Paid Subscriptions May Be Less Effective Than Ads for Video Revenue

Video based content has become a mainstay of many online industries, and there are two main ways in which content can earn money from the videos that they are putting out. The first of these two ways is to earn a portion of the ad revenue that the video will generate, and secondly they can offer paid subscriptions to their loyal followers. Paid subscriptions are often touted as a superior alternative to ad revenue, but in spite of the fact that this is the case ad revenue may be more useful than subscriptions on that front.

Ad revenue from videos totals just under $190 billion in 2022, whereas paid subscriptions only bring in $85 billion with all things having been considered and taken into account. Studies are also showing that ad revenue will grow at a much faster pace, reaching around $360 billion by 2027. By comparison, paid subscription revenue will only grow to about $118 billion in the same timeframe, which suggests that ads are better at driving video revenues than might have been the case otherwise.

It is estimated that the number of digital video viewers worldwide will increase by 350 million between 2022 and 2026. That will result in a 3 point bump from 2022, with around 47.1% of the world projected to regularly watch videos online by 2026. With all of that having been said and now out of the way, it is important to note that ad spending per user will also increase in the interim.

Currently, brands spend about $125 per video viewer. That is likely going to increase to $170 by 2026, which is beneficial because of the fact that this is the sort of thing that could potentially end up allowing content creators to get more money for their hard work.

Paid subscriptions are still advantageous for niche creators who may not be suitable for ads or appealing to brands. The vast majority of content creators will continue to rely on ad revenues, at least for the next decade or so, and it will be interesting to see if anything changes after that.

H/T: Insiderintelligence

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by Zia Muhammad via Digital Information World