Many subscribers to cable television are dropping their subscriptions in favor viewing online streaming media. One reason so many subscribers are switching over to new media is due to the amount of advertising that’s used as way to keep networks financially stable. Using advertising as a means of staying financially stable has also crept into streaming content (and you’ll be surprised in places where it has not).
For the Google.com owned YouTube, advertising for content creators has become paramount for drawing in revenue. In 2013, YouTube brought in $810 million in advertising revenue, with an estimated $1.13 billion in 2014. YouTube wholly allows viewers to access their content for free, aside from officially licensed content that are uploaded to the site from film studios, distributors, and TV networks (this typically includes the streaming of full-length feature films and TV shows). However, much of the content that is uploaded to YouTube cannot be entirely monetized, either due to the short length of the uploaded videos or the content is considered “brand unfriendly” for advertisers. 1
Hulu.com, the online streaming service owned by NBC, Fox, and ABC, brought in a reported $1 billion in revenue in 2013. From that revenue, 59% of it can from advertising. On top of that model, the other 41% came from revenue generated by viewers who have a paid subscription to the site. The paid subscription model on Hulu allows for users to access a larger well of content compared to users who watch content on the site for free. Both of the models require users to view ads, which can play during as well as bookend viewable content. While this has brought in a wealth of revenue for the site, this number is dwarfed by the revenue its main competitor, Netflix, has brought in during a single quarter.
In 2013, Netflix reported revenues $900 million in one quarter.2 In the first quarter of 2015, Netflix reported a $1.57 billion in revenue. Both of these numbers were gained from Netflix relying entirely on a subscription-based model, much like Hulu. The difference between Hulu and Netflix however, is that the site does not bookend ads on their video content, nor do ads interrupt content while it is playing to viewers. As of this writing, Netflix continues to rely on a subscriber-based revenue platform with no additional advertising revenue. Ultimately, the subscription-based and advertising-based revenue models are proving to be a profitable avenue for content creators and filmmakers.