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Is Mainstream the Future of Streaming?

Now that streaming services are so pervasive in the entertainment landscape, will they become the main source of consumption?

Streaming services were once considered alternatives to network and cable TV giants that ruled living rooms for decades. But with millions of subscribers cutting cable each year and more than one billion streaming subscribers worldwide, can the likes of Netflix, Amazon Prime, Hulu, and now Disney+ still be considered alternatives?

Streaming has gone mainstream in many parts of the world and with the newest entrants Disney+ and Apple TV+, which both launched in November 2019, one of the most glaring questions facing the entertainment industry is how many over-the-top platforms will consumers pay for, and have an appetite for?

U.S. consumers, for example, are willing to spend an average of $44 per month on streaming video and subscribe to an average of 3.6 services, according to a recent survey by The Wall Street Journal and the Harris Poll. That’s about $14 more from what most people pay now.

More than 1.1 billion people worldwide subscribe to a streaming service and that number is expected to grow 63 percent by 2023 and hit 1.8 billion, nearly one-quarter of the global population, according to data from eMarketer

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Disney+ garnered more than 10 million subscribers within its first two days across the United States, Canada, and the Netherlands (the first three countries where the service is available), and Disney CEO Bob Iger expects the service to have 60 to 90 million subscribers within its first five years. Access to Disney’s vast content library and Blockbuster franchises such as Marvel and Star Wars makes Iger’s forecast easy to believe, coupled with the fact that at $6.99 a month Disney+ is cheaper than many of its competitors.

Still, the dawn of Disney+ marks a new era in the streaming wars as Disney pulls content from other services and new and existing services scramble to ramp up their original content and value propositions. It took traditional TV and cable decades to be disrupted, but as we enter the second decade of streaming, we already see streaming services moving to disrupt each other. First mover Netflix, for instance, relied on network TV and other content in its earlier years to grow subscribers (a la “Friends” and “Seinfeld”) but now feels pressure as network and cable giants double down on their commitments to their existing or planned streaming products.

In the same Wall Street Journal-Harris Poll survey, some 35 percent of respondents said they are likely to cancel Netflix to make room in their budgets for new streaming services.

As we continue to watch the streaming wars play out and see new services come online, the Publicis Sapient team has a few questions about how consumers will respond and what kind of models will prove popular, including: will we see a cord-cutting trend play out with streaming as we did with TV and cable, or will the pie be big enough for all major players to have a profitable slice?

$44
How much a month U.S. consumers will spend on streaming video
3.6
The average amount of streaming services consumers subscribe to
1.1 billion
The number of people who subscribe to a streaming service worldwide
63 percent
Expected growth in streaming subscribers by 2023

Questions to Ask

Understanding the future of consumer’s streaming behavior starts with answering these questions:

Will consumers develop decision fatigue?

Some would argue many consumers already feel overwhelmed with all of the content available to them and that it’s impossible to keep up with every show that starts trending across each streaming service.

Every service has an original show or two that most consumers consider must-haves that they use to justify a subscription, and services will need more must-have shows to demand more of consumers’ entertainment budgets.

Consumer findability is also becoming a pain point as people are confused about where to find their favorite shows as licensing rights change hands.

How much content will actually get people to subscribe?

Streaming services will soon learn how much content is too much and how thin they can spread themselves before quality is sacrificed for quantity.

Most major media companies are already evolving to an always-on model of distribution, said Jay Mellman, Vice President, Client and Segment Strategy at Epsilon and based in San Francisco. Live TV has become a critical piece in the spectrum of three-day, seven-day, and 30-day viewership patterns alongside streaming. 

“The challenge for these companies is the accurate measurement and analysis of the longer-tail viewership to capture the appropriate revenue,” said Mellman. “These media giants have to launch streaming for both offense – maximizing the value of their catalog – and defense – they are competing for eyeballs against Netflix and Amazon Prime.  So, whether or not they like it or understand it, they are in a business of monetizing their content everywhere.”  

Disney+ debuted with more than 80 years' worth of TV and movies, plus new original shows based on Disney’s existing intellectual property. Disney has a brand affinity that arguably no other streaming service can compete with, but how Disney+ will help subscribers navigate its content universe leads to our next question.

“These media giants have to launch streaming for both offense – maximizing the value of their catalog – and defense – they are competing for eyeballs."
Jay Mellman, Vice President, Client and Segment Strategy

Does the service that uses data the best way win?

Do people want targeted, bespoke experiences from a streaming platform? Most existing services are able to recommend what you should watch next based on what you’ve watched before. But are consumers willing to volunteer more personal data to let these services get a fuller view of their profile to help match content more accurately?

Will we see new buying patterns emerge?

Perhaps the old model will become the new model again. Boxsets used to be how most consumers caught up on a show or re-watched it, and buying seasons one-off is already possible on some services like Amazon Prime Video. Season passes or a la carte subscriptions could become viable models for some subscribers who only want access to certain must-have shows but aren’t interested in the rest of a service’s content library. Or will cell carriers bundling streaming services with monthly plans entice consumers or make things a bit murkier?

How will marketing challenges be solved?

Legacy media giants have long struggled with how to create direct relationships with consumers. “Simply put, [networks’] legacies as hands-off advertising and distribution-based businesses meant they never developed a direct relationship to their viewers,” said Mellman. “They may be coming from a slow start, but they are recognizing the staggering amount of available data about consumers.”

Marketing has been more difficult for native streaming services like Netflix and successes like “Stranger Things” and “The Handmaid’s Tale” should be viewed more as cultural phenomenon rather than case studies for successful marketing campaigns. The string of failures across various services highlight marketers’ challenges with how to reach consumers who access streaming services from different types of devices or how to identify which social platforms have the widest reach for a particular audience.

“Deep customer insights can inform better decisions in development, will enable more targeted campaigns and offers, and deliver a more personalized experience for trial and as a subscriber,” said Mellman. “It’s important to leverage data available both within the organization and from outside to capture a full picture of a subscriber. That combination will drive unique insights based on a streaming service’s brand and content – which can better inform and improve acquisition plans and brand promotion.”

--By Dan Peltier