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Online conflict is erupting and the fallout of it will impact media industries for many years. While full-blown hostilities are yet to break out, it is clear that the battle lines are being drawn in streaming wars. Not only do we know who the major combatants will be, especially Amazon and Apple, but there are also a few other groups that have been prepared.
Creators have huge potential new audience opportunities due to the explosive growth in connected TV (CTV), over the past 18 months. A plethora of streaming services now exist with huge numbers of subscribers, from HBO Max’s 50 million to Amazon’s 150 million-plus subscribers on its Prime service, but exponentially growing audiences do not equate to shared opportunity. The big players in the industry have already begun to look for new ways of capturing more market share.
Related: The Year Netflix Almost Died
Innovators are the best thing in richest waters
The biggest battleground in the streaming wars is this: Who can create the best content to win the largest audience share? Companies like Disney, Netflix, Amazon and Apple recognize that consumers will not want to spend on all of their subscriptions, potentially costing hundreds of dollars, and will opt instead for a small group they deem to be worth the most money. It will be an all-inclusive service that offers more than TV content.
A streaming service’s ability reach the 200 million subscribers worldwide like Netflix will be the benchmark. Some are well on their way. Amazon Prime will reach it soon, and Disney+ is aiming to reach 260 million by 2024, which, combined with Hulu (owned by Disney), would mean a total audience of nearly 300 million. Platforms must ensure they offer high-quality, innovative content and maintain a loyal customer base if they are to achieve this goal.
Beyond video content, what can you do?
We can see that streaming services with innovative and interesting content will be able to compete against other services. Netflix, for example, recently announced that it was looking into podcasting and video games to bolster its current services. Disney has begun to experiment with sports betting in real time, and this is expected to greatly increase its popularity on international markets.
This second step may be harder because if a product has been altered or the company engages in innovation there is a chance that customers might decide not to buy it anymore. This means streaming services must ensure their churn rate is low and their average user time on their platform are high. Although it is difficult to determine average churn rate across platforms since they don’t usually release quarterly rates, established streaming services such as Netflix and Hulu seem to have lower percentages than newer ones like Apple TV.
What will the response be from advertisers?
The ad industry will be affected by this drive to reach new customers and innovation, as well as the need to retain existing subscribers. Advertising is still struggling with this shift in media consumption away from television and towards CTV. Advertisers have a great opportunity to tap into the streaming market with the upcoming streaming wars.
Innovative ad strategies are already being employed on streaming platforms —, for instance, on Twitch. Advertisers are now using stream display ads, which show up under or around somebody’s stream and don’t interfere with the user’s visual experience, meaning the user doesn’t miss any content. Targeted AR ads can quickly take advantage of new trends, and provide significant value.
Customer is always right
Consumers don’t mind paying ads as long they make their subscriptions more affordable. According to Kantar, an international leader in statistical research and consulting, 49% of Americans agree that they don’t mind seeing some advertising if it makes video-streaming services cheaper. Ad-based video of demand (AVOD), which can provide a strong incentive for viewers and lower subscription prices, will be a major feature in the streaming wars.
The key battleground in streaming wars is the decision between an AVOD-focused subscription or a subscription that has no ads and a lower price. While it seems that Amazon and Disney are on the verge of becoming dominant, Netflix’s users seem to be slipping away at a faster rate than Netflix. However, Netflix’s churn rate remains low. Cross-media services that are innovative and creative have failed in the past, but CTV’s rapid growth has made the industry more prepared. The true winner will be likely the consumer, regardless of who wins.
Is there a single lesson you can take from this whole thing? While there are many key elements, innovation is the main battlefield of the streaming wars. To secure competitive advantages, companies must be willing to take risks. This applies to not only content but pricing and subscription plans as well.
A few large fish will dominate almost any industry similar to streaming, regardless of whether they are mobile phones or print media. Netflix, which is currently in decline, but not dead, looks strong, as do Apple, Disney and Amazon, who have large financial resources. It is a difficult task for the other participants, but it’s not impossible. Watch how this conflict plays out.
Publited at Mon, 6 Sep 2021 13.37:44 +0000