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Companies that know their audience best will break ahead in the Streaming Wars.
Streaming television is gaining steam and surpassing traditional broadcast television in user count and impressions. Consider Comcast, the industry-leading cable provider, which has 22 million household subscribers to its name. Meanwhile, Netflix leads the way among streaming networks with 221 million subscribers worldwide, of which 75 million are based in the U.S. and Canada. While growth among Over-the-Top (OTT) services appears to be slowing, cable T.V. subscriber trends are heading in the opposite direction. AT&T, Comcast, and Charter, the three largest cable companies in America, all reported video user losses in 2021, with Comcast totaling nearly 1.5 million alone.
With user preferences migrating away from linear television, broadcast companies are adjusting priorities to their OTT streaming platforms. At the same time, streaming services are looking for ways to differentiate themselves and engage their users with new content.
We're a quarter of the way through 2022, and the major players in the streaming wars have one focus – delivering engaging new content. In one corner, we have the legacy media leaders like Disney, Warner Brothers-Discovery, NBCUniversal, and ViacomCBS facing off against tech giants Netflix, Amazon, Apple, and Alphabet. Netflix alone is predicted to spend $19 billion on content production, a 13 percent increase over last year. A significant advantage for OTT companies like Netflix and Amazon Prime is their freedom from traditional film and linear television.
This advantage is driving competition in the streaming space, as traditional media looks to increase market share against industry frontrunners. According to a recent Forbes article, the nine largest media companies are expected to spend roughly $140 billion on content, customer acquisition, and expanded coverage of live sporting events.
Netflix is setting the industry pace with an overwhelming amount of original content. In March 2022 the company released nearly a dozen new shows, specials, or seasons. For one week in July 2021 eight of the top ten most-watched series were Netflix Originals. Fansided released this fun streaming war tracker that considers new releases, original hits, subscriber churn, and P.R., and assigns a score to each streaming company. According to this informal qualitative research, Disney+ comes in a distant second to the tech giant, which makes sense when considering the wealth of I.P. content Disney can rely on. To keep up, Disney is expected to invest $30.5 billion in content, followed by NBCUniversal at $18 billion, Warner Brothers-Discovery at $16.7 billion, and ViacomCBS at $15 billion. So, it's clear the stakes are high when it comes to delivering optimal content. Consider Netflix will begin to police subscription sharing, limiting sign-ins from people outside the household and protecting their highly-valued content.
Content is one thing, but what about customer acquisition and subscriber churn? The leading strategy is to attract users with prestige content that audiences actively search out and 'tune in.' Everyone's looking for the next show that will strike a chord with audiences and join the cultural zeitgeist that can turn an original into a huge hit. Whether viewers are activated on traditional T.V. and migrate to streaming, or extensive marketing efforts draw them directly to the streaming service, growing customer acquisition costs between marketing and content creation are staggering and unsustainable. Moreover, relying on content to draw in users leaves companies susceptible to the “churn and return” phenomenon where users, particularly Gen Z, chase prestige content, only to drop the service after the series finale. Deloitte released its 2022 technology, media, and telecom predictions in December. The consulting firm predicts 150 million people will cancel a paid streaming subscription this year. In the U.S., the churn rate could climb as high as 38%.
Therefore, OTT companies must focus on engaging existing customers and reducing churn. Increasing the lifetime value (LTV) is a great way to move the needle and support customer acquisition efforts.
So the question is, how do you turn users who resonate with a single property, who are likely to cancel after the finale, and convert them into serial viewers?
Understand their needs. Are your subscribers looking for The Sopranos remake or an educational show to plop their kid in front of? Are they looking to kill time while folding laundry or invite people for a watch party? Knowing your consumer helps you understand what they’re interested in, the activities they’re involved in, and, most importantly, what drives them to watch your content. What’s more, by understanding your subscriber you can find the “white space” to fulfill user needs that you are not aware of. With a comprehensive audience understanding, companies can tailor content to the user and determine how to promote that content. This will help dictate messaging and platform placements that will drive engagement. Ready to dive in? There are a variety of ways to get started!
At MMR Research Associates, we excel in segmenting streaming audiences to understand their attitudes about content and their pattern of usage. What can this help with? Uncovering levels of engagement and the triggers for that engagement. It further helps determine how services are used as consumers go about their day. Are users watching actively or passively? Are they viewing on TV or mobile phones and tablets? Once you understand who your users are with, where they are, the amount of time they have, the mood they’re in, and what they’re up to you can leverage the best content and messaging to meet them in the moment.
We further excel at exploring your customer journey to identify what puts the consumer in a place where they consider streaming, what they want out of a streaming service, what supports their purchase decision, and how to prevent user churn.
Lastly, check out the MMR LIVE ExperienceBuilt™ Brand Index. This study speaks to consumers’ reactions to how brands deliver across a number of principle attributes. Instead of focusing on content, MMR LIVE and the EBBTM Index drill down on the consumer experience with the brand. This research can help you understand what is affecting your relationship with the consumer, beyond content.
