Sport rights, ad tiers reshaping VoD market

Why it is the topic trending:

• Streaming Market Evolution: The article discusses significant shifts in the Video on Demand (VoD) market, including the rise of ad-supported tiers and the growing importance of sports content, making it a trending topic in the media and entertainment industry.

• Consumer Behavior Changes:  Changing consumer preferences towards ad-supported streaming and bundled offers are key trends discussed, reflecting evolving viewing habits and value perceptions, making it relevant to consumer behavior analysis.

• Netflix’s Strategy Shift: Netflix’s move into live sports and ad-supported tiers, along with its subscriber growth and satisfaction rebound, is a major industry development and a trending topic for market analysts and competitors.

• Sports Streaming Growth: The article highlights the impressive subscriber surge for YouTube TV driven by NFL rights, demonstrating the increasing value of sports content in streaming and making it a hot topic in sports media and broadcasting.

• Apple TV+ and Paramount+ Growth: The rapid year-on-year growth of Apple TV+ and Paramount+ as major VoD streamers is noteworthy and contributes to the trending discussion about competition and growth in the streaming landscape.

• The article from Kantar reveals major shifts in the global streaming market, highlighting growing consumer preference for ad-supported streaming, the rise of Apple TV+, the increasing importance of sports content, and Netflix’s strategic moves to maintain market leadership. The study’s Q4 2024 data shows that paid ad-supported subscriptions are gaining momentum, with a significant portion of new subscribers choosing these tiers due to perceived value. Sports, particularly NFL, are becoming a key driver of subscriber growth, as demonstrated by YouTube TV’s surge and Netflix’s entry into live sports. Apple TV+ and Paramount+ are identified as the fastest-growing major VoD streamers, driven by content, bundles, and promotional offers.  The findings underscore a dynamic and competitive streaming landscape where accessibility, affordability, premium content, and strategic partnerships are crucial for success.   

• Top Shows (Q4 2024):

  • Black Doves was the most enjoyed show, followed by The Day of the Jackal, Lord of the Rings: The Rings of Power, Yellowstone, and Outer Banks.

• Fastest Growing VoD Streamers (Year-on-Year):

• Highest Share of New Paying Subscribers:

  •   Prime Video achieved the highest share of new paying subscribers.   

  • Paramount+ was second, and Netflix was third.

• Growth of Paid Ad-Supported Subscriptions:

  • Paid ad-supported subscribers rose by 3% quarter-on-quarter.

  •   35% of new VoD subscribers opted for paid ad-supported models (up from 21% year-over-year).   

• Premium Subscription Preference:

• Market Share Breakdown:

  • Paid ad-supported captured 35% of the market.

  • FAST (Free Ad-Supported Streaming TV) accounted for 20%.

  •   vMVPD (virtual Multichannel Video Programming Distributor) services claimed 7%.   

• Netflix Ad-Supported Tier Adoption:

• Sports Driving Netflix Growth:

  • Sports drove 18% of new Netflix subscriptions globally in Q4 2024.

  • Netflix ranked third among new paying subscribers globally.

  • Netflix subscriber satisfaction rebounded, reaching highest NPS of +44 since Q1 2022.

• NFL Impact on YouTube TV:

  •   YouTube TV experienced a 48% surge in subscribers from Q3 2023 to Q4 2024 after acquiring NFL Sunday matches.   

  •   American football viewership grew to 42% of households watching sports in Q4 2024 (up 6 percentage points).   

• Disney’s Strategic Pivot:

  •   Disney merged Hulu + Live TV business with Fubo.   

  • Anticipates direct-to-consumer ESPN launch.

  • Integrating ESPN into bundles and sports-focused packages.

• Comcast Xfinity’s “Skinny” Bundle:

  •   Comcast Xfinity launched a “skinny” bundle with live sports and news content.   

  • Targeted strategy for consumers wanting curated content.

  •   63% of Xfinity customers tuned into sports in Q4 2024.   

• Value Perception of Ad-Supported Tiers:

• Apple TV+ Growth Drivers:

  • 28% of subscribers globally identify Apple TV+ as primary VoD platform (up 3 percentage points year-on-year).

  • 14% year-over-year subscriber growth, 21% increase in Germany.

  • Drivers: Enhanced content quality, local/international programming, bundles, promotions.

  • 49% of new Apple TV+ sign-ups cited bundling/promotional activity as motivators.

• The VoD market is undergoing a significant transformation driven by consumer preferences for ad-supported streaming and live sports content. Netflix is strategically adapting, while Apple TV+ and Paramount+ are experiencing rapid growth. YouTube TV’s success with NFL rights highlights the power of sports to drive subscriptions. The future of streaming is characterized by dynamic competition, innovative business models (ad-tiers, bundles), and a focus on delivering value, accessibility, and premium content to capture and retain audiences in a fiercely competitive landscape.

Description of the Trend (Ad-Supported Streaming Ascendancy):

• This trend describes the growing dominance and consumer acceptance of ad-supported streaming models within the Video on Demand (VoD) market. Consumers are increasingly opting for cheaper, ad-supported subscription tiers, driven by value consciousness and a perceived trade-off between lower costs and exposure to advertising. This trend signifies a major shift in the streaming landscape, moving away from a purely subscription-based model towards a hybrid approach where ad-supported options play a central role in attracting and retaining subscribers.

What is Consumer Motivation (Streaming Consumer Motivation for Ad-Supported Streaming Ascendancy):

•   Cost Savings and Affordability:  Ad-supported tiers offer significantly lower subscription costs compared to ad-free plans, making streaming services more affordable and accessible, especially for budget-conscious consumers in times of economic pressure.   

• Perceived Value for Money: Consumers are increasingly perceiving ad-supported tiers as offering good value for money, accepting advertising as a reasonable trade-off for reduced subscription fees and access to premium content.

• Acceptance of Advertising in Streaming:  Growing acceptance of advertising as a part of the streaming experience, particularly as platforms refine ad formats and delivery to be less intrusive and more integrated.

•   Content Access at Lower Cost:  Ad-supported tiers allow consumers to access vast libraries of content and popular shows at a lower entry point, removing a barrier to entry for price-sensitive audiences.   

• Subscription Fatigue and Cost Optimization:  As consumers manage multiple streaming subscriptions, ad-supported tiers offer a way to optimize costs and maintain access to desired content without breaking the bank.

What is Driving the Trend:

• Economic Pressures and Inflation:  Rising inflation and economic uncertainty are making consumers more price-sensitive and driving demand for lower-cost entertainment options like ad-supported streaming.

• Streaming Service Price Hikes:  Price increases for ad-free streaming plans by major platforms are pushing consumers towards more affordable ad-supported alternatives.

• Refined Ad-Supported Models: Streaming platforms are improving ad-supported tiers, offering better content libraries, enhanced user experiences, and less disruptive ad formats, making them more appealing to consumers.

• Content Bundling and Value Packages:  Bundling ad-supported streaming with other services or offering promotional packages further enhances the perceived value of these tiers.

• Competition and Market Segmentation:  The intense competition in the streaming market is driving platforms to offer diverse subscription options, including ad-supported tiers, to capture different consumer segments and price points.

What is Motivation Beyond the Trend:

• Practicality and Pragmatism:  The underlying motivation is practicality and pragmatism in entertainment spending. Consumers are seeking sensible and cost-effective ways to access entertainment content without sacrificing too much on viewing experience.

• Value Maximization:  Consumers are driven by a desire to maximize value from their entertainment subscriptions, seeking the best balance between content access and affordability.

• Adaptive Consumption Habits:  Consumers are adapting their media consumption habits to the evolving streaming landscape, becoming more open to ad-supported models as a viable and budget-friendly option.

Description of Consumers Article is Referring to (VoD Subscribers, particularly New Subscribers):

• Age: Likely spans across age demographics, as value consciousness and subscription cost management are relevant to a wide range of age groups.

• Gender: Likely both genders are represented, as ad-supported streaming appeal is not inherently gender-specific.

• Income:  While value is a driver, the trend likely impacts a range of income levels, not just low-income, as subscription cost optimization is a broad consumer concern. However, price sensitivity may be more pronounced for lower-to-middle income segments.

• Lifestyle:  Consumers who are cost-conscious, manage household budgets, subscribe to multiple streaming services, and are open to advertising in exchange for lower subscription fees. Includes cord-cutters and those seeking affordable entertainment options.

• Ad-supported streaming is experiencing rapid growth and consumer acceptance, marking “Ad-Supported Streaming Ascendancy.”

• Cost savings and perceived value are primary drivers for consumers choosing ad-supported tiers.

•   Netflix and other platforms are strategically leveraging ad-supported models for subscriber growth and revenue.   

• Refined ad formats and content bundling are enhancing the appeal of ad-supported streaming.

• The trend represents a major shift towards hybrid subscription models in the streaming market.

Implications for Brands (Streaming Platforms, Content Providers, Advertisers):

• Embrace Ad-Supported Tiers as Core Offering: Streaming platforms should embrace ad-supported tiers not just as a secondary option, but as a core offering to attract and retain a wider range of subscribers, particularly value-conscious audiences.

• Optimize Ad Experience for Engagement:  Focus on optimizing the ad experience within ad-supported tiers, ensuring ads are relevant, non-disruptive, and potentially integrated into content for better user engagement and satisfaction.

• Develop Hybrid Subscription Models:  Design flexible hybrid subscription models that offer a range of ad-supported and ad-free options to cater to diverse consumer preferences and price sensitivities.

• Leverage Bundling and Promotions for Ad-Tiers:  Utilize bundling strategies (with other services or content packages) and promotional offers to further enhance the value proposition of ad-supported tiers and drive subscriber adoption.

•   Advertisers Gain Access to Streaming Audiences:  Advertisers gain access to valuable streaming audiences through ad-supported tiers, creating new opportunities for targeted advertising within premium content environments.   

•   Increased Accessibility of Streaming Entertainment:  Ad-supported streaming models increase the accessibility of streaming entertainment to broader segments of the population, including price-sensitive consumers who might have been priced out of ad-free subscriptions.   

•   Shift in Media Funding Models:  The rise of ad-supported streaming represents a shift in media funding models, diversifying revenue streams for content creators and platforms beyond purely subscription-based revenue.   

• Potential for Ad-Driven Content Innovation:  The ad-supported streaming trend could potentially drive innovation in content formats and ad integration, exploring new ways to seamlessly blend advertising with entertainment.

Implications for Consumers (Streaming Consumers):

•   More Affordable Streaming Options:  Consumers gain access to more affordable streaming options through ad-supported tiers, reducing the overall cost of accessing a wide range of content.   

• Choice and Flexibility in Subscription Models:  Consumers have greater choice and flexibility in selecting subscription models that align with their budgets and viewing preferences, choosing between ad-supported and ad-free plans.

• Potential for Enhanced Value with Bundles:  Consumers can benefit from bundled offers and promotional packages that enhance the value proposition of ad-supported streaming subscriptions.

• Exposure to Advertising in Streaming Environment:  Consumers will be increasingly exposed to advertising within the streaming environment, requiring adaptation to ad-supported viewing experiences.

• Hybrid Streaming Landscape Dominance:  Hybrid streaming models, with both ad-supported and ad-free tiers, will likely become the dominant model in the VoD market.

• Ad-Supported Tier Innovation and Refinement:  Streaming platforms will continue to innovate and refine their ad-supported tiers, improving ad formats, targeting, and user experience to maximize appeal and minimize disruption.

• Content Investment in Ad-Supported Tiers:  Content investment may increasingly flow into ad-supported tiers, as platforms recognize the growth potential and revenue opportunities in this segment.

• Data-Driven Ad-Supported Strategy:  Data analytics will play a crucial role in optimizing ad-supported streaming strategies, informing ad placement, targeting, and content recommendations to enhance both advertiser and viewer value.

Consumer Trend (Streaming Model Trend):

• Name:  Hybrid Streaming Preference

• Detailed Description: This consumer trend describes the growing preference for hybrid streaming models that offer a choice between ad-supported and ad-free subscription tiers. Consumers are increasingly valuing the flexibility to select a streaming plan that aligns with their budget and advertising tolerance, embracing the trade-offs between cost and ad exposure, leading to the rise of hybrid models as the dominant approach in the VoD market.

Consumer Sub Trend (Pricing Preference Trend):

Big Social Trend (Media Consumption Trend):

• Name:  Streaming Service Hybridization

• Detailed Description: The broader social trend of streaming service hybridization, where VoD platforms are evolving from purely subscription-based models to hybrid models that incorporate both ad-supported and ad-free options. This reflects an industry-wide adaptation to changing consumer preferences, economic pressures, and the need for diversified revenue streams in the competitive streaming landscape.

Worldwide Social Trend (Economic Accessibility Trend):

• Name:  Affordable Entertainment Demand

• Detailed Description: The worldwide social trend of increasing consumer demand for affordable entertainment options, driven by economic factors and cost consciousness. Consumers are seeking accessible and budget-friendly ways to access entertainment content, influencing their choices across various media formats, including streaming, gaming, and live entertainment.

Social Drive (Human Motivation Trend):

• Name:  Value & Choice Seeking

• Detailed Description: The underlying human drive is the desire for “value and choice seeking.” Consumers are motivated to maximize value in their spending and seek choices that empower them to customize their experiences and align with their individual needs and budgets. This drive fuels the adoption of hybrid streaming models and the preference for ad-supported tiers as a value-driven option.

Learnings for Brands to Use in 2025 (for Streaming Platforms and Advertisers):

• Ad-Supported is No Longer Niche:  Ad-supported streaming is moving into the mainstream and represents a significant growth opportunity, not just a budget option.

• Value Drives Ad-Tier Adoption:  Clearly communicate the value proposition of ad-supported tiers – lower cost for access to premium content – to attract subscribers.

• Ad Experience Matters More Than Ever:  Focus on creating a positive and non-intrusive ad experience within streaming, as user satisfaction is crucial for ad-tier retention and growth.

• Bundling Enhances Value Perception:  Leverage bundling strategies to further enhance the perceived value of ad-supported tiers and attract price-sensitive consumers.

•   Sports and Live Events Drive Subscriptions:  Live sports and major events are powerful subscriber acquisition tools, particularly for ad-supported streaming platforms.   

Strategy Recommendations for Brands to Follow in 2025 (for Streaming Platforms and Advertisers):

• Invest in and Promote Ad-Supported Tiers:  Actively invest in enhancing ad-supported streaming offerings and aggressively promote these tiers as a valuable and affordable way to access content.

• Optimize Ad Integration and User Experience:  Continuously optimize ad formats, placement, and frequency to create a less disruptive and more engaging ad experience within streaming content, potentially exploring innovative ad formats and contextual relevance.

• Develop Content and Bundling Strategies for Ad-Tiers:  Curate compelling content libraries and develop attractive bundling options specifically for ad-supported tiers to enhance their value proposition and attract subscribers.

•   Leverage Data to Personalize Ad Experiences:  Utilize data analytics to personalize ad targeting and content recommendations within ad-supported tiers, improving ad relevance and user satisfaction.   

• Explore Live Sports and Event Integration for Ad-Tiers:  Strategically integrate live sports and major events into ad-supported tiers to drive subscriber acquisition and engagement, capitalizing on the high demand for these content categories.

Final Sentence (Key Concept):

• The “Ad-Supported Streaming Ascendancy” trend signifies a transformative shift in the VoD market, with ad-supported tiers becoming a central pillar of the streaming ecosystem, driven by consumer demand for value, affordability, and flexible viewing options, compelling streaming platforms and advertisers to strategically embrace and innovate within this evolving hybrid landscape.

What Brands & Companies Should Do in 2025 to Benefit from Trend and How to Do It:

Streaming platforms and advertisers should strategically capitalize on the “Ad-Supported Streaming Ascendancy” trend in 2025 to drive subscriber growth, maximize advertising revenue, and enhance their market position by:

• Prioritizing and investing in the development and promotion of compelling ad-supported subscription tiers:  Make ad-supported tiers a central focus of their streaming strategy, offering a robust content library, attractive pricing, and a user-friendly ad experience to draw in value-conscious subscribers.

• Innovating in ad formats and user experience within ad-supported tiers:  Experiment with less intrusive and more engaging ad formats, such as contextual ads, interactive ads, and rewarded video ads, to improve user satisfaction and minimize ad avoidance.

•   Developing strategic partnerships for content bundling and cross-promotion of ad-supported tiers:  Collaborate with telecommunication companies, device manufacturers, and other service providers to offer bundled packages and cross-promotional deals that highlight the value of ad-supported streaming subscriptions.   

• Leveraging data analytics to optimize ad targeting and personalize the ad experience:  Employ data-driven approaches to deliver targeted and relevant ads to viewers within ad-supported tiers, enhancing ad effectiveness and creating a more personalized and less disruptive user experience.

•   Exploring the integration of live sports and premium events into ad-supported offerings:  Strategically include live sports and major events within ad-supported tiers to attract a broader audience and capitalize on the high demand for these content categories, while offering advertisers premium placement opportunities.   

• Core Trend: Ad-Supported Streaming Ascendancy – Ad-supported streaming is becoming a dominant force.

• Core Strategy: Ad-Tier Optimization & Strategic Partnerships – Optimize ad-tier offerings and build strategic partnerships.

• Core Industry Trend: Hybrid Streaming Model Dominance – Hybrid models with ad-supported and ad-free options are becoming the norm.

• Core Consumer Motivation: Value & Choice Seeking – Consumers prioritize value and choice in their streaming subscriptions.

The “Ad-Supported Streaming Ascendancy” trend signals a fundamental and enduring shift in the streaming industry, creating a landscape where ad-supported models are not just viable alternatives, but essential components of a successful and competitive VoD strategy. By strategically embracing and innovating within ad-supported streaming, platforms and advertisers can unlock significant growth opportunities, cater to evolving consumer preferences, and shape the future of digital entertainment consumption in 2025 and beyond.