The Streaming Wars are Winnable or: Why Streaming Services Large and Small can Learn to Stop Worrying and Love the Bomb
The likes of Disney, Apple, AT&T, NBCUniversal and company are equipped with enviable billion dollar arsenals of content and marketing budgets of mass instruction to match. They are all preparing to take siege of OTT with their own direct-to-consumer streaming offering. Driving the final stake into the heart of cable, the biggest brands in media are serving as market makers, expending immense resources aimed at getting every single consumer of mass media onto their streaming platform. These titans may be going to war against each other, but their collective actions are resulting in a single outcome – an increase in monetizable users and total hours watched on OTT – a result mid-tier and niche streaming services, most of whom are conscientious observers of the streaming wars by choice or circumstance, are well positioned to benefit from.
An Extended Quiet Before the Storm
It is easily forgotten that the first commercially streamed video was distributed over a nascent internet all the way back in 1992. Despite the longstanding technological capabilities of OTT and its widespread appeal to consumers and content owners alike, it has taken over a quarter of a century for streaming to claim its rightfully deserved spotlight. As one of the most entrenched incumbents in any industry, broadcast TV’s dominance did not erode at the quick pace many pundits anticipated – cord cutters be damned. At last, with the outbreak of war, the entertainment world’s major players are now executing strategies that go all in on streaming. The Streaming Wars have accelerated the industry to an inflection point – we’ve hit critical mass – with a majority of large media players investing deeply into OTT, streaming has evolved from a viable alternative to cable to a superior alternative.
A Rising Tide Lifts all Battleships
The biggest winners of the Streaming Wars will not only be the major brands spending limitlessly to burst open the floodgate of viewership on OTT, but also those that can skillfully ride the coming flood with efficient user-acquisition and revenue models; something streaming services of all sizes can execute on. Those that manage to survive the current perceived oversaturation at the top will come out the other end to a world where people are committing the majority of their viewing time and viewing dollars on OTT; no longer beholden to cable and its giant monthly bill.
Every consumer whose cable viewership becomes a casualty of the streaming wars helps streaming services of all sizes in three ways:
– Increased Viewership and Engagement on OTT
– Increased Consumer Budget for Entertainment off Cable
-Increased ad-demand and value
Making Time for OTT
The prognostics for OTT and cable are as equally obverse as they are correlated. By 2023, the increase in cable cutting coupled with improved streaming offerings are projected to push OTT’s user and revenue numbers beyond that of cable. Unlike in the rapidly dwindling kingdom of broadband, where the barriers of entry to compete at the national level are extremely prohibitive, OTT offers parity. Regardless of size, all streaming services can launch and compete on the same app platforms and have access to the same expanding user-base. Although it is the draw of major brands that compel most consumers to reduce their viewing hours on broadcast and reward them to OTT, the beacons of growth from those at the top benefit streaming services of all sizes.
Take an individual who consumes 50 hours of video a week, 30 of which are spent on cable. Say this viewer is convinced to cut the cable completely thanks to Hulu Live’s marketing and offering. All 30 of the hours once earmarked for cable will not necessarily be perfectly transferred to Hulu screen time. In many ways, those 30 hours are very much up for grabs. This is where streaming services not swept up in the Streaming Wars can make a play for significant growth. Hulu’s heavy lifting was necessary to rip away the watch time from cable, but now niche and AVOD streaming services can nibble off precious hours by attracting users from a genre (niche) or value (AVOD) perspective.
Surrendered Cable Subscription Dollars
A similar relationship between cable cutters and streaming service subscriptions also exists. Every time the streaming wars can embolden a citizen of broadcast to defect to OTT, that refugee’s cash once budgeted for a cable bill can be converted into a bespoke bundle of multiple SVOD services. With competitive pricing battles taking place, even after a consumer subscribes to multiple top tier subscription services, there is often budget left over for smaller special interest SVODs. According to a study by Vindicia, the average American subscribes to 3.4 streaming services, paying a total of $29 per month. Now compare that to the average cable bill of $109 and the potential for smaller and cheaper streaming services to rack up subscriptions is clear.
The Ad-ded Benefit of the Streaming wars
The expected increase in viewership on OTT will push the value of AVOD inventory to match the sky high CPM’s and fill of cable. Why? Because targeted CTV ad inventory on premium content is more effective than “dumb” mass advertising on broadcast. Addressable audiences on OTT can be served dynamically inserted ads targeted to the individual viewer of each device. This is vastly more valuable to advertisers than cable’s limited ability to display the same ad to every viewer at the same time. As more and more ad inventory on OTT is made available in hyper targeted segments, the greater interest marketers will have in OTT, eventually shifting the majority of their spend to the medium – providing increased demand for ad inventory on AVOD streaming services large and small. Simply put, the ROI for targeted ads that only OTT can offer outpaces any commercial on cable. Once ad inventory is sufficient to take on brands’ appetites from a volume perspective, the dollars will inevitably follow.
To the Victors and the Survivors Goes the Spoils
The benefits of a direct-to-consumer streaming strategy for media brands is immense. Increased data, ownership of your relationship with fans, and novel monetization opportunities are only a few of the many draws. At last OTT’s merits have been recognized by the very top of the video content world. Their attention brings conflict, but also growth. Growth that will benefit all streaming services with viable business models and scalable libraries of content, regardless of their role in the great Streaming Wars.
Unreel works with streaming services of all sizes to provide them with distribution and monetization support on OTT. Ranging from a full suite of custom apps with monetization options including AVOD, SVOD and TVOD to syndication opportunities on some of the largest platforms in the world, our partners realize the full value of their content and fanbases on OTT.