Streaming media business and monetization models expanded and diversified in 2022 and sent a clear message: Paid subscription models were a necessary gateway to widespread streaming adoption, but now ad-supported viewing has a chance to flourish.
“The larger problem in OTT economics is the subscription models don’t work,” says Josh Stinehour, a principal analyst at Devoncroft Partners. “It doesn’t need to be $2 more expensive; it needs to be $10 more. The numbers are not that close to working. None of them are on a near-term timetable to actually make money, and, at some point, they have to make money.”
Stinehour contends that OTT economics should now include more than creating subscription services or increasing the size of content libraries. “I actually think what happened in April of last year, with Netflix’s announcement [that it had lost 200,000 subscribers in Q1 2022] and the subsequent hits to its stock price, finally pierced this bubble,” Stinehour continues. COVID binge watching “drowned out a lot of organic investment that would have otherwise happened. Now we can get back to exploring all these different ways to monetize content. Maybe price increases are part of the solution, but I think something more fundamental needs to happen,” he says.
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