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Why Netflix, Paramount, HBO, Disney, Warner Bros. and Other Premium Streamers Are Cutting Back Marketing Budgets

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Recent findings from EDO Ad EnGage found that, for the first five months of 2024, premium streaming platforms such as Netflix, Paramount, Disney, and Warner Bros. have reduced their national TV marketing spending, down 18% to $216.1 million in paid advertising/promotional value.

According to MediaPost, “This comes amid a maturing streaming marketplace looking for financial savings to achieve consistent profitability, including more modest TV production expenses and content acquisition costs.”

Alan Wolk, Co-Founder and Lead Analyst, TVREV, says, “The pullback in promotional spending for new shows by streaming services reflects a few converging industry trends. First, they realized consumers were becoming overwhelmed by the deluge of original content, struggling to keep track of what was on each platform. This content overload made it difficult for services to establish a clear brand identity the way HBO had with The Sopranos or Netflix with Orange Is The New Black in their earlier days.

“As a result, the streamers have pivoted to a more curated approach - greenlighting fewer shows but promoting a couple of tentpole hits more aggressively to define their brands. Simultaneously, they're grappling with subscriber churn and shifting marketing dollars toward customer retention efforts like targeted promotions within their apps.

“Overall, this promotional pullback for the nonstop firehose of new originals signals the streaming services have entered a new phase of more judicious content investing. I expect this will become the new normal as the various services aim to curate a clearer identity while focusing resources on keeping their existing subscriber bases engaged.”

Earlier this year, Kantar released its latest Entertainment on Demand (EoD) data and insight report on the US streaming market, noting, “The data shows that customers point to ‘value for money’ as the most important factor for signing-up to a new video streaming service. For the first time the eagerness to watch a specific title is not the most important factor to acquire new viewers.”

In its report, Kantar highlighted that a more personalized, engaged, and curatorial approach to retaining subscribers is now essential. Hannah Avery, Consumer Insights Director, Worldpanel Division, Kantar, says, “Subscriber perception of both importance and value are key indicators of future churn and retention. Brands must dive deep into subscriber data to unveil the true meaning of these concepts and inform strategic changes that improve retention. Value and importance are dynamic, so brands must grasp how streamers interact with and perceive their offerings – it's imperative for futureproofing amid streaming wars. This means understanding factors like content library depth, personalization features, and user experience fluidity, and informing future steps like diversifying content, optimizing algorithms, and offering flexible subscription tiers.”

Jon Giegengack, Principal, Hub Entertainment Research, emphasizes the growing trend of subscription bundles as a way to retain subscribers further while also sharing marketing costs. “The newer streaming platforms needed to spend on advertising to drive awareness. But that mission has been accomplished (our research shows consumers know about all of the major platforms at this point),” he says. “I suspect that the growing number of bundles has helped them kill more birds with one stone/ad. This will probably have an even bigger impact going forward (e.g. Xfinity’s [Comcast’s] Streamsaver will drive lots of visibility for Netflix and Apple TV+ on Comcast’s dime, Disney/Max will presumably share marketing costs for their bundle, etc.).”

According to Variety, “Comcast's forthcoming Peacock, Netflix, and Apple TV+ package is an effort to reduce cancelation rates and provide a more efficient means of subscriber acquisition -- coming as the traditional cable TV business continues to deteriorate.”

However, other high-profile bundling efforts are being met with market and legal resistance. Venu Sports, a proposed joint venture sports bundle by Disney, WBD, and Fox Corp., is facing major opposition, and it is already the subject of a lawsuit from the sports streaming-focused service Fubo. According to Awful Announcing, “A statement from Fubo CEO David Gandler called the three companies a ‘sports cartel’ and alleged they were ‘effectively stealing’ Fubo’s strategy.”

These concerns underscore the current challenges facing both major and emerging players in the streaming market today, as efforts to consolidate and cut costs clash with the complexities of streaming rights and concerns over monopolistic practices, as the past reliance on major shows being used to draw in and retain customers is no longer economically viable. 

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