Is the SVOD Market Already too Crowded?
The BBC stated that if they turned into a subscription service it would cost more than £400 per year, yet offer almost twice the value for money as Netflix. That’s over 5 times more expensive than a standard Netflix subscription. We sat down with Limelight Networks' VP of edge strategy and solutions architecture to make sense of an overcrowded market.
What is happening in the streaming landscape right now?
With consumers requiring home entertainment more than ever, the UK has already become a nation of streamers. The world has moved entertainment away from public venues and into the home, with end-users consuming more content than ever before for extended periods of time. In fact, according to Limelight Networks’ State of Online Video report, in 2020 it was more common to have at least one streaming subscription (78%) than to have none (22%). The streaming landscape is crowded and yet it continues to grow while the demand for audiences is ever-present.
New players and new content offerings are entering the market in abundance – we've already seen the launch of Disney+, Discovery+ and Peacock, but is there space for more?
Subscription services need to deliver a broad range of top-quality content to not only make headway in an already saturated market but also meet their audiences growing expectations. When comparing the services that the BBC currently offers under their £157.50 license fee to the services that would cost over £400 when combined, it is clear that there is a lot of competition for a share of consumer expenditure. Therefore, both quality content and high performance are key in making their services attractive to consumers.
It’s true that consumers are spoilt for choice, but they will continue to look to the media industry to keep them both entertained and occupied. The streaming survivors of tomorrow will be the services which can capture and keep viewers' attention in the long term, once the shine of free trials and new franchise properties has started to fade.
With so many subscription services to choose from, what is keeping viewers interested?
Consumers today are no longer hindered by the limitation of television broadcast showtimes or content availability. It’s all about getting the content they want at a simple touch of a button or a tap of a screen. When this is not achieved, they are fast to move to services that are able to provide this experience.
In an era of immersive storytelling, the launch of Disney+ was the perfect example of a company breaking through in a difficult market. Having just surpassed 95 million subscribers in one year, they were able to use their secret weapon of nostalgia to capture viewers’ hearts and engulfed in reliving their childhood favourites. Further to this, Disney+ are keeping the magic alive with new original content such as The Mandalorian and WandaVision which has not only generated widespread excitement, but has also developed brand loyalty as subscribers come back to the platform for their weekly dose of new episodes.
As the market and leading services mature, streaming has become a much tougher game, with viewers now having a myriad of options to pay to view content on demand and on-the-go through OTT apps. Newer services need to have fresh offerings and have very little overlap with each other in terms of content to make an impact.
What are the leading reasons viewers might lose interest in a subscription streaming service?
The quickest way for a service to lose consumers is to lose their attention. Higher frustrations coupled with lower attention spans means it’s all about the quality. The sheer number of services available implies consumers will expect nothing less than the highest quality video experience. In fact, half of UK viewers (50%) note video rebuffering as their primary viewing frustration, 31% are frustrated with poor video quality and 11% when the video doesn’t play.
The streaming platforms that are rising to the top will be those striking the right combination between reliable services and the range of available content. The onus is now on content providers to deliver exceptional experiences to maintain these huge subscriber numbers.
It’s clear that streaming services will need to offer an all-round quality experience from story to delivery. From preserving outstanding video quality to service reliability and low latency, it all comes down to robust delivery strategies. Within the OTT space, preventing any latency or friction that would disrupt the user experience is the key to success.
Is it the end of broadcast or do traditional content providers have a future in the market?
The rise of streaming superstars like Netflix and Amazon Prime have forever changed the way we consume content. Uninterrupted delivery, original content and ease of choice has appealed to the masses (it’s no surprise that Netflix passed 100 million subscribers recently)- leaving traditional broadcast players in its wake.
Unsurprisingly, 6% of UK viewers have moved away from traditional broadcast altogether and do not spend any time watching broadcast, satellite or cable TV. Instead, they spend all the time streaming online using services like Netflix and free platforms like YouTube.
This cord-cutting trend is real. Netflix-loving Generation Z are killing broadcast television. Globally, 11% of 18- to 25-year-olds said they don’t watch any broadcast, cable or satellite TV—meaning to get in front of the next generation of consumers and professionals, businesses need to pivot to digital channels. This is a big deal as Gen Z’s viewing habits are pushing big brands to move their advertising money to digital platforms – effectively changing the entertainment industry’s revenue model!
But it’s not just the younger generations, 59% of 61-99-year-olds globally are spending their time watching YouTube. This can be beneficial to the BBC as they can also keep their loyal band of older followers through accessible content, replicating the success they have had with the digital-only channel BBC Three, aimed at younger viewers.
Do consumers have divided loyalties when it comes to what they watch?
In the last year, watching online video increased by almost 14 per cent in the UK, with viewers spending 7 hours 24 minutes on average per week in 2020.
When it comes to specialised content providers such as Disney+, UK viewers spend 1 hour and 42 minutes a week watching, compared to 4 hours and 42 minutes a week watching broad content platforms like Netflix and Amazon prime and 2 hours 18 minutes using live TV such as YouTube TV.
Each service has different methods in keeping viewers coming back for more. But UK viewers are most loyal to YouTube which continues to dominate as the platform of choice for 52% who are seeking user-generated content such as the latest Chloe Ting workout or PewDiePie gaming stream session.
Younger generations are keen to try out the newer services as only 6 per cent of 18–25-year-olds spend time on Facebook as they shift to new platforms such as Instagram (13%) and TikTok (13%).
Building audience loyalty will be a difficult task as viewers are keen to explore different platforms and keep their options open. This means content providers need to ensure the viewing experience is top notch, so their content is not lost in a consumer's roster of services.
As consumers becoming increasingly price conscious, where does BBC fit in?
Subscribers to streaming services are sensitive to pricing. Almost half of UK viewers (46%) subscribed to new streaming services as a result of COVID-19; however, 54% cite price and 29% cite lack of content as their top reasons for cancelling subscriptions later on.
If the BBC want to focus their efforts on OTT and be competitive in an increasingly crowded streaming market, they will need to keep their current viewership while winning over new paying viewers. There are far too many services offering services at a cheaper price with content that is still keeping viewers interested. Shifting from their license fee to a subscription model will enable BBC's offerings to appeal to the audience of today, allowing viewers to choose whether they want to subscribe to the service as opposed to paying for an annual TV license.
How many subscription services is too many?
The number of services viewers can choose from are far too many to count. Global audiences spending more time at home has contributed to the boom in streaming services, but is the wide array of choice here to stay or have viewers succumbed to streaming fatigue?
Certainly, the streaming landscape can change and for OTT providers to keep up with these changing demands, they need to be able to understand the consumer, the current climate and take a proactive approach to deliver quality experiences with the integration of Content Delivery Network (CDN) infrastructure within their operations.
For now, it's safe to say that consumers are enjoying the abundance of choice that has provided an escape to a time when viewers are stuck at home.
[This is a contributed article from Limelight Networks. Streaming Media accepts vendor bylines based solely on their value to our readers.]
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