The streaming wars: competing for your attention

Welcome to the second installment of The Streaming Geek, a weekly article series about the latest news, trends and major changes happening in streaming television. I’m part of a Pilot Group that is helping LinkedIn launch a new Series feature. Subscribe to the weekly series by clicking the blue button on the top right corner of this page and you’ll receive a notification of the new article being posted every week. Let’s deep dive into the future of tv together!

The good news: our attention span is better than the one of a squirrel. The bad news: our attention span IS in fact getting shorter (it might not be 8 seconds, but we are pathologically distracted.. at least according to the New York Times and pretty much everyone). Let’s then add the fact that for sure we have an altered perception of the reality when it comes to spending for subscriptions: last July a research by Waterstone revealed that people believed they spend around $79/month in membership fees (whether is Netflix + Hulu + Spotify etc.) when in reality their spending is around a whopping $240/month. So: short attention span + a very complicated relationship between Americans and subscription services. And what happens on the other side? How do streaming companies fight to get your attention? Let’s look into the trends of the streaming industry.

Content quality and variety.

It’s the old dilemma: quantity or quality? While companies like HBO have based their whole value proposition on quality (and paved the way for a type of television that is at par, if not better, than cinema), others have planned to disrupt the market by offering the most extensive catalog – not always with the best results. A recent survey shows that is Hulu, and not Netflix, the streaming service that is perceived as the most quality-dense. Additionally, you’re tapping into debt to produce those shows. Last but not least, with the release of 100 new shows every year you challenge your organization with one fundamental problem: to market them adequately. The marketing budget goes up, the differentiation card becomes much harder to play, and the promotional strategies – no matter how creative – will have fewer chances to grab an audience whose attention is already spread thin. Take a look at this impressive data to see how big is the effort Netflix is pulling to promote its new shows.

Screen Shot 2018-11-08 at 6.27.28 PM

Download option.

I will address this issue more deeply on my blog but let’s just address he myth that everyone wants the download feature and will pay extra for it. In reality, we download before a long commute but we don’t necessarily stay with a service for that reason. On top of that, operating the download option is an issue for two reasons:

  1. Given the licensing constraints, you can allow download only for your own originals which partially limits the appeal of this option.
  2. Download is still a technically challenging feature to implement for streaming companies. In a webinar held by Penthera in collaboration with Streaming Video Alliance, multiple challenges of downloading were addressed: while the initial hurdles are the same as implementing video streaming, there are still lots of issues on how you track the downloads. Since it can take days to track the number of impressions – and that’s what you need for advertisers – it might be still hard to manage an effective ad campaign by leveraging downloads.

That being said, downloads are a huge plus for the companies that adopt them. Wi-fi connection is spotty on train/bus rides, and anything that keeps un entertained is welcome. Our attachment to some shows is sometimes purely irrational. As cable companies figured out long ago, having lots of unwatched shows in the DVR is even a deterrent to canceling a subscription and returning the DVR. Surprisingly, not many companies have chosen the download option yet so we can expect a lot of growth on that front.

Live TV add ons.

At some point not too long ago, around 2017, live television was THE thing to have for any streaming companies. The vMVPD model (virtual Multichannel Video Programming Distribution) represented by SlingTV or DirectTV – a model that bundles a bunch of live channels for a monthly fee – has been adopted broadly for example by Hulu, with the option of HULU Live at $39.99/month, or YouTubeTV at $40/month. While it seemed to be the missing push for people to cut the cord for good, the latest research reveal that in Q3 2018 the highest number of people cut the linear TV cord but there has been also a significant reduction in subscriptions to the “live TV” streaming options. Is it just that linear TV programming is not worth the spending? Or it’s that the audience now puts more value into the convenience of streaming at their convenience and the FOMO (fear of missing out) is not a thing anymore? The reason that made live TV popular in the first place was the appeal of “water cooler conversations of the day after”. As those are gone too (replaced by Twitter and Reddit), it seems like there is no real reason anymore to have Live TV, especially when the bundle offered contains lots of “fillers” (e.g. channels you don’t really care to watch). Could “skinny bundles” be the solution? Maybe. Or maybe not.

Original vs catalog shows (surprise here, it’s not as linear as you think).

The fact: original shows convince you to sign up, but it’s old shows that make you stay. Moreover, sometimes no matter how vast the catalog is, you still don’t stick around once the new season of Game of Thrones is over. The habit of signing up for the new season and canceling the subscription is well known. YouTube, intelligently, has countered it by offering the ability to pause your membership, therefore maintaining the link with the customer. Notoriously it’s much easier to keep a customer if a small link is still there, as opposed to win the customer over and over again.

Local shows: we need to see the reality we can grasp easily.

Started in 2014, Netflix has been investing heavily – and rightly so – into local shows in India, Europe, South America. The investment has paid off: turns out those shows have also been successful elsewhere and Netflix is injecting more money into dubbing. There’s only one exception: the US. It appears that Americans don’t like watching shows in foreign languages. Or more precisely, they don’t like them unless they’re high quality show, that’s at least Netflix’s conclusion. The high level productions allow a story to shine and resonate across countries, and this is why Netflix is investing in high quality foreign productions.

Direct-to-consumer (DTC).

It might get really crowded, folks. Between 2019 and 2022 we might see an insurgence of direct-to-consumer services (Disney, Apple and WarnerMedia will all launch new streaming services next year, plus NBC and other linear TV companies will soon join the club) and According to many analysts, by 2022 all channels will have their own DTC offering. As we had ‘peak TV’ not long ago, are we going to see a ‘peak streaming’ era? I will tackle this topic specifically in my article next week so stay tuned for more!

SVOD vs AVOD.

As they say, if the product is free, you are the product. AVOD services (advertising based video on demand) are free because they can sell your data to advertisers. While the technology advancements of advertising deserve a separate post – coming to you in two weeks – two words are crucial here: addressable advertising. That’s the only way out of the tunnel for many services. By adding addressable advertising, e.g. as ads that are targeted to an audience, streaming services can become sustainable and – oh la la – maybe even profitable. A tiered approach such as the one adopted by Hulu is the winning one. Research shows that people in fact have some level of tolerance for advertising. As much as Netflix has trained the general public into an ad-free, binge-worthy viewing experience, the reality is that the SVOD model (subscription based video on demand) is not sustainable and ads have already started creeping up in the Netflix platform (as the “show suggestion” at the end of each show).

 

(Featured image courtesy of Freepik)

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