M+E Europe

In recent months, several streaming giants have introduced their first ad-supported subscription plans in Europe. Netflix led the way in November 2022 by launching its inaugural ad-supported plan in the UK.

A year later, Disney+ followed suit, implementing a similar strategy by introducing its Ad-tier plan across the UK, France, Germany, Italy, Spain, and the Nordics.

Amazon Prime Video was the latest to join this trend, launching its ad-supported subscription plan in the UK and Germany in February. Other major players have also announced their upcoming Ad-supported tier launches in Europe: SkyShowtime launched on April 23 in all operating European countries, while Max will be available in the Nordics, Spain, Portugal, and in Central and Eastern Europe started in May.

But what is driving many of these major subscription players to give cheaper plans with ads a chance in Europe, and particularly in these countries?

First, it’s essential to understand the evolution of the advertising-based model in EMEA, which has been on a steady climb over time. From the second quarter of 2022 to the fourth quarter of 2023, this revenue model experienced significant growth in many major markets within the region. During this timeframe the advertising-based model saw remarkable increases in Germany (10.44 percent) and Spain (5.21 percent), while its penetration reached 63 percent in Italy and 71 percent in the UK by the fourth quarter of 2023. While the advertising-based model has been expanding its reach quarter by quarter, subscription’s model has shown more moderate growth.

In Germany, Spain, and the UK, the subscription model has grown by 9.04 percent, 4.01 percent, and 1.73 percent respectively. However, compared to the evolution of the advertising-based model, subscription’s growth has slowed down. Advertising-based penetration has increased by 1 percent higher than subscription across all countries. The situation appears to be particularly challenging in Italy, where Subscription’s penetration decreased by 2.12 percent during the analyzed period.

In the fourth quarter of 2023 YouTube led with the highest advertising-based market share in the EMEA region. But how is the advertising-based market composed when excluding YouTube’s share? Pluto TV emerges as the frontrunner, with a 10 percent share regionally.

When analyzing the composition of each country’s market share excluding YouTube, many streaming platforms have benefited from the rising demand for Advertising Based models. Amazon’s Freevee has experienced a notable rise in its share in Germany, reaching 39 percent in the fourth quarter of 2023, up from 31 percent in the second quarter of 2023.

Similarly, Freevee has seen growth in the UK, achieving a 15 percent share, up from 10 percent in 2Q23. Also in the UK, ITVX and My5 have increased their shares, from 19 percent and 14 percent in 2Q23 to 21 percent and 17 percent in the fourth quarter of 2023, respectively.

The increasing preference for advertising based in some of the major European markets indicates that the previous resistance to ads has significantly diminished. During the fourth quarter of 2023, nearly four out of every 10 British, German, and French users expressed a preference for accessing online content for free with ads included.

This inclination was even stronger among Italian users, with a notable 61 percent stating their preference for free ad-supported content. Moreover, when asked about the option of adding commercial ads to their subscription plan to reduce costs, half of the French and Spanish users preferred more affordable plans, even if it meant having ads interrupting the content.

This preference was even stronger in Germany and Italy, where 6 out of every 10 users showed a preference for ad-supported plans, and particularly in the UK, where an astonishing 69 poercent of users leaned towards cheaper plans.

The emergence of ad supported subscription offerings and the steady rise of advertising based’s penetration across major European markets signal a significant shift in consumer preferences towards ad-supported streaming models.

Streaming giants are adapting to meet this demand, offering more diverse and flexible options to cater to varied consumer needs. As consumers seek affordability and choice in their streaming practices, it’s vital that the industry continues to innovate and provide a range of experiences for users to mix and match to their taste.

By Delfina Gianibelli, Media Analyst, BB Media