How to Sustain Streaming Viewership Growth
Unlike CDs and print newspapers, which faced near immediate extinction amid the advent of their digital successors, cable TV has held on relentlessly, capturing a majority (although declining) share of the television market across the U.S. for decades. That is, until this year.
A recent Nielsen report found that, for the first time, streaming usage surpassed linear cable in July 2022, with 34.8% share of television consumption through streaming services like Netflix, YouTube, or other platforms (in comparison to cable’s 34.4% share). This marks a significant paradigm shift in TV viewing behavior.
As cord cutters continue to migrate to subscription video on demand (SVOD) platforms to watch their favorite content, media companies are faced with a pivotal opportunity to drive business growth. To maintain their edge over traditional cable, content owners will need to carefully examine why cable has persisted for this long, where streaming offers value, and where SVOD platforms can continue to optimize to drive sustained viewer engagement.
How Has Cable Held on for This Long?
The first-ever streaming video on demand (SVOD) services, Netflix and Hulu, launched 15 years ago in 2007. Why has it taken so long for SVOD to eclipse cable viewership? For a significant chunk of the American population, streaming hasn’t yet conquered the value proposition of the traditional cable bundle:
- One Bill: Granted, your cable bill is subject to monthly fluctuations, may differ from what you signed up for, and is difficult to cancel. But for higher-income households with less price sensitivity, the convenience of having one bill, often bundled with home internet and landline phone service, trumps the complexity of managing seven separate SVOD subscriptions.
- Access to Everything: Depending on what you want to watch, that is. Take sports as an example. Want to watch your local MLB team? You probably need an RSN subscription (available exclusively through cable), ESPN, FOX, and your local broadcast networks. The only destination where you can get all of those in one place? Cable.
- Rock-Solid Viewing Experience: Poor-quality streaming is a very frustrating experience. The top factor contributing to poor-quality streaming? Weak Internet connection. Approximately 19 million Americans lack access to high-speed Internet. This rate is higher in rural areas, where nearly one in four people lack this service.
- Interface Familiarity: The guide button on the remote was a revelation when it came out (recall the TV Guide channel), and the limitations of linear networks can make it easier to choose something to watch. The paradox of choice is a real problem for streaming providers; if you're looking to passively consume entertainment, it's easier to throw on a network that you're loyal to than it is to face an endless scroll of choices. Plus, why should someone who's satisfied with their existing experience learn a new interface?
If we look at cable’s key differentiators, we can see where streaming services have tried to break in with a value proposition that entices new signups:
Price and Billing: Simple structures with consistent monthly pricing and easy cancellations.
Access to Everything: Content exclusivity. Look at the 2022 Emmy nominees for Outstanding Drama series: Euphoria, Succession, Squid Game, Stranger Things, Ozark, Better Call Saul, Yellowjackets, Severance. If you wanted to be a part of these zeitgeist-defining shows, half of them could only be accessed via streaming.
Viewing Experience and Familiarity: Heavy investment in innovation. Technological advances have allowed streaming to offer video content in 4k, making it a preferable viewing experience to cable. Plus, mimicking major tech companies’ consumer-centric product development approach has led to interfaces that are far easier to use than most legacy set-top boxes that pipe cable subscriptions into homes.
How SVOD Finally Gained the Edge: Convenience, Control, and Storytelling
With the above factors roughly on an even playing field now, why are people increasingly choosing streaming over cable? At the end of the day, streaming’s new value proposition boils down to convenience, control, and storytelling. SVOD platforms provide users with a “what you want, when you want it” model that simply doesn’t exist across linear channels.
And because viewers are no longer tethered to a specific time and place to keep up on episodic content, showrunners can operate on the assumption that the whole audience has seen every episode in order, thus affording them with certain creative liberties that result in more engaging, premium storytelling. These factors come together to create an entertainment experience more in line with contemporary viewing behavior.
Challenges for Streaming Moving Forward
The launch of SVOD completely disrupted the way people consume entertainment—and, as a result, the TV ecosystem totally up in the air. Amid constant evolution and innovation, SVOD platforms will need to continuously optimize their platforms to both serve the consumer and drive revenue. Below are just a few examples of challenges that the streaming world is still working to solve if it wants to replace cable in the long run:
So long as streaming is the only place to get high-quality content, people will keep subscribing. The danger, though, is in media companies forcing consumers to essentially assemble their own disparate, more expensive cable bundles to access the shows they want. As a result, many consumers will simply rotate their subscriptions. Star Trek: Strange New Worlds finishes and a new season of The Mandalorian drops? Viewers can painlessly cancel Paramount+ and resubscribe to Disney+. The bingeable nature of content coupled with the ease of signup and cancellation is going to be a headache for SVOD services unless they can figure out how to make the whole package easier for consumers to deal with.
Some major SVOD services are already seeking solutions to reduce this consumer friction, eyeing so-called “hard bundle” structures that add content directly into entertainment services, much like Paramount’s integration of Showtime directly into Paramount+. This model stands in contrast to the “soft bundle,” in which streaming services aren’t integrated but are offered as discounted add-ons.
Another problem yet to be solved for in the streaming world is content discovery amid a sea of SVOD platforms. Cable TV networks have a great machine for discovery: advertising their new shows during the commercial breaks in their existing shows. Now, the two primary ways to drive awareness for content are either expensive or outside the control of media companies. On one hand, media companies can dole out massive global marketing budgets for streaming mega-productions (like The Lord of the Rings: The Rings of Power’s billion-dollar budget). On the other hand, they can release the reins and rely on word of mouth and social media buzz to generate momentum and drive viewership. Free ad-supported TV (FAST) and universal searchability at the smart TV level are helping brands get their content in front of new eyeballs, but there will need to be strategizing moving forward on how they can continue to target audiences at scale in a crowded market.
There’s a balance to maintain when it comes to personalization in streaming platforms. For advertising, yes, personalization and relevance are essential. But there's also a real power in creating cultural moments that we all share in, and hyper-personalization can run counter to that. A personalized feed of algorithmic content matters a whole lot more in an ocean of user-generated content (TikTok, YouTube, etc.) than it does in a more tightly curated service with professionally produced content. After all, when you catch up with your colleagues on Monday, are you going to talk about the new House of the Dragon episode from Sunday, or a YouTube creator that came up on your algorithm?
Where personalization can really add value is in helping the viewer engage with the experience through added features. For example, a sports fan could select their favorite team and be provided with news, snackable clips, and standings in an easy-to-access way. Fans could also sign up to be notified when the newest episode of The Kardashians drops so they can stay current. These are great ways that consumers can personalize how they interact with the experience while maintaining the sense of community that comes with watching the same thing at the same time.
The Path Forward: Will Streaming Stay on Top?
Have we reached the point of no return, wherein streaming viewership will continue to reign over that of traditional cable? With only four tenths of a percentage separating the two, it’s hard to say for sure. But one thing is for certain: major media companies, content owners, rights holders, and SVOD technology platform partners will need to keep close to the needs of consumers to earn their long-term loyalty. By staying laser-focused on how to supplant cable’s key value proposition while solving for convenience, discoverability, and personalization, media companies can cement streaming’s sustained growth and success.
[Editor's note: This is a contributed article from Endeavor Streaming. Streaming Media accepts vendor bylines based solely on their value to our readers.]