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Amid dizzying policy unpredictability and a grab bag of unpleasant economic possibilities, precise ad spend forecasting is challenging. A scenarios-based approach can help clarify potential outcomes.

Connect the ease of subscription services with personal convenience. Key stat: 44% of parents are interested in receiving regularly purchased food and non-food items through a subscription or auto delivery, according to Walmart鈥檚 鈥淎daptive Retail Report 2024.鈥�.

Nearly a third of the US population will be free ad-supported streaming TV (FAST) viewers by 2027, accounting for a total of 114.5 million viewers, according to our September 2023 forecast. That large audience base, coupled with the rise of new players and the abundance of ad inventory, is making FASTs increasingly appealing to media planners鈥攅specially those on a budget.

In today鈥檚 episode, host Bill Fisher is joined by Paul Briggs, Man-Chung Cheung, and Carina Perkins to discuss the longevity of subscription services and loyalty programs from both a client and corporate perspective. How many subscriptions can people afford, and how much can companies afford to give away as part of their loyalty programs?

鈥淚 think it鈥檚 kind of a hard sell,鈥� said our analyst Daniel Konstantinovic of Netflix鈥檚 Basic with Ads tier. Existing Netflix users are used to ad-free content, and even a cheaper price won鈥檛 win most of them over, he said. Could a potential recession change that?

OTT services grew their subscription revenues at double-digit rates for the fifth consecutive year in 2022. This happened despite gains in ad-supported video, hikes in subscription prices, and increased competition to pump out the most premium content.

Those cheaper subscription offerings are where a huge portion of the subscription growth in the last couple of quarters is coming from. I think they said that it accounted for the majority of subscription signups in markets where it was available this quarter, and 45% of new subscribers do ad supported viewing. Marcus Johnson (05:47):. Yes, exactly right. Exactly right.

In 2023, US subscription over-the-top (sub OTT) ad spend will reach about one-sixth of linear TV ad spend. Streaming offers more ad-free options than TV鈥攁nd when ads are present, loads are lighter. Subscription streamers aren鈥檛 as reliant on ads. Paid streaming services are funded more through subscription fees than ad revenues. But ads are becoming a bigger part of paid streaming services鈥� business.

Marketers need to account for streaming鈥檚 lighter ad loads and the prevalence of ad-free viewing. Netflix experiences advertising growing pains. The streaming king鈥檚 advertising launch has been slow going, and the company canceled its first in-person upfront. But its massive audience still has advertisers salivating. Upfront linear TV ad spend will shrink this year.

Consumers are cutting back on subscriptions. People in the UK are scrutinizing their discretionary spending, and entertainment and news subscriptions are in the firing line. Consumers may still want quality content, but they鈥檙e willing to trim their multi-subscription portfolios. Content providers are responding with ad-supported options.

The glut of over the top (OTT) services available in Canada鈥攊ncluding Disney+, Apple TV+, Paramount+, DAZN, and many others catering to specific content niches鈥攚ill splinter audiences by interest. AVOD service adoption will increase. Tiered pricing will appeal to some households looking to minimize their monthly entertainment bill. TikTok鈥檚 Growth Drives Advertiser Interest Higher.

Asia-Pacific is the most coveted region worldwide for its digital video streaming growth. And the OTT video segment has been gaining steam as audiences increasingly crave high-quality content. However, players have had to stay innovative as they cope with an array of business challenges that comes along with this diverse region.

Global subscription platforms are quickly turning their attention to Latin America as subscription OTT (sub OTT) user growth slows in North America and Western Europe. Latin America鈥檚 sub OTT market is underpenetrated. More than 1 in 4 mobile video viewers in Latin America had paid for at least one subscription video service in the past 12 months, per our survey.

It is the only subscription streaming video service that will reach more than half of the US population through the end of our forecast period in 2026. Monetization. Highlight of Q4 2022:. New forecast for sub OTT video ad spending. What to look for in Q1 2023:. Updates to our forecasts for streaming and pay TV subscription revenues.