Tags containing: "streaming video"

Understanding consumer choices in the evolving TV market

May 26, 2023 Rande Price, Research VP – DCN

Consumers grapple with an overwhelming array of choices and confusion in an era of rapidly evolving streaming services. The streaming landscape has recently witnessed significant shifts, with established players like Netflix and Disney+ introducing ad-supported tiers, Peacock discontinuing its free tier, and anticipation around the impact of Netflix’s crackdown on password sharing.

In this context, HUB’s Best Bundle study aims to shed light on how consumers adapt to the evolving TV/streaming space and land upon the the ideal combination of services that suit their viewing needs. It delves into the extent to which viewers opt for linear versus on-demand services, ad-supported versus ad-free experiences, and subscription-based versus free streaming services. By examining these variables, the study aims to decipher consumers’ choices when constructing their personalized bundles.

The research shows a notable decline in the average number of TV sources used by respondents from 7.4 in 2022 to 6.4 in 2023. This decline suggests that consumers are consolidating their streaming services and opting for a more streamlined approach to their TV viewing experience. While the average of TV sources declined, the overall demand for streaming services remains robust.

Though the use of streaming remained the same compared to last year, responses with an MVPD bundle dropped to 55% versus 62% in 2022. Consumers continue to embrace streaming as their primary source of entertainment, and the decline in the number of sources used does not imply a decrease in consumption. Instead, it signifies a more focused and curated approach to streaming, where viewers prioritize quality over quantity.

Evolving landscape

Interestingly the largest segment of viewers (63%) continues to be those who utilize a combination of traditional and streaming TV sources. This remains consistent with last year (64%) and indicates that traditional TV sources remain relevant in the face of the streaming revolution.

The study reveals that 27% of viewers plan to add a subscription to their existing lineup, which is higher than the figure in 2021 (21%). While this shows a continued consumer interest in expanding streaming options, it also suggests a slight decrease from the previous year, as 33% of viewers intended to add a subscription in 2022.

Furthermore, more than half of respondents (57%) state that they have utilized at least one free-with-ads (FAST) TV service, which aligns with 2022 findings. This suggests that despite the proliferation of subscription-based services, free platforms with advertising support continue to attract many viewers. Cost-saving advantages of free services are attractive, and advertisements for access to content are tolerable.

The study also highlights a decline in the percentage of viewers who use three or more of the largest subscription video-on-demand (SVOD) platforms. In 2023, only 43% of viewers report using three or more of these SVOD services, compared to 50% in the previous year.

Hub’s Best Bundle research points to a nuanced streaming landscape, with viewers seeking a balance between traditional TV sources and streaming platforms. While streaming services are immensely popular, traditional TV sources still play a significant role in viewers’ entertainment consumption. The addition of new subscriptions indicates that viewers are willing to explore and invest in streaming services, although the growth rate has slowed slightly compared to previous years. Further, as the streaming landscape continues to evolve, service providers must take note of viewers’ shifting preferences. Streaming platforms can attract and retain viewers in an increasingly competitive market by offering diverse content, personalized recommendations, and competitive pricing.

DCN-Research | Revenue | Video

New DCN consumer research: Digital Media Subscription Tracking

May 23, 2023 Rande Price, Research VP – DCN

Full research report for DCN members only. Register to or login to download (on desktop see top right corner of page, on mobile the top center). Download buttons will appear at the top and bottom of the page.

DCN Members can access the video of today’s virtual event – a review of the study’s topline findings here.

Digital media companies recognize the important role of subscription-based models in monetizing content effectively. Understanding consumer behavior to support this business model is crucial for attracting and retaining subscribers, optimizing user experiences, and staying competitive. DCN’s new consumer subscription study: Digital Media Subscription Tracking offers a deep dive into consumer subscription behavior and covers a wide range of digital subscription services, including SVOD, MVPD, vMVPD, digital newspapers, magazines, and audio – and usage metrics for AVOD and FAST services. The report is DCN members only, please login or register to access (on desktop see top right corner, on mobile the top center).

The Q1 2023 report is available to all DCN members; all subsequent waves will be exclusive to DCN Benchmark participants as part of their Benchmark’s suite of reports offering timely market intelligence each quarter.

This quarterly research, conducted with Screen Engine/ASI, will identify trends and track market penetration, shifts, and growth in the rapidly changing media landscape. The first wave, Q1 2023, surveyed 1,893 adults 18+, representing the U.S. Census population by age, gender, race, and ethnicity. The sample was online-only and represented approximately 89% of U.S. households and adults 18+ with access to the Internet.

Category penetration

One of the study’s key findings is that the U.S. had more than one billion paid subscriptions in Q1 2023 across the digital media landscape – SVOD, MVPD, vMVPD, digital newspapers, magazines, and audio. This indicates that almost all online U.S. households (97%) subscribe to one or more digital media subscription services. On average, households subscribe to approximately nine different pay services when combining all seven digital media services measured in this study.

The SVOD service category has the most subscribers, with nearly a 60% share of total pay subscriptions, followed by MVPDs and vMVPDs, digital newspapers, digital magazines, and digital audio services. The study also indicates that 29% of all subscribers plan to add one or more services next quarter, while 26% plan to cancel one or more, with MVPDs potentially continuing to decline and vMVPD subscriptions potentially increasing.

The study also highlights that free, “ad-only” AVOD and FAST services will continue attracting more traditional media consumers, who tend to be older and watch more linear TV. SVOD with ads and AVOD services will provide a much-needed incremental and growing revenue stream, especially as growth for pay-only services that don’t carry ads slow their subscriber penetration.

Demographic appeal

The demographic profile of digital media service subscribers shows that the heaviest concentration of subscribers for all services combined are slightly younger (P18-34), more male (M18-34), more diverse (Hispanic and African American), family-oriented (parents with children under 18), higher income (households with income $150K+) and slightly more educated. This demographic profile is extremely attractive for advertisers, making the launch of more digital “hybrid” (pay + ads) services likely.

The Digital Media Subscription Tracking study offers digital content companies essential consumer research to support new revenue models and pricing strategies to stay competitive and retain their subscribers.

Please reach out to me at rande@digitalcontentnext.org with questions about the Digital Media Subscription Tracking study.

DCN Members can also access an on-demand video of the study results.

Advertising | Research | Video

Streaming continues to overtake TV

May 16, 2023 Rande Price, Research VP – DCN

In recent years, the traditional television and streaming video industries have undergone significant transformation due to the expansion of digital platforms and changing consumer preferences. To gain insights into these changes, Adtaxi conducted an extensive study, 2023 TV & Video Streaming Survey, exploring the evolving landscape of TV and video streaming with more than 1,000 U.S. adults.

According to the survey, streaming services have solidified their position as the primary mode of video consumption for most viewers. More than 80% of respondents report subscribing to at least one streaming platform, with Netflix leading the pack. The convenience of on-demand content, the wide variety of choices, and the absence of advertisements were cited as the primary reasons for the popularity of streaming services.

Preferred choice

Streaming services are the preferred choice of video consumption for a significant portion of adults, surpassing cable (31%) and broadcast (11%) options. Approximately 42% of adults now opt for streaming services, with 35% accessing streaming content through their TV sets and 7% using personal devices. Roku predicts that this trend will persist and that an estimated 50% of all U.S. households will cut the cord by 2024.

Cord-cutting continues

The research also reveals that the cord-cutting trend shows no signs of abating. A staggering 75% of respondents report that they canceled their traditional cable or satellite TV subscriptions in favor of streaming services. The flexibility, cost-effectiveness, and customizable nature of streaming platforms have made them attractive alternatives to traditional TV providers.

Original content and exclusive deals

In the battle for viewership dominance, original content has emerged as a key differentiator among streaming services. The Adtaxi survey found that 68% of respondents subscribed to a streaming platform specifically for its original programming. Netflix, Amazon Prime Video, and Disney+ were identified as the top platforms known for their high-quality original shows and movies.

Moreover, exclusive deals and partnerships have become important strategies for streaming services to attract subscribers. This includes securing exclusive rights to popular sports events, partnering with renowned creators, and signing contracts with top-tier production companies. These tactics not only help streaming platforms stand out but also provide viewers with unique and diverse content options.

The battle of ad-supported streaming

While subscription-based streaming services dominate the market, the survey highlights the growing popularity of ad-supported streaming platforms. Almost 40% of respondents report using ad-supported services, indicating a willingness to endure ads in exchange for free or lower-cost access to content. This trend should encourage more advertisers to invest in digital advertising within the streaming space, presenting new opportunities for brands to reach their target audiences.

The 2023 TV & Video Streaming Survey sheds light on the ever-evolving landscape of entertainment consumption. The dominance of streaming services, the ongoing cord-cutting trend, the importance of original content, and the rise of ad-supported platforms all point toward a significant shift in viewer preferences and behavior. As the industry continues to evolve, it will be interesting to see how streaming services adapt to meet the demands of their subscribers while providing a seamless and personalized entertainment experience. The future of TV and video streaming looks promising, offering consumers a wide range of choices and content options that cater to the consumer’s interests and preferences.

Perspectives | Video

2 Key lessons international streamers can learn from the U.S.

March 27, 2023 Christy Tanner, President – Tanner Media LLC

For nearly two decades, I’ve had the privilege of helping lead media’s evolution, first as an executive at two U.S.-based companies that were early to market with streaming video products, and now as a digital transformation consultant working with a variety of international media companies.

Many of the global execs I meet these days are worried that they are behind when it comes to streaming—playing catch up with the U.S. But is playing catch up such a bad thing? I say it’s not. In fact, by “playing catch up,” late movers have an opportunity to learn two key lessons from the U.S. streaming market and thus serve viewers more effectively.

1. Streaming is a long-term investment

After several decades in which the basic methods of creation and distribution were relatively stable, digital technology came along and changed the game. Unfortunately, in the early days of digital, many U.S. media companies took a short-term approach to this massive shift.

Instead of undertaking streaming development as an opportunity to fundamentally transform viewer relationships, most U.S. media companies viewed streaming as an experiment or side project. This led to short cuts in product development. That resulted in dozens of copycat streaming interfaces that today all more or less look just like Netflix, for better or worse. This short-term approach also led to a lack of standards development. That resulted in dozens of measurement methodologies and little to no transparency in companies’ stated metrics for success.

Those who are late to market can take advantage of the learnings from this short-term thinking by setting expectations internally and externally about how long their transition will take. Investing long-term in more thoughtful products will strengthen viewer loyalty. Investing long-term in shared metrics standards will strengthen relationships with partners and investors.

Streaming video is a long-term investment in innovation. It is an ongoing commitment to continuous change. Executed successfully, streaming video should mean more value for viewers—increased options and the convenience of on-demand. And that will result in more loyalty for media brands and more value for investors.

2. Do what you do best

The U.S. is a singular entertainment market. It’s large, geographically and demographically diverse, and relatively affluent. The most game-changing media company from the past two decades of U.S. innovation—Netflix—was actually a unique by-product that arose from the proximity of Hollywood and Silicon Valley and the relatively early widespread adoption of broadband in the U.S. market. If your country is not the U.S., don’t assume your non-US-based media company should follow the same strategies as the U.S.-based giants. Your company doesn’t need to be the next Netflix. Nobody wants or expects that.

The U.S. has too many streaming services that are practically indistinguishable from one another from the viewer perspective. Many are stuck managing churn on mediocre products as opposed to building loyalty via truly excellent offerings.

Unfortunately, this came about because the media companies that launched these streaming services incorrectly thought they had to compete head-to-head with Netflix in a winner-take-all Hunger Games. Recognizing that there is room for many strategies and many types of streaming services in the U.S. would have saved many media companies from over-investing in the wrong places.

The lesson here is to chart your own path. You should know your core viewers and the nuances of your market better than anyone—and you should take advantage of that. Not having to compete amid the complexities and pressures of the U.S. market is an advantage for media companies in other regions. Latecomers can avoid the churn management Hunger Games by doing what they do best, focusing on what differentiates their brand rather than copycatting the struggling strategies of other media companies.

Similarly, while there is room for international brands in most markets, there are nuances to local cultures that can allow for native media companies to truly own their markets. This is also the best way to super-serve your audience: build out from your core identity while embracing new streaming technologies and models.

The bottom line

Let’s get one thing straight: streaming is not a war. The “streaming wars” are a narrative concept, convenient for headlines but ultimately an overly simplistic way to frame the latest evolution of the media industry. In fact, there are and will be many successful players, and as streaming further evolves, it will continually present new opportunities for media companies everywhere to entertain, inform, and engage.

The models might differ from company to company, but all should be investing in an ability to execute continuous evolution. Smart media executives can double down on a long-term investment in their core brands and on super-serving their audiences for continued success in their own markets and beyond.

Almar Latour, CEO, Dow Jones and Jason Kint, CEO of Digital Content Next in conversation at the 2023 DCN: Next Summit

Featured Post | Innovation | Perspectives | Policy | Video

Brand-true omnichannel strategy dominates the 2023 DCN: Next Summit

February 22, 2023 Carol Brzozowski – Independent Journalist

While evergreen issues around trust and a focus on the audience experience peppered the first in-person DCN Next: Summit since 2020, emerging opportunities – and concerns – around generative AI were also focal at the event. Held at the Fort Lauderdale beachfront Conrad Hotel, the 2023 summit hosted a wide range of speakers from inside and outside the DCN membership to discuss the business and future of media, brand mission, omnichannel strategy, consumer preferences, and the impact of the challenging economic and regulatory climate.

Surveying the regulatory landscape

DCN CEO Jason Kint kicked off the event with a focus on current key regulatory issues that impact digital media. He emphasized that the focus must remain on aligning content experiences, advertising behavior, and data usage with consumer expectations. He also looked at the current state of antitrust regulation.

As Kat Downs Mulder, SVP and GM of Yahoo News put it: media brands have a responsibility, in asking consumers for their information through sign-ons, “to be protective of our asks and thoughtful about what we request.”

Shoshana Zuboff, Harvard Business School professor and author of the book The Age of Surveillance Capitalism at the DCN: Next Summit 2023 — Shoshana Zuboff, author of the book *The Age of Surveillance Capitalism*

Kint’s points were hammered home by Shoshana Zuboff, Harvard Business School professor and author of the book The Age of Surveillance Capitalism. Zuboff delineated the history of privacy erosion leading to tech companies’ engagement in a “secret massive scale extraction of human data” and how regulation is a driving factor in reining it in.

The current drive towards antitrust and reining in the dominance a few players have over the ad market was a focal point for Utah Republican Senator Mike Lee, who addressed attendees via Zoom. He discussed a bill he is reintroducing “in a few weeks with bipartisan support,” which is designed to restore and protect competition in digital advertising and improve advertising transparency.

“Unfortunately, big tech behemoths like Google have inserted themselves as middlemen into this relationship, extracting monopoly rents not just on their own properties, but from every corner of the entire internet ecosystem.”

How brand focus empowers growth

The impact of emerging regulation is far from the only challenge media executives currently face. Speakers touched on inflation, supply chain disruption, European conflict, U.S.-China tensions, the ongoing impact of Covid, climate concerns, labor challenges, the erosion of trust in institutions, and the fight for free speech.

However, Almar Latour, CEO, Dow Jones and The Wall Street Journal publisher (pictured at top) said that challenges like these actually drive brands closer to their mission. For his brands, that mission is to go deep with products to provide truth relevant to different aspects of the business world, he added. This strategy is one he believes will lead to subscription growth.

Producing great products consumers love and return to over and over is indeed a driving factor in subscription strategy, as illustrated in a discussion between Julia Beizer, Bloomberg Media CEO and chief digital officer and Mulder. She noted that consumers value connecting with authoritative voices in brand podcasts and newsletters.

Bloomberg Media CEO and chief digital officer Julia Beizer, & SVP and GM of Yahoo News Kat Downs Mulder in conversation with Axios' media reporter Sara Fischer at the 2023 DCN Next:Summit — Bloomberg Media CEO and chief digital officer Julia Beizer, & SVP and GM of Yahoo News Kat Downs Mulder in conversation with Axios’ media reporter Sara Fischer.

Indeed, building an infrastructure on the foundation of staying true to one’s brand is key to success, according to Bonin Bough, Group Black co-founder and chief strategy officer.

Brand, however, is not some vague marketing tool. Scott Mills, BET president and CEO said that maximizing brand requires a comprehensive data-driven ecosystem encompassing linear, streaming, and digital platforms.

Advocating for truth and accuracy

Maximizing brand value requires providing consumers with a source of much-needed, trustworthy information – particularly when others seek to tamp it down and create a void that is often filled with dis- or misinformation.

Scott Mills, BET president at the 2023 DCN: Next Summit — Scott Mills, president of BET

Addressing Florida’s Department of Education rejection of the AP African American History course, Mills noted that such actions will “drive us to allocate more of our resources or more of our attention to ensuring that our community—and people who value and respect our community—have access to accurate information.”

Clearly, the need for accurate information is a global one, though journalistic approaches and press freedoms vary widely. In his work as the manager for East and Southern Africa at the organization Journalists for Human Rights, Dr. Siyabulela Mandela has found that offering training to local journalists not only empowers them, but helps their work better serve local communities. He said that improving journalism’s role of providing checks to those in power is critical at a time when “there seems to be a shift from more democratic ways of doing things towards more totalitarian ways.”

Dr. Siyabulela Mandela, manager for East and Southern Africa at the organization Journalists for Human Rights, speaking at the 2023 DCN: Next Summit — Dr. Siyabulela Mandela, Journalists for Human Rights

Mandela advocates for an approach that enables Western journalists to reframe stories in East and Southern Africa and the Middle East with a more contextual focus on human rights by leveraging his organization’s local knowledge base. He favors the idea of a collaborative exchange program for mutual training with journalists from East and Southern Africa. Each, he pointed out, has much to learn from each other.

Evolving with the times

In addition to providing content that continues to address the needs of audiences, speakers discussed how innovation in storytelling provides creative and impactful ways to engage and inform audiences.

For Emblematic founder and CEO Nonny de la Pena, that means finding new ways to use virtual reality. Nicknamed “the godmother of VR” de la Pena illustrated techniques and showed behind the scenes insights into how some of the most powerful VR stories have been created. However, despite her enthusiasm, she said that given the fact that creators of misinformation often leverage powerful tech, it is essential to establish immutable provenance for footage to make it difficult to manipulate.

Alice McKown, publisher and CRO of The Atlantic speaking at the 2023 DCN: Next Summit — Alice McKown, publisher and CRO of The Atlantic

Encompassing non-traditional strategies to engage new audiences requires portfolio diversification, noted Alice McKown, publisher and CRO of The Atlantic. While the company has digitized its entire archive of 30,000 articles from its 165 years, it also has expanded efforts into creating new ways to leverage its IP, including immersive art exhibits, video, podcasts, book publishing, and events.

Hannah Yang, Chief Growth Officer of The New York Times Speaking at the 2023 DCN: Next Summit — Hannah Yang, Chief Growth Officer, New York Times

The National Geographic also has instituted strategies to evolve with the times while staying true to the brand’s core attributes. The magazine still attracts a relatively small, but incredibly loyal following, according to editor-in-chief Nathan Lump. These days, however, National Geographic brand reaches millions of people via social media, the National Geographic Channel on Disney Plus, virtual reality, live events, a travel business, consumer products, books.

Given the many ways that the brand now reaches audiences, Lump pointed out that National Geographic is the biggest it’s ever been in its 135 years. National Geographic boasts 714 million global followers across the major social platforms alone.

For The New York Times, Chief Growth Officer, Hannah Yang told the audience that its impressive subscription growth is achieved through three well-defined missions: a subscription growth mission to meet financial goals; consumer-facing mission offering desired options such as games and cooking; and platform mission to ensure that all parts of the business have the technology and data perspective they need to thrive.

What’s next

“There’s never been a better time to monetize audiences,” noted Alex Michael, managing director of LionTree Group. He stressed the value of omnichannel strategy and bundling while discussing the investment opportunities his company is leaning into this year.

Richard Plepler, founder, EDEN Productions and former HBO chairman and CEO speaking at the 2023 DCN: Next Summit — Richard Plepler, founder, EDEN Productions

The power of omnichannel was echoed by a number of speakers, including board member Robin Thurston, Outside Interactive founder and CEO. He said, “The concept of single sign-on omnichannel helps connect the dots and create value.”

Richard Plepler, founder, EDEN Productions and former HBO chairman and CEO, reminded attendees of something he’s advocated for many years: quality over quantity. “More is not better; only better is better. I am not of the belief that tonnage gets you more subscribers – what gets you more subscribers is when brands deliver on their promise.”

As DCN members map out strategies for 2023, innovation and audience focus remain constant. However, to win amidst contemporary challenges developing a seamless omnichannel strategy, while staying to brand mission, will be key to attracting new consumers and retaining existing ones.

Content production policy captures the global spotlight

February 9, 2023 Bryson Masse – Independent Journalist

Discoverability, funding, IP ownership, and cultural sovereignty are topics at the forefront of how and to what degree streaming companies should be put under government regulations. As today’s over-the-top streaming platforms continue to navigate emerging domestic rules and regulations, jurisdictions outside the U.S. have started to introduce new content and funding obligations for these services.

The ability to transcend borders has long been a defining characteristic of video streaming platforms: Anyone with an internet connection could view all the content. Initially, incumbent broadcasters and traditional distribution channels faced massive disruption as consumer preference shifted away from linear channels to the choice of what to watch and listen to from hundreds of options. With the wide adoption of digital distribution technology, streaming services became content creators themselves, while traditional content producers launched non-linear platforms to compete.

As is often the case with rapid technological advancements, legislation and regulation are now playing catch up. Local players in global markets have long made the case that the playing field must be leveled against the size of U.S.-based streaming companies, and officials have started to listen. Regulations are evolving to include localized content mandates and participation in domestic industry. Here’s how it’s playing out.

Europeans make early moves

In 2018, the European Union passed the Audiovisual Media Services (AVMS) Directive which included stipulations that the streaming platforms must offer a 30% quota of European content to European consumers. It also built a framework that allowed individual countries to mandate the streamers allocate revenues back into domestic production.

Right now, France is one of the countries with strongest local content rules. Streaming platforms must reinvest 20 to 25% of the domestic revenues back into French production. In France and elsewhere in Europe, since the regulations have been in place, Netflix has reached or exceeded the 30% local content requirements.

English language markets feel the squeeze

Because of the cultural juggernaut that is the U.S., other English-language regions have long felt compelled to shore up local production with support from their respective governments. This trend continues to be a flash point in debates about government overreach.

At the end of January, the Canadian senate passed Bill C-11 or the “Online Streaming Act,” an updated version of the country’s Broadcasting Act, which will allow the federal regulator to include international streaming services in its powers to levy fees and control how content is displayed. It’s expected to become law within a few weeks. Canadian governments have long sought to counter the influence of the cultural output south of its border, and the legislation attempts to extend those rules into the online space.

Similarly, Australia announced its own new “National Cultural Policy” around the same time. While it doesn’t outline the exact plans to regulate online streaming services, the Australian government laid out its goals to address the decline in local broadcasting revenues and bolster the creation of domestic productions.

While the report acknowledged the level of quality and popularity of the current slate of Australian content on the platforms, “these services have no requirements to make Australian content available on their platforms. The ready availability of mass content produced in other countries, particularly the United States, risks drowning out the voices of Australian storytellers,” read the Australian government’s cultural policy plan “Revive.”

While no longer part of the AVMS, the UK’s government continues to investigate the creation of rules so that the Office of Communication (Ofcom) will have jurisdiction over overseas streaming services. This recently came to a head when complaints about the Netflix docuseries featuring Prince Harry and Meghan Markle had no official avenues to be heard.

Canada’s new legislation stands out

The proposed legislation north of the border has faced headwinds from entities both large and small because of the unique nature of the proposed laws. “C-11 is a bit of an outlier. In that it extends to user generated content on platforms like YouTube or Tik Tok. The European example does not,” said the University of Ottawa’s Canada Research Chair in internet and E-commerce law, Michael Geist.

Major pushback has resulted in the inclusion of user generated content and subsequent amendments have been put forward to avoid some of the issues with attempting to put all online content under the Canadian regulatory umbrella.

In September, Disney and Spotify asked the federal government to be more flexible about what it considered “Canadian content.” The streaming services warned that certain material, while ostensibly produced in Canada with a Canadian cast, wouldn’t count under the current rules, which include Canadian ownership of intellectual properties.

However, it’s worth noting that trade agreements such as the North American Free Trade Agreement (NAFTA) and the Canada-United States-Mexico Agreement (CUSMA) include provisions that protect the ability of companies to trade in audiovisual services across the Canada-U.S. border. Already, the U.S. embassy has expressed reservations about the proposed laws violating non-discrimination terms of the free trade agreements signed by the two countries.

While the bill is slated to pass the legislature, much of the specifics will need to be determined by the arms length content regulator the Canadian Radio-Television and Telecommunication Commission (CRTC). So the final rules and the structure of the regulatory framework remains unclear and will be subject to a public consultation process.

Despite the efforts in international English-language markets to avoid being drowned out, English language markets still generally benefit from the sympatico of shared language with the largest content producing sector in the world.

“Those English markets have had significant success, attracting investment from large streaming services and large production companies,” said Geist. “To Canada’s case, it’s a thriving sector that’s based in part on tax, [and] part on proximity to the U.S. market. So I don’t know that that necessarily suggests that what you need is more protection.”

Policy issues on the streaming video horizon

October 27, 2022 Chris Pedigo, SVP Government Affairs – DCN

The streaming video marketplace is expanding and evolving at a breakneck pace. While the market was growing long before Covid, the pandemic lockdown spiked demand and cemented new habits for consumers across demographics. Consumers have devloped a ravenous appetite for streaming, which content providers are happy to satisfy.

Not surprisingly, the number of policy issues surrounding streaming video has grown at a similar pace. Some of these issues have been around for a while, while others emerged just this year. As with all expanding markets, it is critical to monitor regulatory and policy activities to ensure that the market is positioned for healthy growth. To that end, let’s review the current slate of legal, regulatory and legislative issues poised to impact streaming video companies.

New taxes and fees

A host of states and municipalities are attempting to extend franchise fees, which are typically levied on cable and internet service providers, to streaming video companies. Similarly, the Federal Communications Commission (FCC) is considering requiring edge providers (aka companies with apps and websites) to pay into the Universal Service Fund (USF).

The rationale is that the companies that provide high quality, high bandwidth content to consumers should pay for the infrastructure that enables consumers to access this content. Of course, this position fails to recognize the fact that franchise fees and the USF were initially established as a way for cable companies and ISPs to return the benefit they gained from public investment in their infrastructure.

Streaming video companies, however, did not receive any federal or local funding. While actions like these would be detrimental to the entire streaming market, they would disproportionately impact small and diverse content creators because they don’t typically have diversified revenue streams. Instead of levying new taxes on an emerging set of services, it would be better for Congress to continue funding broadband deployment initiatives, which helps level the playing field for equitable access.

Emergency alerts

In 2021, the FCC asked for comments on whether streaming companies should be required to broadcast emergency alerts in the same way that traditional television and cable providers are required to. DCN weighed in with big concerns about the technical and financial burdens of that proposal. We also noted that the costs would likely significantly outweigh the benefits when you consider the fact that consumers already receive these alerts on their phones. The agency prepared a report for Congress and appears to have shelved the proposal for now, but it’s worth monitoring.

Caught up in the techlash

Policymakers at the state and federal level have grown increasingly antagonistic toward big tech platforms. With each new scandal, we typically see a rash of bills introduced in an effort to right the wrongs. Unfortunately, sometimes those bills are overly broad, and they inadvertently affect streaming video companies.

One recent example is the Kids Online Safety Act (KOSA), which was introduced by a group of bipartisan well-meaning Senators after whistleblower Frances Haugen testified before Congress about Meta’s predatory practices with regard to kids on their platforms. The bill purports to address the role that “social media platforms play… in the mental health crisis for children and teens.” However, the bill would also cover streaming video companies which offer professionally-curated content in a safe environment – pretty much the polar opposite of social media services teeming with user generated content.

Data rights and consumer privacy

In the absence of a federal privacy law, five states have now passed their own privacy laws. Of course, these laws apply to a wide range of businesses, impacting far more than streaming companies. However, the new laws will certainly have an impact on how the sector develops, particularly on how consumer data is collected and used.

For example, the California Privacy Rights Act (CPRA) builds on existing California privacy law to provide consumers with robust rights to delete, correct and port data that companies hold about them. Starting next year, consumers will also enjoy easy ways to opt out of the sale or transfer of their data.

Meanwhile, big tech companies like Amazon and Google are battling with newer platforms like Roku, and a raft of advertising-supported video providers, to carve out space in the streaming business with an eye toward harnessing valuable flows of consumer data. If this plays out like the broader web, then whoever controls the data will corner the revenue.

As the streaming video market matures, more policy issues will surface. It’s the hallmark of every evolving sector. The question is whether the streaming video market can continue to grow with healthy competition or whether punitive fees and the collateral effects of dealing with the bad behavior of tech platforms will gum up the works.

To ensure that new entrants and innovation have the opportunity to flourish, DCN will continue to advocate for sound legislation that addresses the specified harms and that unnecessary hurdles are removed. Consumers have high expectations, so should we.

DCN-Research

DCN explores the rise of, and best practices for, AVOD and FAST services

October 12, 2022 Rande Price, Research VP – DCN

As consumers continue to cut the cord at high levels, we see a rise in the adoption of Connected TV (CTV) and free ad-supported TV streaming (FAST) services. What’s old is new again, and the reinvention of free TV is happening now.

Digital Content Next (DCN) partnered with Magid to uncover insights on how the streaming market is developing and to take advantage of the growth in AVOD and FAST. DCN’s new report, The Rise of and Best Practices for AVOD/FAST, exclusive to DCN members, focuses on FAST and the recent consumer response to these services. The report provides thought leadership and best practices for media brands looking to develop and expand a FAST business model.

The methodology includes:

Qualitative interviews with a subset of senior executives from DCN member organizations and secondary research to provide a competitive analysis, content and monetization strategies, distribution plans, and platform partnerships.
Quantitative survey analysis utilizing Magid’s proprietary Video Entertainment Study (VES) to offer consumer tracking, segmentation, and forecasting models in the AVOD and FAST marketplace.

Growth of AVOD/FAST

A post-pandemic mindset and rising inflation are changing consumer attitudes and needs. We see consumers leaning towards FAST services as they become more mindful of their budgets and cut their pay TV cords.

According to Magid’s proprietary data, 82% of U.S. households consume subscription video-on-demand (SVOD) and have at least one paid streaming service. While the growth in SVOD is near saturation, AVOD and FAST channels on streaming services are growing even faster. Since 2019, AVOD/FAST grew by 55% compared to 28% for SVOD. In fact, most Americans (62%) now report using at least one AVOD or FAST service as subscribers or viewers.

AVOD/FAST is now the second most common platform for viewing professional video content among those under 50 and the highest among millennials. The usage growth among 13-24-year-olds is even more pronounced (+15% points since 2020). Media brands must pay attention to the viewing habits of Gen Z, the largest generation, as they mature in the marketplace.

The intention to cut the cord accelerated in 2021 (36% growth among 18–64-year-olds and 70% among 18-34-year-olds between March 2021 and December 2021) and is driving the growth of CTV devices in the home.

Ad market and business opportunities

According to Variety, the forecast for the advertising revenue of FAST channels in the U.S. will total more than $6.0 billion dollars by 2025. This marks an increase of about $3.0 billion dollars compared with the estimate in 2022. Furthermore, nScreenMedia forecasts that the average CPM will also increase from $14 in 2022 to $18 in 2024 due to targeting and advertiser competition for inventory.

In an increasingly “platform agnostic” world, an important way for media brands to boost relevance is by being omnipresent. Today’s consumers do not care where they get the content they want. AVOD and FAST offer an opportunity to reach untapped audiences and to meet different audiences “where they are.” The growth of AVOD and FAST is creating a bigger pie rather than dividing the pie into narrower slices. Senior executives at DCN member organizations believe AVOD and FAST are more additive than cannibalistic.

AVOD and FAST are growing in audience and influence because they offer affordable and appealing options for consumers to access a wide range of content without paying for a subscription. DCN’s The Rise of and Best Practices for AVOD/FAST identifies essential strategies for media brands to navigate at the forefront of this significant shift in the current video distribution space.

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Industry experts offer 3 ways streaming services can reduce churn

October 6, 2022 Matthew Keys – Independent Media Reporter

The Wall Street Journal recently profiled a couple that they characterized as frustrating customers for streaming services. They subscribe to a streaming service, binge what they want to watch, then drop that service and move on to something else. Unfortunately, they are emblematic of a growing segment of streaming audiences.

When Netflix was king of the streaming services, this practice was rare. This was, in part because Netflix had a little bit of everything: hit shows like “The Office” and “Friends,” interspersed with licensed movies from blockbuster studios and must-watch original programs like “House of Cards” and “Orange is the New Black.” Didn’t have Showtime but wanted to watch “Dexter?” Netflix had it. Want to watch “Breaking Bad” without cable? Netflix had that, too.

But over the last few years—as others seek to reap the attraction of their own IP—Netflix has lost some of those key titles that once made the streaming service a must-have for households. NBC moved “The Office” to its own service, Peacock. Warner Bros. did the same thing with “Friends,” bringing it to HBO Max. “Dexter” is now exclusive to Showtime, which can be had as an add-on within Paramount Plus. “Breaking Bad” is still on Netflix, but only for the next few years, at which point it will presumably be exclusive to upstart streaming service AMC Plus.

Unfortunately, the diffusion of content to various services has created a nightmare scenario for streamers. Now, couples like the one profiled by the Journal are becoming the norm.

According to the analytics firm Antenna, around 19% of customers who subscribed to premium, cornerstone streaming services like Netflix, Amazon Prime, Disney Plus, and Hulu dropped three or more of their subscriptions between June 2020 and June 2022. That’s an increase of 6% compared to the period between June 2018 and June 2022.

Their loss has been a benefit to newer streaming services like Paramount Plus, Apple TV Plus, Discovery Plus, and others. However, the nature of how the streaming video business works means their models are not ironclad. Most services offer monthly subscriptions, and with no contract or other long-term mechanism to lock them in, customers can drop those start-up services just as easily as churn through the premium ones.

There are some obvious ways a streaming service can keep customers engaged in a way that reduces churn: Offer compelling shows and movies. Keep the price affordable. Make it easy to use. Make it available on every platform and every device. But with a dizzying landscape of streaming services that are spinning up at a breakneck pace, low prices and hit programming aren’t enough of a strategy to keep viewers locked into a service over the long term.

So, we asked some experts in the video space for other ways streaming services can grow their audience while keeping churn levels relatively low. Here is what they suggest:

1. Know your audience, and respond with that content

When the Fox Nation streaming service launched four years ago, the brand was franchised from Fox Nation section of the Fox News website, which offered a mixture of political and social commentary from thought leaders and digital correspondents. In some ways, it was a “Fox News Plus,” in that it carried several streaming political commentary shows and documentaries that were largely hosted by Fox News personalities.

That worked to a point. But as time went on, executives at Fox News Media realized the Fox Nation streaming service could serve as a platform for other types of content. It offered a home for historical documentaries, general entertainment programs, reality-based shows—content that Fox News enthusiasts had to find across a number of other services, if they were offered at all.

So Fox Nation has stepped up to fill the void. The service commissioned original shows and documentaries that it figured would appeal to the average Fox News viewer. And it has made them easy to find in a single service at a low price point.

“We definitely know what the space looks like for Fox Nation: it looks a lot like what the Fox News audience watches when they’re not watching Fox News,” Jason Klarman, president of Fox Nation, said in an interview. “Curation is at the heart of this. It’s about serving an audience that wants us to give them the content that they otherwise might go somewhere else—everything from real estate shows to cooking shows.”

The opinion programming is still there. In fact, Fox Nation viewers get next-day access to prime-time shows like “Tucker Carlson Tonight” and “The Ingraham Angle” as part of their subscription. But they also get shows like “Sharon Osbourne: To Hell and Back,” a documentary that dives into the issues of cancel culture; “The Pursuit with John Rich,” an interview show with the country music star; and “Historical Battles for America,” a docuseries hosted by Kelsey Grammer.

While the Fox News audience might be considered niche, Klarman said focusing on what those viewers would want to see from a general entertainment streaming service has done very well for Fox Nation. In fact, he went so far as to say Fox Nation has one of the lowest churn rates in the industry (second only to Netflix, he says) because the streaming service’s programming is able to make an emotional connection with the core Fox News audience.

“The opportunity is as big as we want it to be,” he said.

2. Partner with a streaming platform

While some companies like Fox, Showtime and Discovery are able to leverage their traditional cable brands to lure viewers into a streaming service, other upstarts like Acorn TV, Britbox, and Shudder have ventured into the streaming landscape with virtually no name recognition. And all still have the challenge of keeping customers once they’ve signed up.

None of this was a problem for media companies in the era before streaming: If a customer wanted premium television, they signed up for cable or satellite. When they did, they could reasonably expect to have access to the channels carrying the shows that were discussed around the water cooler at work the next day. And accessing a new show was as simple as changing the channel.

Today, things are different. Content is spread out across a few services, which makes for a confusing landscape with many gatekeepers. That is a problem that the big four streaming platforms—Roku, Amazon Fire TV, Apple TV, and Android TV (Google TV)—have sought to address with various algorithms that help viewers discover content across services.

Roku takes things a step farther with its Roku Channel, an app that comes preloaded on every Roku device sold. Through the Roku Channel, users can sign up for dozens of third-party streaming services like Showtime, Starz, Discovery Plus, Paramount Plus, Epix, Acorn TV, and others. The services are paid for using Roku Pay, and content is streamed within the Roku Channel app. The approach makes purchasing a new service and streaming shows and movies a frictionless experience for customers.

“The Roku Channel allows us to showcase content and make it easy to discover and find and potentially attract audiences that would never have discovered it,” Nicole Fencel, a Roku executive in charge of premium streaming services, said at the NAPTE Streaming Plus conference last month. “Otherwise, it’s very hard for smaller services to play in an ecosystem that’s consumed by these major services…finding ways to bring that content up and elevate it across the platform is a way that we can help.”

The Roku Channel is not alone in offering this type of feature. The Apple TV app and Amazon’s Prime Video Channels also offer a marketplace for buying third-party streaming subscriptions, with content delivered within those apps. Google is reportedly working on a similar marketplace that will be powered by its YouTube streaming service.

None of those tech companies require streaming services to offer subscriptions through their marketplaces in order to reach customers on their platforms: Showtime, Epix, Paramount Plus, and others are still available as individual downloads, and customers can sign up directly for those services through the websites of each company.

But Fencel said there’s a benefit to partnering with the Roku Channel: Users have an easier time watching movies and TV shows across different services when they do so through that app, and Roku has developed numerous technologies centered around learning what its users like to watch, then surfacing movies and TV shows they may want to watch next.

“Finding ways to bring that content up and elevated across the platform is a way that we can help,” Fencel said, noting that helping users discover new content can lower overall churn rates.

3. If a customer is going to leave, make sure they leave happy

But Roku’s technology, and that of its competitor platforms, can only take a streaming service so far, something that Fencel acknowledged during her interview at NAPTE last month.

“We will make sure we help prevent churn as much as possible, but if a customer is going to make the decision (to leave), they’re going to make the decision,” Fencel said. “So, our job is to try to figure out, how do we re-attract them?”

Some might assume that the answer is simple: Add more programming that people want to watch. Or lower the price of a service to attract more customers. But some streaming services don’t have the benefit of adding programming or changing prices on a whim.

Philo is one such streaming service: It offers more than six dozen live pay television networks, the same found on cable and satellite, for $25 a month. Philo is able to keep the price low by making deals with programming partners that don’t offer cable news or sports channels. And, luckily, Philo carries a handful of channels that are responsible for many cable hits, including AMC (“Breaking Bad,” “The Walking Dead”) and Paramount Network (“Yellowstone”).

However, Philo is still very much at the whim of its programming partners. It can’t control the shows and movies that the live channels choose to carry in a given season. And it knows that customers might sign up to watch a season of a show like “Yellowstone”, and then leave for a different service once that show has run its course for the year.

Thus, Philo’s executives spend a lot of time thinking about the thing they can control: The customer experience. Does the app work? Is there enough variety? Can customers tune in and relax, or do they have to spend a lot of time finding something to watch?

That strategy has worked well for Philo. The service has grown to over 850,000 paying subscribers as of last year. (The company is private and doesn’t regularly reveal how many subscribers it has). Still, like other streaming services, it allows customers to start and stop service on a whim, which it considers to be its advantage over cable and satellite. However, its a situation that keeps the door revolving.

“I think everyone kind of accepts that churn is a reality,” Andrew McCollum, Philo’s chief executive, said in an interview. “But we have a particular belief that it’s really important people have a good experience with Philo, and that even if they leave, they leave happy.”

Philo’s philosophy is that a satisfied customer who ends their subscription will likely return when their favorite show starts up again, or when they discover a new program that is on a channel carried by the service. It is the kind of brand loyalty strategy that starts and ends with the overall customer experience.

“In a world with high churn, if people have a good experience with Philo, and they leave, and they leave happy, the next time they want to watch something we carry, hopefully they’ll come back to us,” McCollum said.

Forget cable 2.0. Streaming video is TV 3.0

September 1, 2022 Matthew Keys – Independent Media Reporter

A few weeks ago, analytics firm Nielsen Research earned some splashy headlines after it issued a press release reporting that television viewers streamed more content than they watched on cable TV for the first time.

To clarify, Nielsen’s own research put streaming services ahead of traditional cable products for the first time since it began collecting data on those practices. And, arguably, some of its data is debatable, since it rolled services like Hulu with Live TV and YouTube TV into both the “streaming” and “cable” categories (cable networks are core to both products).

Also, while Nielsen’s own data has streaming at a slight edge over cable, columnist David Bloom notes that the measurement firm doesn’t typically gather data from devices like computers or game consoles where streaming services are also offered. More importantly, as Bloom pointed out, the Nielsen report probably reflects a consumer trend that has been taking place for several years.

Still, the survey has fueled comparisons between streaming services and cable television — and not always for the better. Bloomberg media correspondent Lucas Shaw recently wrote that price hikes and advertising made it so that “the streaming business is starting to look like cable TV from 10 years ago.” The idea is that price hikes and advertising are turning the streaming industry into “Cable 2.0“.

It is difficult to argue with that logic from a price perspective: Netflix, Hulu, Amazon Prime, Disney Plus are among the streaming services that have implemented one or more price increases since their debut. (Netflix has raised subscription fees on average at least once per 1.5 years since 2014). But to focus squarely on price misses the bigger picture: Streaming has liberated good entertainment from the wall jack and the television set. And, in doing so, has made it cheaper and more-accessible than at any point in television history.

Streaming is not too far removed from cable’s history

Accessibility has spurred technological advances throughout the history of domestic television: Broadcast TV emerged about a century ago as a way to add moving pictures to radio programs. What is commonly known as cable TV started out as community antenna television. Regions in remote parts of the United States banded together to build a giant antenna capable of receiving distant broadcast signals, then ran coaxial cable from the antenna to homes. Customers paid a few dollars to maintain the system and had access to most, if not all, of the main three networks plus a handful of independent stations.

In the mid-1970s, television mogul Ted Turner figured he could make a few dollars more from the advertising he ran on his Atlanta station, WTBS (Channel 17), if he uplinked it to satellite. From there, cable systems could receive the station and distribute it to their viewers. The idea took off, and soon stations like WGN (Channel 9, Chicago) and WOR-TV (Channel 9, New York) jockeyed for satellite space so they, too, could get national distribution on cable.

Years later, another television pioneer, John Malone, saw that cable was a much-bigger business opportunity than anyone else seemed to realize. His Tele-Communications Incorporated (TCI) grew to become one of the dominant-players in the industry between the late 1970s and the mid-1990s. Malone and TCI bankrolled some of the first cable-only networks around (including Turner’s own CNN when it faced bankruptcy). And many of those cable networks are still around. (TCI is currently owned by Comcast.)

Both phases of television limited viewers to their TV sets. It wasn’t until streaming came along that video was finally liberated from the living room cable jack.

Streaming is not an extension of cable — it’s an evolution of television

Jason Cohen spends a lot of time thinking about this 30,000-foot view of the domestic television industry. In 2019, he left his job as a media portfolio manager for a Wall Street firm to launch MyBundle.TV, an online marketplace for streaming services. He thinks people who focus on streaming services being the new cable — “Cable 2.0” — are missing the bigger picture. He believes that “TV 1.0 was broadcast, TV 2.0 was cable and TV 3.0 is streaming. It’s taking the closed, set-top box model of TV 2.0 and opening up the marketplace.”

There are still pain points for streaming services, with price being an obvious one. It’s true that over the last few years, most major media companies have raised their subscription fees as they invest billions of dollars in original content production earmarked for their own direct-to-consumer services.

And the marketplace is reacting to rate increases by diversifying their subscription tiers. For years, Hulu has offered customers the choice of buying their streaming service at a budget price if they are willing to tolerate ads. They also have the option of paying more money if they want a commercial-free experience. Since then, other streaming services like HBO Max, Discovery Plus, Comcast’s Peacock and Paramount Plus have taken the same approach. Disney and Netflix have confirmed plans to do the same in the near future.

Cohen thinks price diversification will help a streaming service appeal to a broad group of customers at any given time: “If a household wants to save money, they can watch tons of free, ad-supported streaming services. If a household has money to burn, they can spend a ton of money on ad-free tiers of streaming services and never watch another commercial again. And if it’s something in-between — which is probably most of the country — it’s subscribing to a handful of services at one point, and then switching them out during the year.”

TV 3.0 is a chaotic landscape that will stabilize with time

There is some data to suggest that consumers are growing more comfortable with the idea of switching services on a whim. According to the analytics firm Antenna, around one in five households dropped three or more subscription services in the two years ending this June. In 2020, the number was closer to one in 20 households within the same two-year stretch.

One reason why subscribers might be switching away is the sheer volume of streaming services. Consumers are also finding their favorite TV shows and movies shuttled between them. Netflix, for instance, has lost several of its top comedy shows: “Friends” moved to HBO Max, then “The Office” moved to Peacock. Disney has slowly pulled titles from Netflix, too, as it seeks to reclaim movies for its own Disney Plus streaming service.

The revolving door of content hits on another pain point for streaming: In the TV 3.0 world, finding content can be a confusing experience. Cohen believes that platforms are starting to address this by building technology that makes it easier to find shows and movies across a number of different services and devices, and recommendation engines should become better and easier to use over time.

As Cohen describes the situation, “Where is it easiest to discover shows? It’s probably your phone. Where’s the best place to watch TV? It’s probably on the TV.”

So, how do manufacturers and platforms respond to that? By building a bridge between the two — whether that’s Vizio Account, or a Samsung app, or a Roku app, or something else. As he points out, “every TV maker and every operating system is trying to figure out the best way to help consumers find content on their platform.”

That said, Cohen acknowledges the streaming world is something of a mess right now. Mergers and acquisitions mean the owner of one streaming service (like CBS All Access or Discovery Plus) suddenly becomes the owner-operator of another (Pluto TV, HBO Max). And that, of course, means figuring out a long-term strategy for both. (If you’re Paramount Global, each streaming service lives in its own ecosystem. If you’re Warner Bros Discovery, you announce plans to get rid of two flagship streaming services and start anew).

It is a particularly chaotic time to be a sports fan, with sports rights to popular franchises like the National Football League and Major League Baseball split between broadcast, cable and streaming. Major League Baseball games, for example, are carried on regional cable sports networks in many markets, except for a few games that are exclusive to either NBC (and Peacock) or Apple TV Plus. This means that baseball fans this season might have to subscribe to cable and make an account with Peacock and Apple just to follow their home team.

Adding to the confusion is the lack of a single sign-on feature that allows customers to have one username and password that covers every service they want access to. Some companies have experimented with offering a feature that comes close to this: Roku, Apple and Amazon have streaming marketplaces baked within their own platforms. And Vizio recently announced Vizio Account, which seeks to replicate that experience. (Google is also reportedly exploring this idea.)

Cohen’s own MyBundle.TV is a platform-agnostic marketplace that asks streamers about the channels and programming they want to receive, then directs them to streaming services where they can find it. Eventually, customers will be able to manage their subscriptions from within the MyBundle.TV platform. Currently, MyBundle.TV only offers this feature with Sling TV, but other partners are in the works.

Malone, the cable magnate who pioneered TV 2.0, thinks bundles will eventually be the winning ticket for TV 3.0. He also believes there will be further consolidation between media companies as their war with each other intensifies.

Cohen backs the idea of a single platform where customers can start and stop streaming services at will — he left his Wall Street job to build that kind of product. But he’s not convinced that streaming services have to appeal to everyone with everything. He thinks niche streaming services can be successful on their own merit: “Streaming services don’t need to be everything for everyone. There are options that appeal to every household.”

As content becomes more fractured, Cohen said consumers need to resist the itch to sign up for every streaming service that is out there. The idea that customers had to have access to everything hearkens back to the days of TV 1.0 and 2.0 — when popular shows were watched in real-time on just a handful of channels, whether they were on broadcast TV or cable. That experience resulted in appointment-viewing — people had to watch shows at a certain time (later, they could record them for delayed viewing) — and also helped spur water cooler conversations and pop culture moments.

The TV 3.0 landscape is different. Streaming, for the most part, doesn’t require appointment viewing, because people can — and do — watch things on their own time and at their own pace. Cohen says things like streaming watch parties are offering solutions to people who still want television viewing to be a social experience. But it appears to be a technology that few people want. What customers do want is access to everything. But those days are long gone.

Streaming still has its challenges. However, the technology will improve over time and consumers will eventually come around to the idea that the convenience and price of streaming is worth the sacrifice of not having access to everything. That, coupled with the flexibility of starting and stopping services as well as the ability to watch programming across any number of devices, means streaming should not be reduced to Cable 2.0. It is an evolutionary leap in a revolutionary entertainment experience. It’s TV 3.0.

Live sports may be the ticket to growing streaming audiences

August 30, 2022 Chris M. Sutcliffe – Independent Media Reporter

Live sports have been the jewel in broadcast companies’ crowns for decades. The allure of a live and hugely engaged audience has proved to be an effective draw for brand advertisers, particularly those with high-value consumer goods to hawk. That allure hasn’t lost its luster.

Sports broadcast rights remain competitive, expensive, and increasingly fragmented. But what has changed is how audiences choose to interact with sports content. The rise of social media and streaming platforms has changed the game, as their inherent interactivity enhance the appeal of live sport.

Combine this with the investment other media companies have placed in their subscription- and advertising-based streaming platforms, and the growing cost of sports content, and you have a space ripe for disruption. And while the details of exactly how disruption is taking place varies by platform, sport and country, it ultimately has the same cause as the tumult across the media world: tech turning passive audiences into active participants.

Social sport

At Twitter’s recent Newfronts appeal to advertisers, the company announced the rolling over of the platform’s partnership with the WNBA. This marks the sixth year of the partnership which grants Twitter the broadcast license for live games. It is no coincidence this is designed to further engage a predominantly women-led audience at a time when bringing in new audiences is key. Following its 2022 regular season, the WNBA announced that the league “set records for engagement with 186 million video views (+36% vs 2021)” across its social media platforms.

Twitter’s rationale for that partnership is its ability to offer real-time reaction to every basket and foul on. The real-time interplay between tech platform and sports content is part and parcel of how many media companies are selling their sports streaming to advertisers.

Theo Luke, senior director of global content partnerships at Twitter, tells me, “A fundamental to the live sport experience is talking about it. Increasingly broadcasters are actively including social media rights in their deal renewals with leagues because they see the value of highlighting clips alongside the live streaming experience to capture larger audiences and other revenue streams.”

“For example, through our recent Twitter Amplify partnerships with ITV and Formula 1, we offer a number of real-time highlights and the opportunity to engage with the moments that matter directly on people’s timelines,” Luke continues. “From an advertiser’s perspective, this not only allows you to align with premium video content, but also position yourself at the heart of the action and fanbases. When sport happens on Twitter, you don’t have a passive viewership, but an engaged, attentive and connected audience.”

Live community interaction has also been Twitch’s core appeal from even before it was Twitch. Since its acquisition by Amazon, the livestreaming platform has been inching ever closer to a destination for premier sports content. That’s been accelerated by Amazon’s investment in the broadcast rights for sports, and the deeper integration of its advertising tech with the Twitch platform.

In 2020, only two years after Amazon acquired some of the rights for Premier League matches, it was already streaming those high-value matches for free on Twitch, as well as NBA content. At the time, Twitch’s content acquisition lead, Eric Brunner, said, “They’re very open to exploring new ways to engage their community, like co-streaming USA Basketball on Twitch.”

Effectively, then, the new streaming platforms are hoping the pre-existing live interaction that formed their core appeal will supercharge interaction around sports coverage. That creates huge opportunities for potential advertising partners, both in terms of activating those audiences in the moment and by providing analytics around the interaction.

Sports clubs reap the benefits of streaming

The transition to sports streaming on new platforms is also being driven by the sports leagues and clubs themselves. Andreas Jung, chief marketing officer for FC Bayern Munich, told me the club’s engagement windows have widened beyond match day: “This is the expectation that the fans have and they want to participate in everything. This means that they consume content everywhere and anytime… 24/7.”

Fans can pay a yearly fee to be club members, and Jung says members, “have the expectation to get more information, to get to be closer with a club and therefore we have to bring them more information, we have to bring them more services and so on and so on.” As a result, Bayern is betting on its multi-year partnership with Adobe to boost its streaming content for users – and to deliver greater advertising revenue.

Opportunities for smaller leagues and networks

And while platforms and the bigger legacy leagues take advantage of the new advertising opportunities afforded by live streaming, smaller clubs and platforms are effectively launching as alternatives. Unbound by the limited amount of airtime on linear channels, new wrestling leagues are vaulting over the lower bar to entry to replicate some of the new opportunities – albeit at a smaller scale.

Guildford Town FC is a regional soccer team in the UK, far removed from the glittering heights of the Premier League. Speaking about the club’s partnership with dedicated sports streaming platform Joymo, its manager Paul Barnes echoed the comments from larger clubs: “I believe this is where the world is going. We’ve talked about the benefits from a playing perspective and staying connected with our fans, but this is also a way for us to make revenues that can help the ongoing development of the club.”

In the U.S., too, smaller leagues are using streaming to grow audiences and revenue. Overtime, a sports media company aimed at Millennials, recently raised over $80 million in a Class C funding round. Much of the confidence around the investment is predicated on Overtime’s strong social media and streaming offering, which includes 65 million followers across all of its 80 social media channels

The strategy was pioneered by esports leagues, which grew from grassroots to huge events through judicious use of live streaming platforms like Twitch. What is especially interesting for wider media companies, though, is that even traditional broadcasters, such as BBC and BT Sport, are now adding esports coverage to their linear offerings.

New audiences, new approaches

“Twitter works alongside broadcasters and rights holders to help make live sporting events even bigger,” explains Luke. “Our platform connects people directly to what’s happening around live events and that conversation provides greater value to our partners.”

He continues, “Most recently, we saw this with the UEFA Women’s EURO 2022, which saw the number of tweets [triple] ahead of the final and nearly 900 million impressions in the UK throughout the tournament. Watching live sport in 2022 isn’t just about consumption, it’s also about engagement.”

James Hartnett, account director for sports-specialist marketing agency The Playbook, told me, “As the topics and ways they are discussed has also evolved, so too have the platforms sports fans turn to. The primary source of 39% of 18-24-year-old ‘social natives’ for sports news – including match highlights, unique moments and opinion commentary – is TikTok, Instagram and YouTube. The stats are much the same for 25-34-year-old, though they tend to prefer Facebook over TikTok.

Streaming has indelibly altered sports viewing. This creates new opportunities across the ecosystem, especially when it comes to engaging new, often younger, audiences – a challenge most publishers can relate to.

Industry-Research

Key trends shaping the booming streaming market

June 28, 2022 Rande Price, Research VP – DCN

Earlier this year, Tubi forecasted that free streaming audiences would grow more than paid streaming by mid-2022. Fast-forward to comScore’s new State of Streaming 2022 Report, which backs up this prediction. The comScore data shows that consumers are adopting ad-supported streaming services faster than non-advertising supported streaming services (29% vs. 21% over the last three years). comScore’s analysis uses 13 million Smart TV devices from two primary Automatic Content Recognition (ACR) service providers.

Streaming is thriving, and the industry forecasts continued growth. Even while Wall Street questions the performance of streaming brands and their less explosive growth since the pandemic, subscriptions and viewing time continue to grow.

The overall market for subscription video on demand (SVOD) is substantial. The new PwC Global Entertainment & Media Outlook 2022–2026 projects that the 2022 SVOD marketplace in the U.S will generate $25.3 billion, up 13% from last year. PwC projects this segment to reach $33.6 billion by 2026, representing a conservative growth rate of 8.5% compound annual growth rate from 2021-26.

Subscriptions per household are growing watching watched 5.4 streaming services per month as of March 2022, compared to 4.7 in March 2021. In March 2022, the “Big Five” streaming services (Netflix, YouTube, Hulu, Amazon, and Disney) became the “Big Six,” now including HBO Max. The Netflix audiences overlap with 82% of the other top six streaming services, especially Amazon (66%) and YouTube (66%).

Big 6 services

According to the PwC’s report, global SVOD subscriptions will increase by 485 million between 2021 and 2027 to reach 1.7 billion. The six US-based platforms will have 988 million paying SVOD subscribers by 2027, up from 612 million in 2021. PwC views Netflix as the revenue winner, with $34 billion by 2027, similar to Disney+, HBO Max, and Paramount+ combined.

Device market share

Connected TVs (CTV) are the largest segment of streaming devices at 137 million in 2022 compared to 114 million in 2020. However, Smart TVs are the fastest-growing segment of streaming devices, up 48% YOY from 38 million in 2020 to 56 million in 2022. While Samsung has the largest market share among Smart TV manufacturers in 2022 at 26%, it declined from its high of 31% in 2020. Other top manufacturers include Alcatel/TCL at 15% market share in 2022, down from 14% in 2020, and Vizio at 14% in 2022, flat compared to 2020.

Eight in ten (79%) of Wifi-enabled homes watch streaming content on connected TV devices. Each of these households spends approximately 122 hours per month streaming, an increase of 19% from March 2021. Of all services, Netflix captures the most hours per month watched at 43 hours, followed closely by YouTube at 39 hours and Hulu at 33 hours.

It’s essential to distinguish the terms CTV (connected TV) and OTT (over-the-top). CTV is the device that connects to or is embedded in television to stream video content. It’s the hardware – Smart TVs, gaming consoles (used to stream video content), Roku, Amazon Fire TV, and Apple TV. OTT refers to content viewed over the internet.

Diversifying audience growth

Diverse audiences now account for more than 40% of Wifi-enabled households viewing connected TV content in the U.S.

Hispanic audiences, the largest segment of diverse homes that stream, over-index for Netflix, YouTube, FuboTV, and Sling.
African Americans over-index for Amazon, FuboTV, YouTube, and Pluto in terms of the streaming platforms viewing days per household.
Asians over-index for HBO Max, Hulu, YouTube, and Sling.

Analysts question how the SVOD market will continue to grow. Many believe teens and Gen Z will drive the market as short-form video platforms like TikTok move into longer-form content. Others suggest the SVOD platforms will increase as more countries gain broader internet access.

New partnerships, mergers, and more offerings will likely continue marketplace growth. The consumer needs to be front and center as competition grows to evolve an individualized and personalized user experience.