“When the streaming businesses started and the pricing was in the midsingle digits, there was no room or need because pricing was competitive and low enough,” said JB Perrette, the president of global streaming at Warner Bros. Discovery, the new parent company of HBO Max. “But content is expensive, and as the pricing for ad-free tiers has gone up — in the high-teens level on some of these packages, and even Netflix moving up — it has to be paid for.”
The number of subscribers for the ad-supported services has soared. By the end of last year, 129 million people used an advertising video-on-demand service, according to Insider Intelligence, a market research firm. By 2025, the firm projects, that figure will rise to 165 million users. Likewise, video advertising revenue shot up 51 percent last year to $39.5 billion, according to the Interactive Advertising Bureau, a trade organization.
“Free, ad-driven TV isn’t sitting at the kids’ table anymore,” said Jennifer Salke, the head of Amazon Studios, which supplies programming to Freevee.
Some executives said advertising’s arrival was inevitable, as the streaming industry’s offerings increasingly mirror what has been available on television for decades: a mix of broadcast, basic cable with commercials and premium ad-free services.
“In many ways, we are seeing reincarnation of the last half a century of television for the streaming age,” said Mr. Perrette, the streaming executive at Warner Bros. Discovery, whose portfolio also includes Discovery+.
Some streaming platforms have run ads for years; Hulu has had ads since 2007, adding a commercial-free tier in 2015. The company, which Disney owns, reaches nearly half of all connected television households in the United States, Comscore found last year.
Article source: https://www.nytimes.com/2022/04/19/business/media/netflix-amazon-disney-ads.html
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