In Search of a Unified Streaming Video Experience

by Parks Associates | Nov. 10, 2022

Since OTT’s inception, online video services have promised a simplified viewing experience with significant savings over traditional pay TV. However, OTT growth has also meant that fragmentation in the market has continued to rise, thanks to the abundance of streaming services available. The OTT medium offers access to an incredible variety of content, and consumers have embraced that diversity of access to satisfy their needs.

Parks Associates research from Q1 2022 finds the average US internet household subscribes to four or more OTT services, and 22% have nine or more. Additionally, half of US internet households now combine one of the Big 3 services with at least one other subscription OTT service to form their online video portfolio.

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The downside of exposure to so much variety of content, and familiarity with it, is a consumer overload of choice and a desire for simplicity. Managing multiple video service subscriptions—rather than just a single pay-TV service subscription—is a major pain point for consumers and a challenge for OTT providers’ retention efforts.

Users are turning to aggregation and bundling options to help streamline their subscriptions. Fifty-nine percent of consumers from Parks Associates Q1 2022 report a preference for bundles that combine streaming services with other household subscriptions. The more services consumers receive from a single source, the stickier the relationship with that source becomes. Thus, bundling is in the interest of both the streaming and service provider industries.

The future of increased viewership and subscription growth in the streaming market will not just come from adapting new business models that include AVOD and FAST. It will also come from stronger streaming partnerships and bundle propositions that provide a unified streaming experience. Bundles of services drive greater satisfaction as well as increase customer loyalty, a crucial factor considering the role of churn in the OTT sector. In 2023, expect to see more service providers bundling OTT as they strive to provide consumers with a seamless streaming experience.

Seeking Growth Amidst Heightened Economic Concerns

While the COVID-19 pandemic has waned, its fiscal impact is a key contributor to the challenge of running a streaming business in a post-pandemic world. Consumers, confronting the worst inflation in 40 years, are examining and tightening their monthly spending on subscriptions across entertainment categories. At the same time, OTT providers are adjusting their business models and their operational spending as they face slower subscriber growth and rising costs. The result is higher fees.


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Redbox in April 2022 reduced its workforce by 10%—citing the financial impact of COVID-19 as a primary reason. During the following May and June, Netflix laid off 450 employees in the wake of slower subscriber growth. Several months later in October, Amazon announced a hiring freeze through the end of the year for corporate roles and other operational divisions.

Inflation and rising costs will continue into 2023, and financial experts and economists predict a recession with varying degrees of impact. Streaming services are investing heavily in archive and rerun content rights, as well as spending billions of dollars developing new original content. Current economic conditions drive the costs of content expansion efforts up even further than in past years. Passing some of those costs to consumers may work once or twice. However, consumers will only tolerate price hikes for so long—especially in a tight economy. The addition of lower-priced, ad-supported subscription tiers can help SVOD services like Disney and Netflix to keep and attract subscribers who are cutting back on discretionary expenses. Still, the lingering economic uncertainty and its implications for providers and consumers present a challenge to even those business models.

OTT services are also spending in areas other than content to retain and expand their user base. These areas include gaming, interactive experiences, and free services via partners. As the economy weathers the current financial storm, streaming providers must develop innovative ways to leverage their services for maximum revenue and subscriber growth—while minimizing costs.

Maximizing Content and Data for Engagement and Retention

Although content is essential to subscriber acquisition, engagement, and retention, it is the variety of a streamer’s content library that wins subscribers. Parks Associates research finds that viewers dedicate an average of 70% of their viewing to services with a broad variety of content. Over one-third of viewers dedicate over three-fourths of their time to services with varied content. Matching the right kind of content for the right subscriber is key to maximizing how valuable a service is to the consumer.

As far as minimizing the degree to which consumers are overwhelmed by content choice, offering a bundle or aggregated selection of content often reduces the sense of choice overload. In addition to simplification, variety provides an additional layer of appeal to consumers. The challenge for all streaming models is learning what their audiences want. They must also provide robust content discovery capabilities and keep subscribers engaged with content releases at optimal times. This is where smart, insightful data help ensure providers offer the content best suited to their subscribers.

Data collection and analysis can help streaming companies:

  • optimize revenue
  • create new value for subscribers
  • increase value from content
  • understand new ways to license content
  • detect and predict churn
  • better understand what keeps subscribers engaged

Data also allow programming executives to make more informed decisions about the content that their services choose to carry. Advertising responses add even more data to the mix. Serving ads for products and services of interest to viewers are more engaging and more effective than unwanted ads. Likewise, documenting delivery and high viewing results that help marketers better reach a target audience also helps OTT services justify higher ad prices.

In today’s highly competitive and churn-prone environment, every engagement advantage counts. As streaming services embrace ad-supported and other business models, they must focus on core engagement advantages.

This is an excerpt from Parks Associates OTT Video Market Tracker. The OTT Video Market Tracker helps companies stay abreast of the North American OTT services, providing details on current players, new entrants, and trends in the OTT video services market. Services tracked include subscription, transaction, and ad-supported services that deliver professionally created content to consumers on internet-connected devices.   

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Tags: OTT, pay TV, streaming

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