers are actively exploring opportunities on FAST channels, particularly as viewing behaviors shift from traditional linear television to connected television. Some examples of these platforms include Pluto TV (owned by Viacom), Tubi TV (owned by FOX), and Roku Channel.
FAST Channels allow for changing viewing behaviors; Consumers are moving away from traditional cable and satellite TV towards streaming services. FAST channels provide advertisers with a way to reach audiences who have embraced streaming as their primary mode of entertainment.
Most importantly, Advertisers are attracted to the cost-effective nature of advertising on FAST channels. The ad-supported model allows them to reach a large audience without the need for viewers to pay for a subscription.
In addition, these channels allow for targeted advertising. Streaming platforms often collect vast amounts of user data, allowing advertisers to target specific demographics with more precision. This targeted advertising can lead to higher engagement and conversion rates.
Streaming platforms provide advertisers with the flexibility to experiment with different ad formats, placements, and creative approaches. This can lead to more innovative and engaging advertising campaigns.
Challenges in Connected TV
Connected TV platforms face several challenges in the highly competitive and rapidly evolving digital media landscape. These challenges can impact their ability to attract and retain subscribers, provide high-quality content, and remain profitable. Some of the key challenges include:
Content Costs: Acquiring and producing high-quality content is expensive. Streaming platforms often face rising content acquisition costs, particularly for exclusive or original content. Balancing content spending with profitability is a constant challenge.
Competition: The streaming market is saturated with numerous platforms, each vying for subscribers. The competition for viewers’ attention and dollars is fierce, making it challenging for platforms to stand out. Will we see platform consolidation in 2024?
Subscriber Churn: Retaining subscribers is crucial for streaming platforms. High subscriber churn rates, where customers cancel their subscriptions, can erode a platform’s user base and revenue.
Monetization Models: Finding the right balance between subscription-based, ad-supported, and freemium models can be challenging. Platforms need to determine how to generate revenue without alienating subscribers with too many ads or high subscription fees.
Password sharing: Password crackdown in 2023 across services drove a decrease in sharing accounts with friends across Netflix, Disney+ and Amazon in 2023, while also decreasing users.
Addressing these Challenges:
Addressing these challenges requires ongoing innovation, investment, and a deep understanding of the evolving media landscape. Successful streaming platforms are those that stay ahead of the curve by investing in innovation, technology, and user experience while remaining adaptable to changes in the media and regulatory landscape. This requires a holistic and dynamic approach that considers both content creation and the technical infrastructure supporting the platform. With more and more large network bases broadening into FAST channels, Modus Direct is capitalizing on these data advancements and advertising opportunities.