As the streaming industry continues to evolve, for a not-insignificant portion of cord-cutters, there has been an obvious migration away from premium subscriptions to either free or reduced-price options. Ad-supported video-on-demand (AVOD) subscription tiers have shown their worth as of late with HBO Max revealing that almost 30% of its subscriber base chose their least expensive plan according to a recent eMarketer report.
In June 2021, HBO Max released its ad-supported tier for just $9.99 per month, $5 cheaper than its $14.99 standard plan. In just shy of one year, the streamer saw a shift in subscribership towards their AVOD model by 28%. Other streamers such as Hulu and Paramount+ that released with AVOD tiers already in place have a much higher subscriber base that utilizes their less-expensive subscription plans. For example, Peacock’s ad-free service only constitutes 23% of its subscriber base, but a large number of people receive the ad-supported version of the platform for free as part of their Xfinity cable subscription.
To help minimize the impact of AVOD interruptions, HBO Max has developed some unique ways of handling commercials on its platform. Utilizing Pause Ads, the streamer hopes that these less-intrusive brand spots that appear over the top of paused content will increase their revenue while keeping viewers’ eyes glued to their favorite content.
The streamer has also maintained its initial pledges to keep ad times at less than four minutes per hour and to allow viewers on the streaming service to experience HBO original content ad-free, like they would if they were watching via the premium cable channel.
HBO’s success in the AVOD market is good news to other media companies looking to break into ad-supported streaming. Disney+ and Netflix are both poised to release their own AVOD subscription tiers later in 2022. Projections put the profit benefit around $1.8 billion by 2025, making HBO Max an excellent prognosticator for the advantages ad-supported streaming has to offer.
Max
Max is a subscription video streaming service that gives access to the full HBO library, along with exclusive Max Originals. There are hubs for content from TLC, HGTV, Food Network, Discovery, TCM, Cartoon Network, Travel Channel, ID, and more. Watch hit series like “The Last of Us,” “House of the Dragon,” “Succession,” “Curb Your Enthusiasm,” and more. Thanks to the B/R Sports add-on, users can watch NBA, MLB, NHL, March Madness, and NASCAR events.