Insights: Strategic Priorities in Media and Entertainment
Chapter 1.
Hybrid Monetisation Models: Navigating Subscription Evolution
The streaming landscape has reached a strategic turning point. As consumers navigate a richer array of subscription choices, platforms are evolving their revenue models to capture growth opportunities. As our research shows, subscriptions requires more sophisticated approaches that combine multiple revenue streams while creating value for increasingly selective consumers.
Daniela Boquete, streaming industry expert, articulates this evolution: "Hybrid monetisation models, particularly those incorporating advertisements, have emerged as a powerful solution. This approach makes it lighter for subscribers to move between services while still generating revenue. Disney+ exemplifies this strategy well, with a third of their subscribers now on the ad-supported tier, according to their latest investor call. This creates a subsidised model where consumers pay less while the company builds additional revenue streams through ads."
The data tells a compelling story. Our survey reveals that hybrid subscription/advertising models are considered the most promising approach to revenue diversification among industry leaders. This shift represents a natural evolution in a market where consumers are becoming increasingly selective about their subscription commitments.
Angus Mitchell from Channel 4 reinforces this trend: "As a public service broadcaster, we have a unique formula, but that doesn't mean we don't care about money. We're 100% supported by ad revenue – we receive no government funding – so how we generate revenue is a huge responsibility." He elaborates on their multi-faceted approach: "We've launched 4 Plus for viewers who want an ad-free experience, with a goal to double subscribers by 2030. We also have the Indie Growth Fund supporting emerging production companies, Four Ventures investing in high-growth startups, and branded content where we leverage our in-house expertise for brands."
This evolution toward hybrid models extends beyond simply adding advertisements to subscription services. Boquete notes that "the market is clearly shifting toward multi-faceted revenue models. Beyond the subscription-plus-advertising hybrid, bundle partnerships represent another interesting monetisation strategy. Many major players are also incorporating more live content, such as sports events on Netflix and Amazon, which drives advertising revenue opportunities."
The integration of advertising into subscription services represents a critical evolution in how media companies approach monetisation. Traditional ad-supported broadcasters bring valuable expertise to this transition. As Mitchell explains: "I think we have an advantage as traditional ad-supported broadcasters compared to subscription services now moving into advertising. We have a deeper understanding of ad tolerance, optimal frequency, and how programmes should be structured with commercial breaks in mind."
The key to successful hybrid monetisation lies in:
- Creating tiered options that give consumers flexible choices
- Developing advertising models that enhance rather than detract from the viewing experience
- Building additional revenue streams through complementary services and features
- Leveraging data to optimise both subscription and advertising revenue
- Forming strategic bundling partnerships that increase perceived value
Moving forward, Boquete anticipates further evolution: "Looking ahead, I anticipate loyalty will be better rewarded by streaming services, as engagement becomes an increasingly key metric. People who spend more time on a platform or share it with friends might receive benefits or special offers, similar to retail rewards systems. Though this approach hasn't been widely adopted in streaming yet, as the industry matures and margins tighten, implementing such programmes seems a natural evolution."
The convergence of subscription and advertising models represents not a return to traditional television economics but rather an evolution toward more sophisticated, consumer-centric approaches. By offering viewers options that fit their preferences and budgets, media companies can capitalise on the subscription economy's evolution while building sustainable business models for the future.
Key Insights Recap
With subscription options increasing, media companies are adopting multi-faceted approaches that combine subscription and advertising revenue streams. Disney+ exemplifies this strategy with a third of subscribers now on the ad-supported tier, creating a subsidised model where consumers pay less while the company builds additional revenue streams.
Quick Action Guide
Key Insights Recap
With subscription options increasing, media companies are adopting multi-faceted approaches that combine subscription and advertising revenue streams. Disney+ exemplifies this strategy with a third of subscribers now on the ad-supported tier, creating a subsidised model where consumers pay less while the company builds additional revenue streams.
Quick Action Guide
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