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The streaming media industry is now entering a new era, as major launches and acquisitions carve out a global landscape for 2020 and beyond. US Direct-to-Consumer launches in the spring NBCUniversal's Peacock and Warner Media's HBO Max will join recent newcomers AppleTV and Disney , along with industry veterans Netflix, Amazon and Hulu, to bring even more choice to consumers. Peacock will initially only be available to Xfinity customers, before a full launch in July. Warner Media's HBO Max will also roll out into Latin America later in the year, followed by some European countries in 2021, bringing a wealth of new content.
Across the wider streaming market there is a real land grab sweeping across this landscape by the various media players, examples of these collaborations, mergers and acquisitions include Universal and Xumo, the purchase of Pluto TV by ViacomCBS, Fox is now rumoured to be buying Tubi, however this is not the bit sold to Disney, this still belongs to Murdock. NBCUniversal is in talks to buy Vudu, which also offers AVod. Rakuten is launching AVOD, on top of Amazon's IMBDTV. We saw Sony selling its majority stake of streaming service Crackle. Warner Media's Crunchyroll is also available on Roku channels. Meanwhile in the UK, BritBox, the BBC and the ITV joint venture continues to extend its reach, with its UK launch in late 2019 joining the party behind the USA and Canada. Then there's DAZN, providing a sports subscription streaming service across Austria, Germany, Switzerland, Japan, Canada the USA, Italy, Spain and Brazil, with more country launches likely in the future and the list will just continue.
A Renaissance for Content Producers
In the USA alone, Futuresource forecasts show that consumer spend on SVoD (Subscription Video on Demand) will rise to more than $20 billion in 2020, exceeding transactional home video and box office combined. Moving forward, SVoD will see a 16% average annual increase over the next five years. Conversely, Pay-TV is in slow decline in the USA, yielding to downward pressure from a combination of competition from SVoD, Pay-TV operators focusing on broadband access, and a lower-than-expected uptake of Pay-TV lite/MVPD services.
Amid this SVoD upsurge, content producers are enjoying a renaissance, with an abundance of premium content being created for an ever-expanding raft of services across a wide range of genres. For studios and broadcasters alike, this provides the opportunity to go direct-to-consumer with a targeted offering. However, it's a big departure from established business models and the high rewards are not without their risks. How many services is too many? Will consumers become more susceptible to churn? Could the widespread availability of free trials create a culture of service hopping? Despite all the opportunity, churn management will come to the fore, as content producers evaluate their long-range strategies, with super aggregation a priority for leading platforms and tech companies.
Maturing Markets and Continued Fragmentation
In this new world of content choice, service stacking could become commonplace for consumers, with households regularly churning in and out of services, as they become increasingly media savvy and weigh up the cumulative costs of taking multiple services. As an example, around one-third of current and previous Netflix subscribers in the USA and key European markets cancelled their service and restarted last year, over half of them doing it more than once.
As viewing behaviour matures in many countries across the globe, consumption is fragmenting across SVoD, AVoD (Advertising Funded Video on Demand) platforms, such as YouTube, BVoD (Broadcaster Video on Demand) platforms, such as BBC iPlayer and transactional digital video, as it continues to make steady in-roads. How these new services will fit in with the wider viewing mix of free traditional TV, Pay-TV, transactional video and newer AVoD services, such as Pluto TV, has yet to play out.
Power Shifting and Finding that Right Balance
These new services each have their individual strengths and will be appealing to many, yet central to their long-term successes will not only be adding new subscribers but retaining existing customers as well. UX (user experience) design will play a leading role in customer retention. Alongside breadth of content, great UX provides a seamless customer journey through the content, aiding engagement, search, navigation and discovery. UX walks a challenging path between placing the brand front and centre and fading into the background to let the content come into focus and do the talking. This combination of powerful content and clear content visibility will prove more important than ever in 2020. As a result, super aggregators and content providers that operate at scale will become more relevant, yet they will still require platforms with strong customer bases to help drive and maintain subscriber numbers. Although the time is right for direct-to-consumer, it can never thrive on its own and will always require a backbone of hardware, platform, brand tie-ins and positioning to reach out with impact and enable a strong and sustainable customer experience.
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