PRINT HED: Signal Turns to Noise
PRINT DEK: The streaming wars have a loser: consumers
PULLQUOTE IF NEEDED: “Now that the streaming industry is starting to mature, it’s funny how we are circling back a little bit to the original model.” Brandon Katz, Parrot Analytics
During the 76th Emmy Awards last month, actress Jean Smart joked about confusing HBO and its rebranded streaming service Max.
Though it was a joke, there’s some truth to it.
At ADWEEK’s recent Brandweek conference, Stephanie Fried, chief marketing officer of UGC entertainment and gaming platform Fandom, made a point about how difficult it is to know which streamers have certain programming and when shows are released.
Other experts agree that fragmentation is a major issue across the TV and streaming industry.
“The move away from pay TV does give consumers that choice. You’re not locked into a contract,” said Jennifer Kent, vice president of research at market intelligence firm Park Associates. “Unfortunately, where we’ve landed is not necessarily painless. That freedom to access content everywhere is another painful experience of finding where it is, or figuring out many services you have to subscribe to to get the content you want.”
Brandon Katz, senior entertainment industry strategist at Parrot Analytics, said because of the fragmentation and saturation in the market, the streaming landscape is looking a lot like cable TV.
“It’s ironic because consumers were frustrated with the bloated pay TV bundle, being charged an inordinate amount of money for a waterfall of channels,” Katz said. “But when streaming came out, consumers had more control and freedom over how and when they consume whatever they want than ever before. Now that the streaming industry is starting to mature and we’re several years into it, it’s funny how in a small way, we are circling back a little bit to the original model.”
Choice becomes the problem
Parks Associates research found that 57% of households agree there are too many streaming options to choose from. The data also found that among households that subscribe to at least one OTT service, the average number of subscriptions per household is 5.5.
The same data found that nearly half (47%) of households have subscribed to and canceled a service within the past year. The top three reasons were a need to cut household expenses (32%); finishing the series they liked (25%); and couldn’t find good programs to watch (22%).
“The massive fragmentation of media has led to those high industry churn rates,” Katz said. “We will binge Stranger Things and then cancel Netflix until the next season. The streaming industry is starting to realize it’s hard to keep a consumer on the hook long term.”
But some experts think there are solutions to help alleviate the confusion.
Sarah Lee, research analyst at Park Associates, said the move toward consolidation and bundling can help ease customer frustration. Currently, companies like Disney have a bundle with Hulu and ESPN+, while Paramount has Paramount+ with Showtime.
Katz agreed that more consolidation and bundling is something streamers can do to keep customers interested.
“I would not be surprised if there’s further bundles that roll out in the future,” Katz said. “All of these are designed to reduce churn because they’re trying to give people a more streamlined, universal experience.”
He said that added-value bundles especially are a way to keep users in the ecosystem longer.
“Amazon Prime Video benefits mentally from being part of Amazon Prime,” Katz said. “Netflix has been getting into video games to try to create added value. Peacock has introduced a lot more shoppable TV. Customers want to feel like they’re getting the bang for their buck.”
However, there are still challenges to overcome, which can be tackled with a bit of cooperation among streaming players.
Lee suggested services moving toward an aggregated search experience rather than making customers hunt for a specific show or sports event across each individual platform.
“We still have a good amount of people who have to go to Google to find where they want to watch something like The Office, or if they want to watch a movie because they thought it was on Netflix, but now it’s not,” she said.
Lee referred to Plex, which has a feature that lets users input which platforms they’re subscribed to and tells them where to watch a show or movie. ESPN also launched a Where to Watch feature last month that allowed people to search which games are playing on which platforms.
Katz said developing in-app discoverability tools like Top 10 carousels, curated collections, and seasonal curations can help cut down on search time.
“As library consolidation continues, strategically nudging subscribers outside of their comfort zones based on consumption affinity can help unlock the full value of a catalog,” Katz said.
Coming up next
Looking ahead, Lee said the industry will likely land somewhere between pay TV and streaming options.
“Rather than having the three cable packages or 400 streaming services, we’ll land somewhere in the middle, where we can have the options for people who want a one-size-fit-all experience of one big bundle of channels or an option for a niche streaming service,” Lee said.
Skinnier bundles will likely still be prominent in the near future, she noted, citing the carriage dispute between Disney and DirecTV, which wanted to offer smaller bundles. “There will still continue to be a lot more options to viewers, but it will be less overwhelming,” Lee said.
Ad-supported options will continue to be a big influence on the market. Parks Associate research found that 59% of vMVPD and AVOD using households don’t mind watching ads on a paid streaming service if it lowers the subscription fee, while 59% also agree that they don’t mind watching the ads on a free streaming service.
At the end of the day, Katz noted, consumers are fickle: going from hating the pay TV model because it was bloated and expensive to loving the freedom and control streaming offered, to now finding it frustrating.
“That’s a lot of whiplash for the corporations to deal with … consumers vote with their wallets, and these companies are under immense pressure to follow those trends,” Katz said. “We as an audience have to decide definitively what we want and what we don’t want, and try to stick to that.”
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