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In late 2022, both Netflix and Disney rearranged their payment tiers to introduce ad-supported plans. While reneging on the initial promise of streaming, free from ads and interruptions, it was implemented amid rising service prices so that an affordable subscription tier was available. Now New Zealand streaming service Neon has followed the market leaders, offering its own ad-supported tier.
Neon In The Streaming Industry
When Neon first launched in 2015, it offered a wide range of HBO shows and a 30-day free trial. Then, in 2019, their parent company Sky purchased competitor Lightbox and merged the services in the following year. This officially made Neon the largest streaming service based out of New Zealand, streaming content that’s also accessible worldwide using a VPN.
Led by Netflix, the past decade saw the rise of services like Neon in every country. While some cater to specific regions, others like Shudder focus on genres instead. Outside of VOD streaming, livestreaming has also provided a lot of entertainment options away from big-name production companies. For example, user-generated content floods video-sharing platforms like YouTube, while other industries like iGaming host live-streamed gameshows like Crazy Time. Consumers have a lot of choices for online entertainment, leading to a saturated market where the biggest streaming services compete for viewers and content exclusivity. For Neon, their HBO exclusivity contract has recently paid dividends by giving them distribution rights to House of the Dragon throughout 2023 and the coming year.
Neon Introduces Ads
Amid rising streaming prices in Australia, Neon has now introduced ad-supported plans as of January 11th 2024. Following this change, the basic NZ$12.99 plan now shows ads before content and when the user pauses content. The standard NZ$19.99 plan has fewer ads, only when paused. Those paused ads can be exited by the user at will.
This new ad support came with a compromise – the previously standard definition basic plan is now available in high definition too. The new basic with ads plan can also host two streams at once and a roster of five profiles. To save data, viewers can downgrade their basic experience to SD. The basic ads plan features un-skippable video segments while the standard content pack focuses more on static pause ads instead.
Neon’s official statement explains this decision in more detail, providing some context for the recent hike in pricing. They cite premium content, whose distribution rights can be costly to obtain. Content exclusivity has long been described as an arms race, where offering unique content is vital for success. In 2023, we saw big streamers battle over sports streaming content, something that will continue to play out in 2024.
Additionally, they reassured users that presented ads are “designed to be as unobtrusive as possible to minimize any interruptions to your viewing experience.” Both Neon plans will show ads, though only on content targeting non-minors. They also claim to have a system that prevents users from seeing the same advertisements frequently.
Ad Support War In 2024
After marketing their own ad-supported tiers throughout 2023, analysts predict that more is on the way. While services like Neon have attached ads to all of their plans, market leaders Netflix and Disney still have ad-free alternative plans. However, competition in the market is only going to get fiercer.
Four years after Disney+’s debut set off the subscription-based streaming war, the introduction of Amazon Prime Video’s ads tier in 2024 heralds the ad-supported streaming war. https://t.co/wcCpqPVR1R
— Digiday (@Digiday) January 2, 2024
As more ad money flows into streaming, consumers should expect more stratification between subscription plans. For example, streamers could further monetize their exclusive content programming by placing shows behind higher payment tiers. The prospect of not getting all content with a basic subscription may be a hard sell for beleaguered consumers.