Streaming giant Netflix made a splash in the live event space on November 15th with a highly anticipated boxing match between Mike Tyson and Jake Paul. If no traditional ad formats were planned, featured integrated product placements were part of the fight and advertisers must have monitored very closely Netflix’s ability to sustain such an event on its network. While the platform resisted the appeals of sports events for a long time, its position changed with the success of its ad-supported tier surging to 70 million MAUs, up from 40 million in May. Live sports, a traditional stronghold of broadcast TV, are a massive draw for advertisers, and Netflix is leveraging this appeal for live events as a lucrative opportunity to capture advertiser dollars - hence the $5 billion deal to acquire the WWE show Raw and the NFL deal to obtain the Christmas Day games for the next 3 years. Netflix’s venture into live programming is redefining the growth trajectory of SVOD players toward ad revenues in an increasingly saturated market. But what are the ramifications of this strategy for Western European markets? Expansion of the video advertising market in Western Europe As subscription OTT revenues are slowing down in Western Europe with an expected CAGR of 2.4% between 2023 and 2029, OTT advertising revenues are now the main driver of revenue in the OTT world and will surpass the subscription revenues generated by ad-free subscription plans in 2029. Of course, native SVOD players want a piece of the pie. The rise of pure AVOD video offerings, the expansion of CTVs into households followed by the success of FAST channels, and the launch of true BVOD offerings by European broadcasters have opened up the market to SVODs and increased ad-tolerance by consumers. According to Tivo’s Q2 2024 Video Trends Report in the UK - the most advanced video market in Europe - almost three-quarters of Brits declare themselves tolerant to advertisements. Global streamers are now building on it and addressing a new market with their HVOD offerings: Disney+ expanded its advertising tier to Portugal, the Netherlands, and Finland in October. And local players are following the lead, with for instance Viapay rolling out an ad-supported plan in Denmark in June, then Sweden in August. If the OTT subscription market keeps expanding in the coming years, the more affordable ad-supported plans will fuel that growth in sign-ups. As a result, the number of subscriptions to ad-free plans will even decrease by 12% between 2023 and 2029, while the number of subscribers to ad-supported offers will reach the 90 million milestone in 2029 in Western Europe - the promise of SVOD has changed. Platforms are adapting to customers’ expectations: the need...
