As the streaming world continues to struggle for market share and overcome a major industry contraction in the entertainment sectors, we have seen streaming services like Hulu, AMC, and HBO Max adopt ad-supported tiers on their OTT Platforms (stands for “over-the-top” and refers to technology that delivers streamed content via internet-connected devices).

One of the major draws for VOD (video on demand) in the first place was the “On Demand” offering that many networks offered for their linear TV shows. With Smart TVs counting to gain market share in the United States and demands for new content continuing to increase, AVOD (advertising-based video on demand) and FAST Channels have served as a quick revenue-generating measure for streamers to keep pace with one another, and cash-in on audiences through ad support. According to some reports, Streaming Viewer Forecasts, “over two-thirds of the viewership on Peacock, Paramount+, and Hulu will be ad-supported next year.”

While the structure of ad-supported streaming is similar to cable, we still needed to figure out the issues of “serial bingers” watching hit shows and contributing to user churn. According to Antenna, “‘Stranger Things was the most popular Netflix show among “serial churners,” a category of consumers who destroy lifetime value by binging and bailing.’” One of the challenges with creating a hit linear TV show is that the audience will come to sit on their couch every once or twice a week to watch their favorite show (all ads included). Hit streaming shows have created an audience that sits in their room or on their laptop to watch 10 hours of content never to watch that streaming service again, think of HBO’s Euphoria for example.

This yoyo audience is considered a plague to most streaming services causing eradicate reports for programming, and discouraging ad partners from investing in major shows that are only available on SVOD (subscription video on demand). Despite the ad market supporting CTV (connected TV) platforms, like Youtube and Twitch, which still reign in some eye-watering streaming numbers with virtually NO production cost. With highly engaged audiences and endless micro-transactions, we are able to see how Twitch influencers like Kai Cenat hit viewership numbers (about 50K+ per stream with over 33MM Total Viewing Hours) that compete with major streaming shows. In comparison, HBO’s Somebody Somewhere Season #3 was canceled with about 130K viewer per episode with Kai Cenat’s show being created for only a fraction of the budget, marketing, and shooting the Kai Cenat show completely in his basement.

Last year, YouTube viewers watched more than 1 billion hours on average of YouTube content on their TVs every day and the number of top creators that receive the majority of their watchtime on TVs has increased by more than 400%. (Nielsen). With this in mind, OTT platforms not only have to find ways to budget out expensive productions and compete with YouTube CPM rates for CTV ads.

All of this competition and vast economic scale has triggered some streamers like AMC to cash in on FAST Channels in hopes of not only competing on their own OTT channels, but also capturing some of the readily available CTV ad dollars that are being split between CTV and, still very sparingly, linear cable ad dollars. While binge-watching audiences might remember a time when ads were nowhere to be found in their 14hr binge session of Family Guy; this slow yet necessary transition into cable-esk viewing is not only necessary for the studio to stay afloat but makes the streaming experience more and more like cable television.

When you throw in news and sports programming with multi-platform bundles, you have a channel-based viewing experience that is almost indistinguishable from the traditional cable network. Keep in mind the endless cross-platform bundles and you have a viewing offering that sounds more and more like DirectTV or Comcast.

Leave a comment below, do you think that streams will eventually become cable TV again?

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