OTT Targeting: 8 Best Ways to Reach Your Audience
by Cat Hausler
5 Min Read
Your primer on everything you need to know about streaming this year
6 Min Read
Much has been made of CTV’s big year in 2022. From Netflix and Disney+ embracing ads, to streaming besting linear TV in viewership, it was a year of shakeups, disruptions, and exponential growth. But as Frank Sinatra once sang, “the best is yet to come”—and 2023 is packing a whole lot of excitement for viewers, services, and advertisers.
Below you’ll find a sneak peek of what to expect this year and why 2023 will overtake last year as the “best year yet” for CTV.
When Netflix first started to produce original content in 2013, they publicly made their intentions clear: they were aiming to dethrone HBO as the home of “prestige TV.” In 2023, that strategy has broadened as much as Netflix’s service. In a recent interview with The New Yorker, Netflix’s head of global TV, Bela Barjaria, revealed the service’s new ambition: to “replace all television.” The company is blazing its own path in the post-streaming world, looking to offer the widest variety of content to attract and retain subscribers after a less-than-great subscriber loss last year.
To help drive those subscription numbers up, this year will also see Netflix launch an “Extra Members” feature that will charge subscribers for the ability to share passwords. The end result is a win-win for Netflix: either they get extra revenue to cover the viewers who aren’t paying them, or, more likely, non-subscribers will be booted off their friends’ and family’s service and encouraged to sign up themselves. For advertisers, this means a steady flow of new viewers who are both hooked on Netflix’s content offering and looking to make the jump from “free” to “paying” as inexpensive as possible—which happens to be the ad-supported tier.
Meanwhile, Disney is rethinking the streaming model for its viewers with an exclusive online shopping service for Disney+ subscribers. Currently in its testing phase and without a launch date, the online shop offers merchandise from Disney brands, including Star Wars, Pixar, and Marvel. Additionally, the brand is reportedly exploring plans for a membership program like Amazon Prime, though this feature is still in its infancy. Both of these offer potential opportunities for the service to boost its value proposition to subscribers, especially in the wake of ever-increasing subscription costs, and unlock new advertising opportunities for brands.
At the end of last year, ad-supported streaming got a major shot in the arm from Netflix and Disney+ and this year they’ll be doubling down on perfecting and expanding the platform. For Netflix’s part, the new ad-supported offering is predicted to hit 7.5 million U.S. subscribers by the end of 2023. Netflix is pleased with the growth of the $6.99 ad tier, with co-founder and co-CEO Reed Hastings publicly admitting their previous anti-ad stance was “wrong.” The service is expected to see $600 million in advertising sales this year alone.
Disney+ similarly has big plans for its $ 7.99-a-month ad tier, with a goal of signing up as many as 260 million subscribers by the end of 2024. Hopes are high that the streamer can overcome the one hurdle it has left in its ad-supported launch—availability on Roku—but there’s no word on a timeline yet. In 2023, Disney+ will expand internationally to 30 additional countries, bringing its service to a total of 160 nations.
With Netflix and Disney entering the ad-supported SVOD market, several services are looking to stand out by moving even further: to a free, ad-supported model. Amazon Prime is testing the waters with both its own free ad-supported streaming (FAST) service, Freevee (formerly IMDB TV), as well as a new virtual product placement ad format. While there’s no confirmation yet, rumors and hopes continue to swirl that Prime Video introduces a cheaper ad-supported tier. AppleTV+, which recently increased its subscription costs to $6.99 a month, could similarly benefit from the influx of revenue and subscribers that an ad-supported offering would bring. Finally, Warner Bros. Discovery is reportedly planning a FAST variation of its HBO Max to compete with competitors including Freevee, Peacock, Pluto TV, and others.
One of streaming’s biggest selling points has been the ability to watch on-demand content, whenever and wherever you are. And while that will continue to be the focal point of Connected TV for the foreseeable future, in 2023 streaming services will move forward by looking back – and bringing the return of live television. Netflix is betting big on its new live-streaming launch, hoping that it will lead to an influx of viewers—and advertisers looking to serve targeted ads during live tentpole events.
Similarly, live sports are projected to make a big splash on streaming services this year. In 2022 Amazon’s Prime Video became the exclusive home of NFL’s Thursday Night Football, pulling in 15.3 million viewers for the first game alone. This year, the streamer is expanding their gridiron offering by exclusively offering the first NFL Black Friday game—the first time the league has ever played on the day after Thanksgiving. Meanwhile, Apple TV+ is likely to continue its live sports deals with both Major League Baseball this year— bringing “Friday Night Baseball” games and “MLB Big Inning” to subscribers. In February 2023, Apple will expand its sports offering further by launching “MLS Season Pass,” a subscription service for Major League Soccer fans.
Finally, 2023 might be another big year of shakeups—especially with regard to HBO Max and Hulu. Fresh off its acquisition from Warner Bros. Discovery last year, HBO Max is set to combine with Discovery+ into a new streaming service launching in the spring. The new service, which is currently without a name but is reportedly dropping its “HBO” brand to just be named “Max,” will give viewers access to over 200,000 hours of programming over 100 brands, including WB, HBO, Discovery, CNN, TBS, Food Network, Animal Planet, and more. Like HBO Max, “Max” is expected to launch with both an ad-free and ad-supported streaming option. It’s expected that Max’s ad-free model will cost more than HBO Max’s current $14.99-a-month plan, likely pushing many viewers to switch over to the ad-supported tier.
Fresh off hitting its 58 Emmy nominations, Hulu is beginning the year with 47.2 million subscribers—but its 2023 plans are murky. Disney, who currently owns 66% of the service, will likely be buying out Comcast’s 33% remainder before the end of 2024, taking full ownership of Hulu. However, last year the former Disney CEO let it slip that Disney might buy the rights as soon as 2023. Regardless of the timeline, rumors continue to swirl that once Disney owns Hulu they’ll combine it with Disney+ and ESPN+ into one platform. Hulu’s ad-supported offering has been a gamble that paid off for the service—besides influencing Netflix’s about-face on ads, Hulu reports that 70% of its 82 million subscribers are on the ad-supported offering.
As last year proved, the Connected TV advertising space moves too fast and dynamically to predict everything. Expect even more market consolidation, shakeups, surprises, and advertising tech advances—all of which we’ll be covering weekly here.
One thing’s clear: just because it’s a new year, CTV growth shows no sign of slowing down. By this time next year, we’ll likely be reflecting on how 2023 was CTV’s biggest year yet—and looking at how 2024 will top it.
Summary: 2023 is shaping up to be Connected TV’s biggest year yet, as streaming services incorporate new strategies, technologies, and advertising opportunities for brands.
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