How Streaming Services Can Deal With Consumer Privacy Concerns
With third-party data coming to an end, streaming services understand they’re in a position of strength through their direct customer relationships and first-party data. But as the space becomes increasingly crowded and streaming networks look to expand their monetization strategies, it's imperative they consider how to sustain customer relationships amid changes in privacy regulations.
The Current State of Streaming
Consumers have a wide variety of streaming providers to choose from and in a bid to combat cabin fever over the last year, have increased their content consumption and the number of subscriptions they have tenfold. In December 2020, the average US consumer spent $47 per month on streaming services—a 24% increase from April 2020. Hulu announced it added 2.2 million subscribers, bringing the company's grand total to 41.6 million in the second quarter of 2021. However, as cities open up, streaming providers know they will see a decrease in new subscribers adds and a drop in the number of hours of streaming. This begs the question: can this uptick in subscribers not only be sustained but continue to grow and more importantly what will be the offerings to do so?
Offer Unique Incentives to Increase—and Retain—Subscribers
The competition for share of wallet and viewing time is fierce. Traditional cable and satellite companies, content creators (e.g. studios, networks, etc), device manufacturers and streaming services are all vying for our collective share of wallet and viewing time. All of these companies know that having direct relationship is not only essential for their business but in the new realities of data and privacy, the only way to control their own growth and advertising revenue where relevant.
Traditional cable and satellite companies have for many years partnered with TV and set top manufacturers to develop unique and personalized content and advertising solutions for their customers. Increased regulation around consumer privacy has further turned first-party relationships and delivery into gold and placed all these providers in a position of strength through subscriptions and registrations across devices. Success in both growing their customer bases and the advertising revenues, streaming services will need to evaluate new strategies with their marketing and advertising partners. It what in most cases has been smaller partner efforts, services will need to create much broader partnerships to enhance their offerings and personalization through combining streaming data with manufacturer’s product data, they could create more specific consumer groups without delving into the world of third-party data, thus ensuring that both parties win.
As most streaming services have looked to unique ‘owned’ content such as Amazon’s recent acquisition of the MGM catalog, to drive new and sustain customers, rewarding loyal customers will also need to be key to retention. Taking a page out of the retail and travel playbooks, streaming services should take a long look at similar approaches in offering credits for loyal users , particularly when they anticipate a dip in viewership.This can be promoted as a tool to drive new subscribers and differentiate and for long standing subscribers.
New Monetization Strategies
With a post-pandemic world fast approaching (if not here in the U.S.), it is time for streaming services to begin to brainstorm new monetization strategies post Covid. Although some services (i.e. Netflix) do not have lower cost options with commercials, it may be time also to further the offerings to engage more audiences with cost tiers that include advertising at a lower cost. Services like OnDemand and Hulu often place ads in the middle of its programming with no skip option available. Hulu specifically offers different tiers, allowing their subscribers to choose their experience, may it be the original base offering or one with live TV. Unlike Netflix, Hulu, Amazon Prime Video, and YouTube, for example, make some content available through rentals or on a pay per view basis – additional revenue on top of the monthly subscription fee. Some may consider more unusual routes toward new monetization strategies as Netflix recently did with the launch of its e-commerce site, Netflix Shop.
Another thing to keep in mind is that many of the world's online video streaming users belong to Gen Z. Therefore, services should be sure to use social media to their advantage in order to sustain a positive customer relationship. Bigger streaming platforms like Netflix could consider partnering with popular Gen Z social media app TikTok, which has over 689 million users and a past history of collaborating with big name brands. Social media could be a streaming services tool to continued success.
Video and video consumption is changing and 2020 accelerated the consumer behavior and their not looking back.As consumers continue to resume some sort of semblance of a normal life, video streaming will continue to be a part of their day but how much and how many services do they want/need is the question. The video streaming industry stands to grow 21% to reach an estimated $223.98 billion in value by 2028. As such, streaming networks should make the most of their relationships with their advertising and marketing partners to execute on goals and continue to drive consumers to their platforms.
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