The Role of Content in SVOD Growth
While recent slumps in subscription-driven OTT have convinced many observers that great content and plenty of it simply aren't enough, what can content providers do to reverse that trend by following the numbers and understanding their audiences better? Jon Giegengack, Principal and Founder, Hub Entertainment Research, has the numbers and some strong recommendations in this clip from his presentation at Streaming Media East 2023.
Peak TV Has Finally Peaked
“Content is becoming a lot more important when it comes to attracting new subscribers,” Giegengack says. “And I'm talking about content as opposed to the brand of a streaming platform itself.” He displays a chart titled “Peak TV Has Peaked (For Real This Time)”, which displays the number of scripted original series released per year since 2013, peaking at 599 in 2022. “This is from John Landgraf’s presentation he gives you every year at the TV Critics Association,” Giegengack says. “This is just the number of scripted series released each year. It doesn't include sports, news, [and] unscripted, so the real number is a lot bigger than that. But even as the production of new series starts to decline, it's still at the highest number that they've ever tracked.”
Consumer Brand Awareness vs. Consumer Value Propositions
He shows a chart that displays the percentages spent on brand marketing awareness by several major streamers, such as Netflix, Amazon Prime, Max, Hulu, Paramount Plus, Apple TV+, and Discovery+. “All of these streaming platforms have collectively by far the biggest budget when it comes to releasing new content,” he says. “And they have also done a really good job, especially during Covid, of spending a lot of money on advertising. So that awareness of all these platforms is above 90%, even the newest ones. More than 90% of consumers say they have heard of this brand before.” He next shows the same chart but with the brand marketing numbers contrasted with the percentages of value propositions that users can describe for each service, which are uniformly lower than the money spent on marketing. “Where it falls short is when we ask [consumers] to explain that brand's value proposition,” he says. “So we say, ‘How confident are you that you could explain to somebody else what this platform does and how it's different from the others? And in no case is the understanding or perceived understanding of a value proposition as high as [brand] awareness. Even some companies like Apple, that we think of as being kind of the wizards of branding in any category…even for them, the number of people who feel like they understand what Apple TV+ is for is less than half the number of people who have heard of it. So there is this high awareness that streaming is a cool thing. There's very low understanding of why I would need one platform over another, which explains why there's all this churn in and out of those platforms.”
Why Content is Now the Biggest Reason for Both High Amounts of New Subscriptions and High Churn
Giegengack’s next slide highlights the steady increase since 2021 of users who say they signed up for a platform specifically for one show. “Into this vacuum comes the role of content,” he says. “So the biggest single predictor for almost everyone [who] decides they are going to sign up for a platform or not, is that there's a specific show that strikes their interest and makes them want to watch. So in 2023, 41% of people said in the past year, they signed up for something just to watch one show. That's up from 35% in 2021. And this behavior is even higher amongst some of the most desirable demographics. So if you are 16 to 34, 57% of those people say they've done that in the past year. Households with kids, it's 54%.”
The following slide goes deeper into breaking down the subscription habits of the most valuable users. “The most valuable TV consumers, the people who spend the most, are also the most likely to sign up based on access to a particular show,” Giegengack says. “So the access along the bottom shows how many different paid sources of TV they have, the percentage is how many of those people said they signed up just to watch one show within the past year. And you can see among people that have six or more paid platforms, which is above average – but it's not insanely above the average – almost two thirds of them say that they have signed up for platforms to watch just one show.
“Now the downside of that is when that show is over, and if it's [on a] streaming platform, almost always there's nothing to prevent those people from leaving. So there's that revolving door that is the bane of existence for a lot of streaming platforms right now.” The next slide, titled “Viewers Are Fickle (Especially Younger Ones)” illustrates the stats. “42% of everybody says they've canceled a subscription at least once within six months of signing up,” he says. “Among young people, it's 58%. And the biggest reason that they did that wasn't that it was too expensive or that they were spending too much money. It was that they ran out of stuff to watch. There were no more shows of interest. So they signed up very often…usually to watch one specific show. When that show was over, there was nothing left to hold their attention and they dropped it.”
The Binge Burnout
“If you think about 10 years ago, House of Cards came out,” Giegengack says. “It wasn't Netflix's first show to do this, but it was the highest profile release of the time, where they released all the episodes at once, [then they] went out and talked to consumers. They all thought this was amazing. ‘I love sitting down and binging the whole series at once. I never want to watch it any way other than that again.’ But if you fast forward to 2022, shows like the Last of Us or House of the Dragon, they're all going back to this weekly release.”
He displays a graphic titled “Weekly Episodic Drops Have Become More Common.” “This is taken from Nielsen Data,” he says. “If you look at the top viewed SVOD series, the green bar is the percent that were released all episodes at once. The blue bar is the percentage that were released one episode at a time. And you can see from Q3 of 2020 to Q3 of 2022, essentially, they flip flop. So about two thirds now of the top series are being released once a week. This obviously makes sense for the providers because it lets them take that more limited investment they have to make in content and string it out for longer, and it pushes out that horizon where that show is going to be over, and that person is going to be looking for something new to watch. And you would think that consumers – because of how much they liked binge viewing – [would be] rising up against this in outrage. But they seem to be kind of rediscovering the fun of anticipating a show that comes out a week from now. They really like the fact that there is at least one day a week that they don't have to do that death scroll through Netflix and spend 20 minutes trying to figure out what they're going to watch next. So this seems to be really kind of a win-win for everyone.”
The Value of Shifting IP to Different Categories
Giegengack displays a slide titled “IP Taken From Other Categories is Also Effective at Driving Interest in New Shows.” “One of the other things that we're seeing happen a lot more with new content is taking IP that's valuable and that's known in one category and porting it over into another category,” he says. “So here we ask people, ‘Would you be more likely to watch a new show if it were based on a movie you liked, a book you've read, character spun off from an existing show or a video game you've played?’ All age groups surveyed show they would watch something new containing IP they’re already familiar with. However, Gen Z is especially open to this. “60% of Gen Z says they would be more likely to watch a new show if it was based on a video game that they liked,” he says. “And this plays in perfectly with the recent success of The Last of Us.”
Giegengack delves further into this specific numbers related to this IP-importing trend. “4.7 million people turned in for the premiere, which was the second biggest launch on, sorry, the second biggest on HBO Max after House of the Dragon. 5.7 million people tuned in for the second episode, which was the biggest increase of any show ever on HBO, going back to before there was any streaming at all. So that was just a huge increase. This surprised a lot of critics, but it's really not that surprising when you consider that [with] The Last of Us game, 37 million people played the first one. I think upwards of 40 million people played the second one. They all spent 60 bucks for the game. They all spent 18 hours working their way through the story. So there's a huge level of investment in those characters and that milieu…it's not really that hard to imagine that if you poured that over to HBO Max, people would spend the time to watch eight episodes, or that they'd even spend 15 bucks a month to get an HBO Max subscription in order to do that.”
Another surprising element, Giegengack says, is the amount of viewers who were not players of The Last of Us game watching the show anyway due to the positive reviews and buzz. “The big jump was all the regular TV consumers who said, ‘I don't really like zombie shows, but I see this show as a 100% on Rotten Tomatoes. I better see what it's all about.’ So I think this is something that if you're running a platform, figuring out valuable IP that you can leverage or license from other categories to have on your platform [is] a really effective way to get viewers when there's so much to choose from.”
Creating “Discovery Chains” to Generate New Viewers Across All Platforms
Giegengack brings up another slide which highlights the hit program Yellowstone and the phenomenon of “discovery chains,” where buzz created from one program draws viewers to check out other programming related to a show’s “universe.”
“29% of people in all of our samples said they had watched Yellowstone,” he says. “Then we asked them, ‘Have you watched any of these other shows that are either part of the Yellowstone universe or they're marketed as being from Taylor Sheridan, [and] from the creators of Yellowstone. 70% of everybody that watched Yellowstone watched at least one of those shows. That's a pretty impressive number in general, but it's even more impressive when you take into account that you can only watch Yellowstone on cable or back episodes on Peacock. All these other shows are on Paramount Plus. So in order for them to watch these, they had to go and sign up for Paramount Plus. And we don't have data to say exactly how many of these people had Paramount Plus anyway, but there's no question that many of those people signed up explicitly to watch these shows. And because there's so many of them, that horizon where they don't have anything left to watch is kicked down the road a lot further. So they are going to be a lot stickier subscribers than they would be if they had signed up to watch that one show, and then there was nothing else afterwards.”
Learn more about a wide range of streaming industry topics at Streaming Media Connect 2023.
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