2023 to be turbulent year for big SVOD | Media Analysis | Business | News | Rapid TV News
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A study note from Rethink Research is predicting volatility in the subscription video-on-demand sector over the course of the next twelve months with the introduction of advertising-based SVOD muddying waters to the advantage of market leader Netflix.
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The analyst notes that the turbulence will see all SVOD players under pressure from investors eager for them to start turning profits, a big ask in what are uncertain times in many economies. It added that in terms of financial visibility and performance metrics, investor sentiment be pushed towards the second tier of SVOD which will likely embrace bundling and operator partnerships and gain ground on the upper tier.

In addition, the study expects more complexity from the trend of AVOD platforms offering ad-free subscription packages, the exploration of live content, the arrival of FAST and the issue of accurately defining both services and customers.

Rethink predicts that 2023 will see something of a clear divide emerge between the two different strata in SVOD. At the top of the pile, the incumbent services will have to try and monetise the freeloaders on these accounts, while simultaneously not offering a free-to-access tier. This will mean said the analyst that they will rely heavily on free trials, which will attempt to use a free window to prove the value of the service to someone that has effectively just been kicked off. The problem said Rethink was that this occurs at a time when there is no shortage of direct VOD rivals and in a surge of FAST alternatives.

As such, the SVOD platforms are going to have tens of millions of consumers on some form of trial account, at any one time, as they try to convert them into paid-up subs. Investor pressure will likely encourage them to pump up their figures, and so tracking their actual performance is going to be difficult, especially as this pool of non-committal viewers could be larger than the entirety of the second tier of SVOD services.

Rethink placed Netflix and Disney as indisputably part of the upper tier of the new SVOD , with the looming amalgamation of HBO Max and Discovery (expected to be called Max) rounding out a trio.

While it cautioned it would be going too far to call the times a new era, Rethink stressed there was definitely a new opportunity for the streaming minnows to aggressively expand their reach via bundling and operator integrations. That is, while the large operators were floundering, trying to manage their advertising evolutions, the nimbler services should be able to swoop. It added that those that were quite happy to see their libraries accessed from different frontends can outmanoeuvre their larger rivals – and poach viewers from the freeloader exodus.

Concluding, Rethink Research said that Disney, Netflix, and Warner Bros. Discovery were going to find that miniscule advertising discounts were not enough to keep churn-risk customers around in an era of immense competition. It expected Netflix to highlight its profitability, to turn the investment community against its largest rivals, while the smaller streamers turn to collaboration and distribution with operators as a way to quickly expand.