For major legacy TV brands, pricing their advertising options can be tricky.
For streaming platform owners, the bet is that the modest monthly fees versus that of bigger, no-ads, subscription fees
will not erode overall revenue projections.
At the low end, at $4.99 a month, we have Paramount+, Discovery+, and Peacock. At $6.99, we have Netflix. A dollar higher, at $7.99, are Disney+ and
Hulu. Top pricing for ad-supported service is HBO Max, at $9.99.
How do consumers shop with these numbers in mind? Do they sense HBO Max is twice as valuable as Paramount+?
And what
about Netflix and Disney+ -- the presumed market leaders according to many, which are virtually tied?
Consumers adjust to perceived value -- as well as for their most favorite returning shows
on a service. If legacy TV companies are giving streaming content away for free, how valuable is it really?
Now, let's drop down a bit to other services: Consider Fox Corp.-owned Tubi and
Paramount Global's Pluto TV. Both completely free, ad-supported services. What's the real value there?
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As Tom Rogers, executive
chairman of Engine Gaming & Media, said recently on CNBC, it's all about “engagement.” For many that specifically means how many total hours are spent on the service over a given
period.
Far and away, Netflix has the highest engagement.
In plain-speak, it's all about high-performing programs. Look at any of the weekly Nielsen measured data for streaming shows
for example. Netflix still dominates in almost every category.
If you are a consumer who wants the most bang for their buck, at $6.99 for Netflix's ad-supported option that can be a deal --
especially as it appears the bulk of Netflix original programming will find its way there.
And the question we are asking going forward is what Disney's returning CEO Bob Iger can do to beat
Netflix when it comes to its ad-supported options -- or even whether he should. Surely the legacy TV mode of releasing one episode per week for new original shows might be in need of a
change.
At the other end of the spectrum, HBO Max is at $9.99. Will that amount to anything? Do consumers have a sense that this ad option works for them?
Warner Bros. Discovery plans
to merge HBO Max with Discovery+ next year, which in theory could be strongly marketed to consumers as being more valuable -- especially at the same $9.99 price tag.
At the same time, premium
streamers will continue to push more of their full-fledged ad-free subscription platforms -- to continue highlighting one key financial measure to investors -- average monthly revenue per paid
subscriber.
In a possible recessionary period amid a continued weakening TV-video advertising market, it's key to always keep the money rolling in -- no matter where you get it from.