It’s no secret that Netflix has had its share of financial woes in recent months. They were the first and biggest streamer to hit the market, and were dominant for many years. Yet, as other streamers such as Hulu, HBO Max, and Disney+ have come to market, Netflix has been losing subscribers. One of the ways they’re looking to make up revenue by luring back old subscribers and wooing new subscribers, is to offer a lower-priced advertising tier.
We don’t yet know how this will shake out, but it’s worth revisiting a topic Media Link Software wrote about in 2019, a lifetime ago in the streaming world: evaluating OTT. Many of these streamers rely exclusively on subscription fees, as Netflix has, but many rely on advertising revenue as well. This means advertisers have more opportunities for video ads than ever.
OTT (Overt the Top Television) is video content distributed through the internet, bypassing cable, satellite, and broadcast transmission. While we occasionally still hear the acronym OTT used in the business, these distributors are more commonly known as “streamers.” This includes Netflix, and streamers such as Hulu, ESPN+, and Disney+.
Traditional broadcasters have gotten into the streaming game with their own dedicated streamers, such as Paramount Plus and Peacock. There are also niche streamers that strictly show food, health, or religious programming. And it’s not just young people who have “cut the cord” and are watching streaming channels. Decider reports that viewers age 50 and older are streaming more content than any other demographic.
One thing that hasn’t changed is that ads on OTT/streamers tend to be shorter than traditional broadcast ads. And something that has changed more and more throughout the last few years is that viewers are watching TV on auxiliary devices now more than ever. This means ads have to be designed to look good on a smartphone as well as a big-screen TV.
This presents a real opportunity. Forbes reports that agencies love OTT advertising because it delivers ads directly to consumers on devices that they can click on directly. “Unlike traditional TV broadcasting, which has to cater to a broad audience,” Forbes writes, “OTT services can target niche audiences. By advertising on an OTT platform, your ad dollars can go further to reach a more targeted, niche audience than with traditional forms of advertising.”
Just like anything in our business, there are a lot of factors to evaluate. It’s worth keeping an eye on what happens with Netflix and other streamers with their advertising models.
