More and more legacy broadcasters are entering the streaming space – to varying degrees of success. And yet, even before the COVID-19 pandemic sent audience adoption of streaming skyward, industry leaders were warning of subscription fatigue. There’s been a lot of discussion over what audiences’ breaking points will be for racking up subscriptions to new services. We’re seeing signs that as far as streaming video platforms are concerned, they’re anticipating that breaking point and developing new ad-supported options for audiences who want the freedom to partake of a variety of platforms’ offerings.

These developments are certain to shift the playing field for streaming platforms and their advertisers. Ad-supported video needs technology to support it in turn. And it needs to entice marketers to spend. It’s time to look at the changes to the streaming business model, and how platforms and their partners will win.

A dual subscription/ad-supported model will resemble linear – with tech at its heart.

In the moves made in recent months by some of the biggest names in streaming, we’re seeing a case of history being repeated. Disney+, YouTube TV, and Amazon have all announced they’re rolling out ad-supported versions of their subscriber services. That dual subscription/ ad-supported revenue model, with the same high-quality content delivered either way, looks a lot like the linear broadcast model. And this model will play a front-stage role as these platforms join the ad-supported fray. This is, after all, in line with the flexibility viewers want – Amazon has said they’re simply following audiences’ shift toward ad-supported options.

At the end of the day, these big-name entrants to the ad-supported model are pushing a reinvention of digital video distribution. We’re going to see a bifurcation with video providers – those who can manage their ad business with in-house technology, and those who will rely on a number of intermediaries to run their tech stack. The latter we’ve seen more commonly with legacy media companies. The former is harder to build, and in the past, it’s been largely the domain of Big Tech companies that also offer streaming services. But that bifurcation won’t be so neat and tidy as the dual ad/subscription model takes flight in the next couple of years. Disney gave us an example of where ad-supported streaming might go: the company is using its tech stack in conjunction with Hulu’s ad server. For a media company with a lot of family-appropriate content, having such control over its ad tech would be a boon for complying with privacy and other particular concerns its business faces in advertising. Controlling the tech stack is also important in delivering unique, platform-specific ad experiences – as we see with YouTube’s skippable ads, for example.

Sports programming will be the canary in the coal mine for gauging the tech’s effectiveness.

Through the emergence of this dual business model, sports will prove to be the inflection point. It’s not just that broadcasters have historically had an advantage in the sports market, and that Amazon and Apple are making strong entries there. It’s that sports truly test the scale of streaming video. For a Big Tech company, professional sports make for a landmark case study in how durable their tech can be.

Take the case of Amazon streaming UK Premier League football (soccer). A December Arsenal/Manchester United game netted 4 million concurrent streaming views in the UK. That’s a very large number. After that point, a number of ad tech functions start to function less well, including real-time bidding and measurement. Keep in mind Super Bowl 2022 had 11 million streaming views in the US. The goal, for a media business, is to have tech strong enough to serve an audience at a similar scale. Turning off ad tech functions to support the distribution of content and video is not a sustainable option.

Targeting and measurement will bring “TV” as we know it closer to digital campaigns.

With this audience scale and the ad tech that can support it, we’ll see an acceleration of the trend of marketers thinking of streaming video in similar ways that they’ve long thought of digital display. For legacy broadcast networks and digital-native streaming platforms alike, digital video allows marketers and media buyers to target broad or highly specific audiences, and to measure campaign KPIs effectively. And marketers welcome these changes – they create new opportunities to reach highly engaged audiences through, for example, direct-to-consumer (DTC) or performance campaigns. Streaming allows for data-driven buys to reach specific audiences (regions, demographics, and so on) and more efficiently show ROI by connecting ad exposure to KPIs and outcomes. More and more ad spending is shifting from linear to streaming, and the ability to measure ROI will only increase spending and heighten the imperative that streaming businesses invest in their tech stacks.

As high-quality streaming video continues to proliferate, and its audiences grow, the traditional broadcast networks and the digital pure players in the market may not have the clear advantages and disadvantages one might expect. This is not a matter of newer business models versus older models. Realistically, it’s a matter of how each individual business in streaming understands not only the value of its content and audiences but the strength and utility of its technology. The vehicle is only as worthy as what’s under the hood.

Written by Tal Chalozin, CTO and Co-Founder of Innovid