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How Content Delivery is Evolving in the Fight for Eyeballs

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With more content, delivered through more devices and apps, pay-TV and streaming operators are all fighting hard for eyeballs. This is a tumultuous time for the video entertainment industry, where market saturation and rates of subscriber churn are high, and operators now more than ever need to understand and meet the evolving demands of consumers. By aligning their offerings to consumer expectations, operators can carve out a competitive edge, enhance revenue streams and strengthen their position in a fiercely competitive market. 

The main challenges facing the video entertainment industry

With so much content on offer by so many providers (Netflix, Prime Video, Disney+, Hulu, HBO Max, Apple TV+, Paramount+, Peacock, etc.), content has become fragmented across platforms, and the battle for subscribers has no end in sight.

Given the ease of streaming a wide variety of content from many different service providers, subscribers rarely consume media from a single source and the competition is resulting in declining average revenues per user (ARPU). 31% of UK consumers surveyed by YouGov have canceled or removed at least one streaming service in the last 12 months. With subscribers frequently switching between services, or canceling them altogether, the challenge continues for operators to maintain a steady revenue.

Subscribers are churning

According to Antenna, a subscriptions analytics company, monthly churn for major streaming platforms reached 6.3% in November 2023, up from 5.1% in the previous year, and the continuous switching between platforms is starting to take a toll on consumers. Even as far back as 2022, 78% of subscribers surveyed by Bango said they wanted one single platform to manage all of their subscriptions and this is possible through what we call “super aggregation.”

Defined as the bundling of online video apps, streaming services and traditional pay-TV offerings into one, unified user-experience hub, super aggregation has become a key business focus for operators as they look to reduce subscriber churn, increase customer satisfaction and grow their business.

Unifying the tech stack

Beyond subscription fatigue, the demands of consumers have skyrocketed as they expect diverse, high-quality content with seamless delivery. This has forced operators to target investment accordingly, while also facing significant market pressures to get a return on those investments.

However, before jumping to revenue-generating services such as deep analytics, operators need to consider the state of their tech stack. Starting from a strong base, operators can benefit from a platform that they can grow from, which in turn acts as a first step to reducing revenue headwinds. 

Pay-TV and streaming operators are struggling with constrained budgets and limited internal resources right at the time when they need them most. With cost reduction in mind, carefully choosing the right technology building blocks from trusted vendors is essential. Whether the decision is made to build, buy or take a hybrid approach, making a sound decision in infrastructure investment can help to maximize efficiency, generate a faster time to market and reduce the total cost of ownership.

Finding innovative technical talent

Pay-TV and streaming operators also face pressure to develop new services within their platforms and operators often struggle with limited in-house developer teams, due to size or funding restrictions. These talent shortfalls aren’t going away. According to research from Caretta, 70% of the operators surveyed have fewer than 100 engineers, they are typically focused on maintaining legacy technology stacks. To meet the transformation imperative, operators are somewhat dependent on third parties and only 12% of those surveyed opted for a full “build it yourself” approach. For the majority, buying some or all of their technology stack from vendors with a customized approach was most common, with more than 40% of operators buying components and then integrating and customizing them further.

Taking a hybrid approach to mix the best components from multiple vendors with carefully planned internal developments allows for competitive differentiation in key customer touch points and user experience, all while avoiding the wasted cost of trying to reinvent the wheel.

Achieving long-term success

The fight to win and retain subscribers is no easy feat. Pay-TV and streaming operators need to take a holistic approach with continuous innovation and improvements. By focusing efforts on smart and strategic investment, operators will be able to navigate the evolving landscape of the video entertainment industry and position themselves for sustained growth.

[Editor's note: This is a contributed article from Irdeto. Streaming Media accepts vendor bylines based solely on their value to our readers.]

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