Industry Insights: Even ad-resistant viewers are coming round to the concept of streaming TV ads, but there are definite ways to maximize their effect. Plus, Disney merges live channels with Fubo, and NFL Christmas Day games were a qualified success for Netflix.
Summary
- A recent survey indicates that two-thirds of consumers are open to watching ads if it reduces their subscription costs, with acceptance among ad-intolerant viewers increasing from 30% to 42% over three years.
- Disney is merging Hulu Live TV with Fubo, taking a 70% stake in the new entity, which will continue to operate under the Fubo name. This merger will create a more substantial player in the US vMVPD market, with a combined total of 6.2 million subscribers.
- Netflix’s live sports streaming faced initial challenges with the Jake Paul vs Mike Tyson match but improved for the NFL Christmas Day games which were watched by up to 65 million people worldwide.
Viewer acceptance of streaming ads continues to grow
The pivot from many streamers to ad tiers seems to be tapping into the zeitgeist. According to data from Hub Research’s semi-annual survey TV Advertising: Fact vs Fiction, the majority of consumers are happy to watch TV ads in exchange for lower subscription costs. What’s more, that holds even amongst those who say they are ad-intolerant.
In the US survey of 3,000 consumers, overall two-thirds of viewers say they would prefer to watch content with ads if it brings down the cost of a TV subscription. And the change in attitude amongst the ad-intolerant has been remarkable over the past three years. In June 2021, only 30% of this category indicated a preference for a lower-cost ad-supported option. This has now risen to 42%.
Dividing the respondents into age groups, all feel more ‘forgiving’ (Hub’s term) of ads on live TV as opposed to on-demand, rising to 69% of viewers aged 16-34. Hub explains this partly due to ads being seen as part of the regular rhythm of the action in live sports coverage, which makes up a significant amount of the live streaming schedules.
There is some interesting data emerging surrounding viewer attention as well. The best way to capture this is, perhaps not surprisingly, by offering incentives for watching an ad, which was rated as a successful tactic by 50% of respondents. This is very closely followed though by actions limiting ad load: shorter ad breaks (49%), shorter ad length (47%), and running a single ad in a break (46%).
Ads requiring viewer participation scored more lowly. Games, interactive ads, and those containing product links were only rated as likely to keep viewers engaged by 31%, 22% and 21% respectively. Pause ads also ranked low as well at 23%.
In short, serving relevant, interesting ads presented in shorter breaks with fewer commercials is the main route to attracting viewers’ attention.
“Over the past three years, it’s clear most viewers prefer watching ads if they can save on TV subscriptions. More recently, we’re seeing that even the most ad-intolerant consumers are deciding the trade-off of watching ads for lower costs is worthwhile,” said Mark Loughney, Hub Research Senior Consultant. “There is plenty of good news here for streaming services and their advertisers. Most consumers think the amount of advertising is reasonable, especially in live viewing. As streamers add more live content, especially sports, advertisers will have greater opportunities to reach more viewers who are paying full attention to their messages.”
Disney to merge live channels with Fubo
[Broadband TV News, Streaming Media]
Genuine surprises in the television world are rare nowadays, but Disney’s announcement that it is going to merge its multichannel streaming service Hulu Live TV with competitor Fubo seems to have taken almost everybody unawares.
Disney will take a controlling 70% stake in the newco which will continue to be traded publicly under the Fubo name. Fubo management, including co-founder and CEO David Gandler, will run the combined venture, though Disney will appoint the majority of the board. It’s important to note that the deal does not include the core Hulu SVOD service and is focused only on the virtual multichannel video provider (vMVPD) offering.
After the deal closes, subject to the usual regulatory approval (though this is expected to operate with a much lighter touch under a Trump administration), the company will continue to offer both Hulu + Live TV and Fubo under distinct brands. Hulu will continue to be available in the larger Disney bundle. Fubo will negotiate carriage deals on behalf of the services, independent from Disney.
It’s a bold move and will create a much bigger player in the US vMVPD space. Hulu + Live TV has approximately 4.6 million subs and Fubo has 1.6 million, giving a combined 6.2 million subs. Disney marketing muscle will now give the new Fubo the ability to chase after the leader in the space, YouTube TV, which has around 8 million subscribers.
It also brings to a close Fubo’s ongoing legal action against the upcoming Venu Sports streaming service. This is the sports-specific skinny streaming offering set up to bundle together Disney’s ESPN channels and the sports channels from Warner Bros. Discovery, along with ABC, Fox and Fox Sports 1. This had been blocked by Fubo’s anti-trust action but is now free to proceed (though arguably is now rather less of a unique market proposition).
Disney, Fox and WBD will pay Fubo $220 million in settlement, with Disney providing a $145 million term loan through 2026. Fubo will also receive a $130 million termination fee if the deal fails to close under certain circumstances. Disney and Fubo expect the deal to close within 12-18 months.
Netflix scores a touchdown with NFL Christmas games
Netflix had a rocky start to the latest batch of its live sports streaming exclusives, with the Jake Paul vs Mike Tyson boxing match in mid-November drawing criticism for buffering, dropped connections, and poor picture quality. 108 million viewers worldwide watched at least one minute of the match via 65 million concurrent streams, and the company's systems simply couldn’t cope.
Just over a month later, however, it performed much better in the high-profile Christmas Day matches in the NFL. The early afternoon game between the Kansas City Chiefs and Pittsburgh Steelers was watched by 24.1 million viewers, while the Baltimore Ravens’ win over the Houston Texans was even more popular with 24.3 million viewers (both figures include over-the-air broadcasts in the teams’ local markets).
Unsurprisingly, the Netflix audience peaked during Beyonce’s halftime performance at the Ravens-Texans game. All in all, the company reckons that 65 million people watched at least one minute of the two matches. While the domestic market was very much the focus, the global figures have disappointed though, only boosting the two games’ viewing to 30 million and 31.5 million respectively despite pulling in viewers from over 200 countries. As The Hollywood Reporter notes, that means around 86% of the audience was domestic. The hope will have been for the Beyoncé performance at least to break through to a wider audience. But, for all its attempts at global expansion, the appeal of American Football remains firmly anchored in its home country.
That, of course, meant that the technical team did not have to cope with the same surge of demand as during the Tyson v Paul fight. But it seems that Netflix learned a lot from that anyway (“You can’t learn these things until you do them, so you take a big swing,” said Netflix’s Chief Content Officer Bela Bajaria at the start of December) and is now moving smoothly into its program of live weekly WWE programming which started Jan 6.
It is perhaps worth pointing out though that at least 81.4 million people watched one minute of the NFL Christmas Day double-header when it was broadcast on CBS and Fox in 2023. So, there is still a way to go and capacity that needs to be built in for more viewers hopefully yet to come.
