I want to share a statistic that kind of blew my mind.
In 2011, about 20 percent of non-game Internet revenue came from content subscriptions (to stuff like Hulu, Spotify, Amazon Prime, and Netflix). The bulk of the revenue has historically derived from advertising.
Today, that number has completely flopped with subscription-based revenue at 80 percent — in just five years!
And content-based subscriptions will account for more than half of all internet consumer media growth in the next five years.
These projections came from Activate CEO Michael Wolf’s presentation this month at a recent Wall Street Journal Conference.
What makes this trend even more remarkable is that “cord-cutting” (getting all your media from the internet instead of traditional TV and cable) is only growing at just 1 percent per year. Growth in cord-cutting has been blunted because just 12 percent of the U.S. has access to the minimum speeds needed for multiple pay TV video streams.
In our new episode of The Marketing Companion, Tom Webster and I dissect this trend and its implications for marketing.
The new media economy and advertising
I commented that the amount of video content being consumed is exploding, driven by two trends:
- Viewing is now asynchronous, meaning you can view it any time you want and even consume in a binge
- Fueled by subscription revenues, channels like HBO and Netflix can take greater risks on quality long-form storytelling
An entirely new media economy is being driven by this content-driven trend, and the news is not good at all for advertisers. The millions of hours consumers now spend with subscription content is “unaddressable” by advertisers. Essentially, the places to even spend advertising budgets is drying up.
This trend also explains some of the content/carrier alliances and mergers. Could this open up new marketing opportunities?
The development of this new media economy is simply a fascinating idea and you’ll not want to miss this recorded conversation. Click here to get up to speed on the new content dominance strategy:
If you can’t access the edition above, click on this link to listen to Episode 90
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