Ad-supported streaming booms with increasing viewer approval
Kantar, the world’s leading marketing data and analytics company, today releases its latest Entertainment on Demand (EoD) data and analysis on the global video streaming landscape. Kantar’s EoD study uncovers the following behaviours within the global Video on Demand (VoD) market between Apr to Jun 2024:
• Ad-supported streaming saw significant growth in Q2 2024, with AVoD (ad-supported video on demand) increasing by 10% quarter-on-quarter and FAST (free ad-supported streaming TV) growing by 6%.
• Almost half (49%) of households are now willing to accept ads for a cheaper service.
• Specific content remains the primary driver of new service adoption, underscoring the importance of a regular slate of high-quality offerings.
• Bridgerton on Netflix was the most enjoyed title in Q2 2024, followed by Fallout on Prime Video.
• Both discovery+ and Apple TV+ have been the fastest-growing paid VoD services in the first six months of 2024, with discovery+ leading in Q2 2024.
• After a soft first quarter, Prime Video rebounded to achieve the highest share of paid VoD subscriptions in Q2 2024.
• Netflix’s Net Promoter Score (NPS) remains number one across the board, with an impressive rise from Apple TV+, now second among the major multi-market streamers with an NPS of +33.
The growth of ad-supported streaming
Ad-supported streaming is driving significant growth within the global streaming sector, both in paid (AVoD) and free forms (FAST). Both formats have experienced substantial growth throughout Q2 2024, continuing an impressive upward trajectory over the past year. Ad-supported services accounted for 47% of all new services adopted in Q2 2024, highlighting the pivotal role ads are now playing in the streaming video on demand landscape. Consumer acceptance of ads is also rising, with 49% of households globally willing to adopt ad-supported services to access cheaper content.
Andrew Skerratt, Global Insights Director at Kantar, comments: “It’s clear that ads provide streaming services with opportunities to diversify their revenue streams while catering to diverse audience preferences, with the tiered approach providing flexibility for consumers. However, the impact of ads on the viewer’s experience cannot be understated. Currently, only 22% of people enjoy the ads they see on streaming services, and less than a quarter find them relevant. Nearly one in three want more tailored ads, and with only 20% linking a streaming ad to a purchase of a new product or service, there’s plenty of potential for marketers to improve their return on investment.”
Among the major streamers, discovery+ has delivered a superior ad experience, setting the benchmark for viewer satisfaction and engagement. Ads on discovery+ are notably more effective than those on other platforms, with viewers appreciating the balance in the number of commercials and the length of ad breaks, which enhance rather than detract from their experience.
Andrew Skerratt continues: “Apple TV+ remains the only major multi-market streaming service without an ad tier, but this seems likely to change. Even with a smaller reach than some competitors, advertisers would appreciate the value of engaging with a premium, highly engaged audience.”
Content recommendations becoming increasingly crucial
Viewers’ attention is increasingly divided among multiple streaming services, with an average 4.6 VoD services per household. This means the quality of recommendations within a platform becomes crucial. Currently, only 8% of viewers are satisfied with the recommendations provided by their VoD services – Netflix enjoys the highest satisfaction rates while other platforms contest for second place.
Netflix’s recommendations are bolstered by its advanced algorithms, now enhanced with AI. The platform excels in adapting and learning from viewing patterns to offer tailored content suggestions – Netflix’s dynamic thumbnails and ads stand out, appealing to individual users based on their likely interests. It’s no wonder that 37% of streamers turn to Netflix to discover new content – far ahead of Prime Video in second place with 14%. Interface issues also play a significant role in cancellations; while 30% of cancellations were attributed to content dissatisfaction in Q2, 24% were due to problems such as difficulties finding content or poor ad experiences.
Andrew Skerratt comments: “The impact of effective recommendations on viewer engagement and retention often goes underappreciated. Increasing user engagement is a critical priority for streaming services, as households frequently switch between platforms, often because of either an apparent lack of compelling content or they’re drawn to something specific elsewhere.”
Netflix and Prime Video top content enjoyment
In Q2, Netflix experienced high engagement levels, largely driven by the release of the new season of Bridgerton. This series was the most enjoyed and most viewed of the quarter, directly accounting for 14% of new subscriber sign-ups driven by specific content.
Prime Video also saw significant success, with Fallout ranking as the second most enjoyed and third most viewed show of the quarter, further bolstered by The Boys and Clarkson’s Farm. Meanwhile, Disney+’s Japanese historical drama Shogun performed well, securing the sixth spot for most viewed and fifth for most enjoyed show. Additionally, the release of series 20 of Grey’s Anatomy was a major attraction for new Disney+ subscribers.
Discovery+ momentum was strong going into the Olympics
Discovery+ emerged as a standout performer in Q2 2024, building on an already strong Q1 and becoming the fastest growing paid VoD service by subscriber growth. Partnerships and strong advertising campaigns have been fundamental to this growth, paired with their robust slate of reality and sporting content. Despite this, and in a similar manner to Apple TV+, discovery+’s higher churn rates will present challenges moving forward, especially for households attracted by specific content. Discovery+ will be hoping the Olympics can continue this growth trajectory, with early signs looking extremely positive.