Subscription and pay-per-view models are reshaping TV revenue. Subscriptions offer unlimited access for a recurring fee, while pay-per-view charges for individual content. These models are growing due to convenience, affordability, and original programming.

The shift impacts traditional advertising, forcing networks to adapt. It also presents challenges like increased competition and subscription fatigue. However, opportunities arise for collaboration, niche targeting, and global expansion through streaming platforms.

Subscription and Pay-Per-View Models in the Television Industry

Subscription vs pay-per-view models

• Subscription-based model involves users paying a recurring fee (usually monthly or annually) for access to a library of content (Netflix, Hulu, Disney+, Amazon Prime Video)
  • Provides a consistent revenue stream for the service provider
  • Users have access to a wide variety of content as long as they maintain their subscription
• Pay-per-view model requires users to pay for individual pieces of content, such as movies or events (boxing matches, WWE events, concerts)
  • Allows users to selectively pay for the content they want to watch
  • Revenue is generated on a per-transaction basis

Growth factors of streaming services

• Convenience and flexibility enable users to watch content anytime, anywhere, on various devices without adhering to a fixed programming schedule
• Affordable pricing with monthly subscription fees often lower than traditional cable or satellite TV packages and no long-term contracts or hidden fees
• Original and exclusive content produced by streaming services attracts and retains subscribers (Stranger Things, The Mandalorian)
• Personalization and recommendations enhance user experience and engagement through algorithms that suggest content based on user preferences and viewing history
• Changing consumer preferences, particularly among younger generations who prefer on-demand content over traditional TV, contribute to the cord-cutting trend of canceling cable or satellite subscriptions in favor of streaming services

Impact on traditional advertising revenue

• Reduced reliance on advertising as subscription-based services often have limited or no advertising and pay-per-view content is typically ad-free
• Shift in advertising strategies requires traditional TV networks to adapt and compete with streaming services, emphasizing targeted advertising to reach specific demographics
• Fragmentation of audience divides viewers among multiple platforms and services, forcing advertisers to spread their budgets across various channels to reach their target audience
• Potential for product placement and sponsored content allows streaming services to explore alternative advertising methods, such as integrating products into original content or creating branded series or movies to generate revenue without traditional ad breaks

Challenges of multiple revenue models

• Challenges
  1. Increased competition for viewers' attention and subscription dollars
  2. Difficulty in measuring and comparing viewership across different platforms
  3. Potential for subscription fatigue as users juggle multiple services
  4. Need for continuous investment in original content to retain subscribers
• Opportunities
  1. Potential for collaboration and bundling of services (Disney+ bundle with Hulu and ESPN+)
  2. Ability to cater to niche audiences with targeted content (Crunchyroll for anime fans)
  3. Increased global reach through online distribution
  4. Development of new technologies and interactive features to enhance user experience (Netflix's choose-your-own-adventure shows)
  5. Possibility for traditional networks to launch their own streaming platforms to complement existing offerings (HBO Max, Peacock)