Whether you use Spotify or not, you’re probably aware that the tech giant has been investing a lot in podcast videos recently.

There’s been a growing trend towards video content more generally in recent years, and this has naturally bled into the podcasting space. So of course, Spotify wants to be part of that in a big way.

To capitalize on this content trend, Spotify has begun channelling substantial resources into video podcasts. But is this the only reason it’s investing heavily in the video space?

Let’s take a look at Spotify’s journey into podcasting so far, what it tells us about this recent dive into video, and what this potentially means for podcasters.

Spotify entered the podcast market relatively late. While podcasts have been available on the platform since 2015, it wasn’t until 2019 that Spotify made clear its intentions to become an active player in the market.

In a bold move, CEO Daniel Ek declared that Spotify was positioning itself to become “the leading producer of podcasts.” The company invested $400 million to acquire Gimlet, Anchor and Parcast – three key companies that had majorly contributed to the podcasting boom during the pandemic. Acquiring Gimlet and Parcast was also a way to produce podcasts that could be adapted by Hollywood studios and generate profit from intellectual property rights.

Over the years, Spotify continued to invest heavily in podcasting, spending another $1 billion on podcast-related deals and hiring into the podcast team. But then in 2022, a decline in advertising revenue led to a spending freeze. The company laid off around 200 Podcast-division employees and merged its Parcast and Gimlet teams into Spotify Studios.

After throwing almost $1 billion at the industry, Spotify made it clear it was deinvesting in podcasts in pursuit of better profits.

And then video came along…

How is Spotify Investing in Video?

Spotify only started offering video podcasts in 2020, when it bought exclusive rights to Joe Rogan’s show, and he made it a requirement of the deal. Since then, Rogan has consistently held the #1 spot in the Spotify podcast charts and as a result, video consumption on Spotify has never been higher.

Spotify is riding that trend wave, pushing forward a strategy to get as much video content on the platform as possible. For example, you no longer have to be a Spotify for Podcasters user to upload video.

According to a report from Bloomberg, the company has also started incentivising video creators to distribute their shows on its platform. This is a similar strategy to what YouTube was doing a few years ago, when it started paying podcasters to create video versions of their shows.

In some cases, Spotify is asking creators to do this for free, promising marketing support in return. Others are reportedly being offered seven-figure offers to upload video content.

Unlike earlier strategies, exclusivity isn’t a priority anymore. Instead, Spotify seems focused on building its video catalogue.

Let’s take a look at why that is.

Why Spotify Is Investing in Video Podcasts

1. To capitalize on the rise of video platforms

During the pandemic, online video consumption soared 215%. Between this and the fact that Google prioritises YouTube videos in search results, it’s been estimated that 82% of internet traffic is now video.

Witnessing the rise in video platforms like YouTube and TikTok in recent years, it’s hardly surprising that Spotify wants to take a punt on it.

But where podcast consumption is concerned, the rise in video platforms isn’t so black and white.

While YouTube is used a lot more for podcast consumption nowadays, we learned that most podcasters publish their content as audio on the platform, just with a static image or audiogram.

2. To appeal to new global markets

The largest markets for creators publishing video include the U.S., Brazil, and Mexico. In Brazil and the Philippines, around 20% of all active podcast creators now publish video content – nearly double the share from the previous year.

With these insights, it’s clear that Spotify’s targeting strategic expansions into high-growth, emerging markets as part of its plan to cultivate diverse global audiences.

3. To improve user experience

This push for video is also part of a broader strategy to enhance the Spotify user experience. Aside from video, Spotify has introduced other types of content to cater to user needs in the past, like music videos and video-based learning courses.

However, the largest area of growth has come from video. These recent statistics shared by Spotify reveal the scale of this growth:

More than 170 million users have watched a video podcast on Spotify.

Over half of the top 20 podcasts on the platform now include video.

Global daily streams of video podcasts have increased by 39% year-on-year.

In the U.S., nearly two-thirds of podcast listeners say they prefer shows that include video.

The number of creators publishing video podcasts has grown by 70% year-over-year.

4. To generate more advertising revenue

YouTube is currently dominating the video podcast market. The company recently released figures that provide insight into how lucrative video advertising can be.

In Q2 2024, YouTube’s ad revenue grew by 13% year-over-year, reaching $8.66 billion. As the market leader, YouTube has set a high bar, but Spotify’s investment in video suggests it wants a share of that market. This effort mirrors Spotify’s earlier push into the podcast industry, where it successfully took market share from Apple’s native podcast app.

By building up its video catalogue, it comes closer to competing with YouTube as the go-to platform for video podcast consumption.

Spotify’s focus on video also allows the company to build on the momentum of its growing advertising business. Over the past six quarters, Spotify has achieved double-digit growth in ad revenue. According to WARC Media, the company’s global advertising revenue is expected to exceed $2 billion for the first time in 2024. By 2026, revenue is projected to reach $2.6 billion.

Notably, podcast advertising revenue growth has outpaced Spotify’s music advertising monetization. This success is largely due to an increase in impressions sold through the Spotify Audience Network, covering both original and licensed content. As Spotify continues to develop its video capabilities, this could further accelerate the growth of its advertising business too.

What Does This Mean for Podcasters?

Spotify’s current strategy reflects a strong commitment to video. But who knows how long it will last?

As podcasters, it’s important to look beyond the trend and focus on what works for you. This will always be the most important thing you can do for your show. If creating video for your podcast isn’t on your agenda, forcing yourself into it will only slow down your production.

If you do decide to start sharing video content of your podcast on Spotify, there’s one disruption to be aware of: dynamic ads.

When you upload video content to Spotify, the platform pulls the audio from the video instead of the RSS feed. As a result, dynamic ads can no longer be inserted. When this happens, podcasters are forced to rely on static ads that remain embedded in the content permanently, limiting their ability to update ads and reducing revenue opportunities.

While adding video to Spotify does offer new opportunities for greater engagement and reach, it will mark a shift from dynamic ads towards proprietary technologies controlled by platforms like Spotify and YouTube. With both companies leading in podcast consumption and neither supporting dynamic ads, this move could have a longer-term impact on the podcasting monetization landscape.

While that’s a bridge podcasters may have to cross in the future, the good news is that monetisation in the medium extends far beyond ads and sponsorship, and there are many other ways to make money from your podcast.

And with a final note on video podcasts, are you feeling pressure to join the craze? If so, here’s an article that might make you feel better.