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Emerging Trends in CTV and Streaming Monetization

Shobana Radhakrishnan, Senior Director of Engineering, Google TV, discusses ongoing shifts in M&E content consumption like the growth of CTV and streaming relative to traditional linear broadcast, the continued fragmentation of the streaming content market, and how the transition to more advertising-based monetization models will impact the overall revenue picture in 2024-26, in this clip from her Streaming Media Connect 2023 keynote.

Time Spent on Streaming is Up But Fragmented

Radhakrishnan says that users are beginning to spend nearly half their time between watching linear TV and CTV. However, the share of streaming viewership is becoming increasingly fragmented, especially with the rise of many FAST channels such as Tubi and Pluto. This rising competition for viewership is likely to be a continuing trend that should be optimized as best as possible. “This sets solid ground for us to think about how to bring more free content in front of users and make it meaningful for both users and businesses,” she says.

Content Costs Have Ballooned as Streamers Face Profitability Pressures

“As streaming companies buy for more eyeballs, they continue to invest in content,” Radhakrishnan says. “We have all seen the transition to original content from practically every popular streaming service and platform. At the same time, more recently, we have been starting to see a slowdown in original content, even unrelated to the recent strikes. This is because producing original content is extremely expensive, and this slowdown is due to the growing pressure to become profitable, where it used to be all about the number of subscribers.” She emphasizes that a broader and more diversified revenue model than just subscriptions is becoming increasingly essential for survival since subscription growth is slowing while churn rates are increasing. “Users expect a variety of content. And so this leads to a trend of users unsubscribing and resubscribing for specific content, which is problematic from a predictable business model perspective,” she says.

Why Platforms Now Focus on the Dual Revenue Stream Model

Streamers now focus more on the “dual revenue stream” model from paid TV to streaming. “This model has been the core model for decades in media and entertainment. Content is dollars, and it must be monetized via subscription and ads,” Radhakrishnan says. “This is why bringing together the power of streaming platforms and services like Google TV becomes critical, as these all individually address parts of the partner's business models. But collectively, they can address this duality and it's really important for any platform to approach it so that we can be a cohesive partner that helps our other partners in the ecosystem irrespective of how they are leaning in on these two aspects.”

She notes the wide variety of current business model options. “Some services provide programming purely free with ads. Some are providing subscription-based models, and some are in the middle of the spectrum…where there is a lower or free tier that has more ads and a higher premium tier, which has either no ads or a much smaller proportion of ads. Or they may be providing bundles where they try to bring different subscriptions with product portfolios to satisfy a wide variety of users. So it's a very fascinating and exciting time to observe how these all evolve in parallel as these services fight for user eyeballs and user acquisition and retention.”

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