Account-Based Marketing vs Demand Generation: What’s the Difference?
by Frankie Karrer
Min Read
Major streaming services are struggling with inconsistencies, but for savvy advertisers, it's still smooth sailing.
6 Min Read
It was the best of times, it was the worst of times — for streaming services, that is. In 2023, cord-cutters overtook linear holdouts (44% vs. 41%), meaning cable TV was no longer enemy no. 1 for streamers. This sounds as if it would fall in the “best of times” bucket, right? Maybe not.
The big streamers may have cemented themselves in our everyday lives, but for others, the road to profitability is a long and winding one. Q4 earnings reports are putting the goods, the bads, and the “huhs?” of the streaming industry on full display. Netflix and Warner Bros. Discovery (WBD), are riding high in the public eye — and in reported profits. But there’s more to the story when it comes to both — not to mention what’s going on with the other major names in streaming.
While many people (ourselves included) raised eyebrows when the HBO and Discovery+ merger was announced in 2022, Warner Bros. Discovery (WBD) squashed some skepticism last week when it reported that its “direct to consumer” segment — which includes streaming service Max — turned a $103 million profit in 2023. This makes it the first Hollywood conglomerate to reach profitability for a full year in streaming. So while the question of streaming solvency remains a hotly debated topic, some major players in the space are starting to make good on their promises to make money.
It’s not all sunshine and roses for WBD at the moment though. Despite its strong 2023, the media and entertainment company’s revenue also declined by 9% in Q4. WBD CEO David Zaslav seems confident that Max will prevail in 2024.
“We have an attack plan for 2024 that includes the roll-out of Max in key international markets, a more robust creative pipeline across our film and TV studios, and further progress against our long-range financial goals and are confident in our ability to drive sustained operating momentum and enhanced shareholder value,” he told shareholders.
Looking to the future, it appears WBD will continue its search for the right level of investment in content. It isn’t alone in experimenting with the best ways to reach the highest level of profit, either.
One such revenue building tactic is consolidation. Historically, mergers between streamers have been a strategic move to combine content catalogs, making them larger and more appealing to a wider variety of viewers, with the ultimate goal of increasing subscribers.
While word on the street is that Warner Bros. Discovery is no longer interested in joining forces with Paramount, there’s still potential for another major merger. The new interested party: Peacock. Given the size and variety of both platforms’ catalogs, a partnership between Paramount and Peacock could be a big win for both parties. And Paramount Global’s recent surprise Q4 2023 profit will only increase its desirability for mergers like this.
An unlikely contender is also getting in on the fun. This week, Walmart announced it will acquire entertainment company Vizio for $2.3 billion. What does this have to do with streaming? The primary reason for the acquisition is to boost Walmart’s ad business.
“Walmart and its Sam’s Club warehouse chain have long been major sellers of Vizio devices,” CNBC reports. “But in buying the company, Walmart touted the potential to boost its ad business through Vizio’s SmartCast Operating System, which allows users to stream free ad-supported content on their TVs.”
In making this move, Walmart is directly challenging Amazon’s business model and that of other streaming heavyweights.
The journey to streaming profitability is far from over. And there are plenty more pain points where these came from.
Remember that new sports streaming venture we recently discussed? It may already be in trouble. Last week, sports-focused streamer FuboTV filed a lawsuit against Walt Disney, Fox, and WBD (the companies behind the proposed new platform). According to a copy of the lawsuit obtained by CNBC, Fubo TV cited “extreme suppression of competition in the U.S. sports-focused streaming market.”
“Each of these companies has consistently engaged in anticompetitive practices that aim to monopolize the market, stifle any form of competition, create higher pricing for subscribers, and cheat consumers from deserved choice,” Fubo co-founder and CEO David Gandler said. “By joining together to exclusively reserve the rights to distribute a specialized live sports package, we believe these corporations are erecting insurmountable barriers that will effectively block any new competitors from entering the market.”
Netflix is feeling some heat, as well, but for a different reason. While it was advertisers who were concerned when the streaming service missed subscriber goals after its ad-supported tier launched in late 2022, another issue has come to light recently — this time on the viewer side.
“Netflix says its ad-supported plan includes ‘the vast majority’ of TV shows and movies available on the standard no-ads tiers,” Variety reports. “but more than a year after the streamer introduced the cheaper option, several popular titles remain unavailable to customers with the ad plan.”
Some of the titles missing from the ad-supported tiers are extremely popular with viewers, with some making it into Netflix’s homepage Top 10. Included on the list are Eli Roth’s horror film “Thanksgiving,” thriller “The Tourist,” and the acclaimed animated feature “Spider-Man: Across the Spider-Verse.”
A help article on Netflix’s website cites “licensing restrictions” as the reason why some content isn’t available to ad-tier subscribers, which suggests ad inventory on Netflix may be limited by individual deals with studios and production companies, at least to an extent. It’s unclear if these restrictions are permanent or could be adjusted in the future. But if the list of unavailable content continues to grow — especially if it features some of the hottest titles of the moment — viewers are sure to take note and may decide to take their money elsewhere. It also surfaces the question: if this is true of Netflix’s ad-supported offerings, are other major streamers in the same boat?
If you’re currently advertising on Connected TV (CTV), or are considering it, this turbulence in the streaming space may set off a few alarm bells. But it shouldn’t — not with the right strategy in place. The majority of consumers who have cut the cord won’t be making the move back to cable. And while various streaming services may be battling for profitability and decreasing subscriber churn, savvy advertisers can avoid all of that noise with an audience-first approach to CTV advertising.
That means ignoring the streamer itself and positioning yourself to be able to follow your customer base wherever they go. Focus on targeting the right audiences on the platforms where they consume their favorite content, and it really won’t matter what streamers merge with each other, change their content catalogs, or hike subscription fees. Your best bet is to find a comprehensive third party advertising solution that provides you with access to multiple top streaming services via one easy-to-use platform. (We may or may not know something about that … )
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