The year in ad-supported streaming

Rewind a year: Netflix and Disney+ didn’t have ads and hadn’t officially announced plans to incorporate them. Netflix predicted 8% subscriber growth to 224 million in its first quarter. CNN+ didn’t exist. Fast forward to the present day: Netflix and Disney+ both have ads. Netflix just hit 223 million subscribers in its third quarter after multiple quarters of losses. CNN+ doesn’t exist (it only lasted a month). For all of its hardships, the pandemic was an opportunity for streamers to gain mass appeal as consumers looked for new sources of entertainment while in lockdown. But those platforms were brought back to reality in 2022. The loudest alarm bells began sounding with Netflix’s first-quarter earnings, when, rather than reporting a continuation of its growth trajectory, the industry behemoth instead revealed it had lost 200,000 subscribers—its first drop in over a decade—with more losses predicted (spoiler: it wasn’t as bad as feared). Check out the latest Ad Age events and award programs But stay tuned in 2023, which promises to be a landmark year in ad-supported streaming as well—Apple TV+ remains the last major service without a lower-cost tier. Warner Bros. Discovery is set to debut its combined HBO Max/Discovery+ service in the first half of the year. Comcast and Charter’s joint streamer, maintaining the name of Comcast’s FAST platform Xumo, has revealed little details. As competition has grown more fierce among streaming platforms, viewership continues to accelerate overall, according to Nielsen’s latest edition of The Gauge. The report, collecting insights from October viewership, found that overall TV usage is up nearly 3% year-over-year, with streaming holding the largest share (over 37%) of consumption over broadcast and cable. Compared to October 2021, streaming viewership is up 35%, while broadcast and cable are down 6% and 8%, respectively. This continues streaming’s dominance over linear TV that began in August of this year. Ad Age Year in Review 2022 The year's biggest news, trends and takeaways Click here Perhaps the biggest surprise of the year came when during that same first-quarter conference call: Netflix’s co-CEO Reed Hastings revealed the streamer would explore adding advertising “over the next year or two” (one can’t help but chuckle re-reading these words in retrospect). Outside of needing to mitigate subscriber churn, one of Hastings’ explanations for Netflix’s sudden interest in ads: “Disney’s doing it.” Indeed, just a month earlier, Disney had announced it would bring ads to Disney+, although less of a surprise as the media company has never been staunchly opposed to advertising as Netflix had been previously. In December, Disney+ announced that over 100 advertisers bought inventory for its ad-tier debut. Over the year, it’s become clear that the effects of inflation and recessionary fears have dramatically impacted the streaming marketplace. Consumers are cutting costs and being increasingly selective about monthly bills, creating a Catch-22 for platforms, as the necessity to cut production costs coincides with the need for more subscriber revenue. This conundrum is exemplified by Disney’s recent CEO bombshell, the exit of Bob Chapek for the return of his predecessor Bob Iger, after the company reported $1.5 billion in operating losses in its direct-to-consumer platforms during its fourth quarter. Both Disney and Netflix hope to offset some losses by welcoming advertisers, despite streaming posing continuing obstacles for the TV ad business, such as measurement, consumer privacy and data transparency. The explosion of digital inventory, however, holds promise for advertisers as it creates more avenues to expand a brand’s reach and offers more opportunities for adjacencies to premium content.

The year in ad-supported streaming

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