Tectonic Shifts And the Future Landscape of the Video Streaming Market
It is safe to say that streaming video services have become the main form of entertainment in many households, thus attracting more viewers than cable or broadcast TV.
In 2022, streaming captured 34.8% of the U.S. viewership in July, while cable accounted for 34.4%, and broadcast came in third at 21.6%. The number of must-watch shows is increasing, and the competition among streaming services is only heating up.
Does it mean that traditional linear broadcast TV has been replaced with streaming video? Recent research by Nielsen indicates that it has.
Remember those days when most video content was difficult or expensive to access? You had to wait to watch your favorite show on cable TV or buy new DVDs for your collection. In 2007, Netflix revolutionized the industry (and our sleep routine) by launching its streaming service. They provided us with quick and easy access to thousands of movies, documentaries, and TV shows for a relatively low price.
Netflix has been a disruptor, giving rise to numerous video streaming services like Hulu, Amazon Prime, HBO Max, and Disney+, which now projected to reach US$95,35bn in revenue in 2023.
Let’s dive further into the future of technology and video streaming industry trends and see what market players need to be ready for.
Competition for the Market Share
How do streaming services compete in the battle for subscribers? Until now, the content was the only king. However, several factors have transformed the video streaming market, including the end of COVID-19 isolation and a decrease in the number of subscriptions as people are now looking for ways to cut costs amid steeply climbing inflation. As big players like Netflix, HBO Max, and Disney+ can no longer rely purely on their content, they need to explore new strategies that will help them increase their profits and secure the bottom line.
Here are a few shifts within streaming services that we’ve witnessed so far:
Netflix and Disney+ Added an Ad Tier in 2022
Netflix and Disney+ added an ad tier in 2022 as they looked for new growth avenues. Netflix remained ad-free for a long time, but as subscriber and revenue growth started to decrease, the streamer decided to move to commercials to attract customers and create a new revenue stream.
As for Disney, the company’s CFO, Christine McCarthy, explained the jump into an ad-supported tier:
“Some people don’t mind seeing ads. So, we look at this as something that’s going to be a win-win for the consumers who want it, the consumers who couldn’t afford it otherwise, and it’s also going to be great for the advertisers because we have a unique audience.”
Walmart + Roku Partnered to Make TV Streaming the Next e-Commerce Shopping Destination
Streaming platform Roku and retail giant Walmart partnered to bring interactive ads to Roku users and make TV streaming the next e-commerce shopping destination. The viewers can purchase items using their Roku remotes and just press “OK” to make a transaction right on the TV screen. It will then take viewers directly to a checkout page with their payment and shipping information pulled up from Roku Pay.
Walmart will be acting behind the scenes and fulfilling orders. In other words, Roku acts as a digital storefront for Walmart and, at the same time, making shopping on TV as easy as on social media platforms. However, there is still not much data proving the effectiveness of such kind of partnership, but time will tell how much it sticks with viewers.
Amazon Prime and Apple TV Signed the Deals to Air Live Sports Events
Amazon Prime and Apple TV took live sports streaming by storm in 2022 by signing deals to air live sports events. It marked a big step for Apple, moving the subscription streaming-video service beyond movies and dramas into live sports.
HBO Max and Discovery+ to Become a Single Streaming Platform in Summer 2023
HBO Max and Discovery+ are set to merge into a single streaming platform in the summer of 2023. The new platform (which still has no name) will combine the best elements of both services while aiming to cut subscriber losses and offering “something for everyone in the household,” said Jean-Briac Perrette, Warner Bros. The company is also considering a free streaming service supported by advertisements.
While the video streaming market is changing, engaging content remains the main factor in retaining subscribers. But the streaming wars are far from over, so creating value through extra offerings will differentiate streaming services in the fight for viewership.
Which Trends Should the TV and Video Industry Keep an Eye on to Adapt to Change?
In this article, we are not trying to predict streaming trends and what the future of TV and video will be like. We’d instead illustrate what could possibly happen and how today’s players might adapt to the uncertainties of the rapidly changing market landscape.
More Platforms Will Look to AVOD for Subscriber and Revenue Growth
2022 was a year that saw Netflix and Disney+ jump into ad-supported streaming, enabling access to video content at a lower cost — in return for watching ads. It is predicted that by 2028, the global SVOD subscriptions will reach 1,76 billion driven by ad-supported tiers.
The main reason for introducing advertising is to get an additional source of revenue and maintain growth. However, adopting an ad-tech strategy will not be easy, as streaming providers must restructure their operations, reformat existing content to identify natural breaks for ads, implement changes in organizational culture, and add new sales capabilities.
Live Sports Will Be the Next Arena for the Streaming Wars
Fans of sports content have myriad options to watch their favorite games, whether on cable, broadcast, or streaming services across big and small screens. But in 2023, streaming is getting all the headlines, with streamers spending more than $6bn on primary sports rights in the largest global markets.
Both sports organizations and streaming providers benefit from this symbiosis. While sports organizations look for further monetization of their rights and attract new viewers, providers consider sports events as a way to reduce churn and differentiate among competitors.
To prove that the age of sports live streaming is upon us, YouTube has already secured the rights to the US NFL’s Sunday Ticket, Amazon Prime is investing billions for exclusive rights for the NFL’s “Thursday Night Football,” and Apple has sealed deals for Major League Baseball and Major League Soccer on Apple TV+.
Lifestyle Bundles of Services vs VOD Platforms
Big tech companies create ecosystem bundling with a whole bunch of perks inside. For example, Amazon Prime with free home delivery, movies, books, and other benefits, or Apple with TV, Music, and Cloud all for one price. On the contrary, there is Netflix, HBO Max, or Disney+ subscriptions, which cover solely video streaming content. The question is, can this bundling thing be considered a panacea for every SVOD provider out there?
It is a matter of time and relevant financial reports. So far, the trend is gaining momentum, and if it continues moving successfully in this direction, the industry might have a different approach to subscription video on demand marketing.
Convergence of TV Streaming + e-Commerce
Business continues to seek new ways to attract consumers online, especially when it comes to e-commerce. The ability to see, touch, smell, and taste a product has always played a crucial role when making purchases. By combining live streaming with online shopping, companies create the in-person experience and keep customers interactively engaged with the brands. TikTok, YouTube, and Amazon claim that the future of retail is live e-commerce.
At the same time, the social shopping revolution in the UK and US is still in the “experimenting phase.” David Katz, Vice President of Product Management at YouTube Shopping, says:
“It is still very early to conclude,” he adds. “The behavior is more advanced in some markets . . . [and] we’ll have to learn whether there are intrinsic differences or if it’s simply a matter of developing user understanding and enthusiasm.”
Final Thoughts
As consumers are getting more selective about which services they adopt, content producers and broadcasters need to rethink their market position. We expect strategies to shift as streaming companies need to secure their revenues, business models, and try out different approaches, including bundling, pricing plans, and even alliances with direct competitors. Above all, SVOD providers should constantly invest in their digital expertise, as technology has become an essential element of their business process.
If you are looking for assistance in pivoting or expanding your video streaming capabilities to stay ahead of the competition, learn more about how DataArt Media & Entertainment experts can help you.
Author: Max Kalmykov
Vice President of Media and Entertainment Practice at DataArt
Originally published on https://www.dataart.com/blog.
