As consumers in Canada and worldwide continue to take a harder look at their expenses, media companies will answer with more ad-supported options, according to the 2023 TMT Predictions from Deloitte.
Deloitte predicts that by the end of 2023, two-thirds of consumers in developed countries will use at least one ad-supported video on demand service monthly, a 5% increase over 2022.
This is fueled by another one of Deloitte’s predictions: that every major subscriber-based streamer in developed markets will have an ad-funded tier to complement ad-free options and slow the number of cost-conscious customers cancelling their subscriptions. Further, by the end of 2024, Deloitte predicts that half of these providers will also have launched a FAST (free ad-supported television) option.
Netflix launched its ad-supported tier in November. Ad-supported Disney+ plans are set to launch in the U.S. this month before rolling out to other markets in the new year.
Streamers are looking to advertising to subsidize lower subscription fees, which may be an important tool to retain increasingly cost-conscious consumers. In Canada, 71% of people have at least one VOD subscription, with the average person having more than three. But more than 20% have axed at least one SVOD service in the last 12 months, with almost a third of those between 18 and 34 stopping their subscription. A further 30% to 50% of Canadians say they’re either considering cancelling, or would consider cancelling in the future.
Further, 35% of Canadians said they’re willing to pay full price for the ad-free version of a new streamer. But a quarter were willing to watch five minutes of ads per hour in exchange for half off the subscription price, while full 40% were willing to watch 10 minutes ads per hour if they didn’t have to pay at all – a strong signal for the potential in FAST channels.
Outside of TV, Deloitte predicts that the virtual reality market will generate $7 billion USD in revenue globally in 2023, a 50% increase over 2022’s estimated $4.7 billion USD. Most of that ($6.3 billion USD) will be generated by hardware sales, with 14 million units expected to sell next year.
An average price for VR headset is $450 USD – which is less than the newest PlayStation and Xbox consoles – but in October, Meta released a Pro model of its Quest headset, which is more tailored to professional and workplace environments and retails for $1,500 USD.
On the other hand, few Canadian consumers have embraced VR. Thus far, only 6% of Canadians have access to headsets (not counting DIY or cardboard versions) and only 14% of those have used them within the last day, meaning that just 0.8% of Canadians are regular VR users.
