What’s Next for Streaming: The Union of Content, Advertising, and Interactive Experiences
Is the streaming space starting to feel a little too familiar?
While streaming platforms initially promised ad-free, cost-conscious entertainment as an alternative to cable, more and more platforms are going the ad-based route, bundling with wireless providers, and more. As a result, it’s starting to feel like cable did at its heyday. But is this a bad thing?
As the space continues to evolve in 2024, without a doubt bringing at least one more merger of streaming providers, I believe we’ll see a further fusion of ad-based content, interactive experiences, and evolving pricing models, marking a significant shift in the streaming paradigm. Some of these changes will be like cable, while others will unlock new ways for consumers to interact with their entertainment.
Advertising will start to feel like cable…but not quite
When streaming first hit the scene, it came with a promise of on-demand content with little to no ads at a low monthly cost. The resultant cord-cutting phenomenon posed a substantial threat to traditional cable services. However, our recent research found a fascinating trend – 27% of Americans now pay a minimum of $75 per month for digital subscriptions, while more than half have encountered an uptick in ad-based content during their streaming experiences.
While advertising on streaming services is on the rise, a departure from the initial promise of an ad-free experience, the format is evolving to align with contemporary consumer behaviors. I predict ad breaks during streaming will remain short, respecting the viewers' time while intensifying competition for coveted ad spots. This shift signifies a delicate balance, ensuring advertisers reach their audience without prolonged interruptions; something creators did not expect when developing their content for an ad-free platform.
Further, limited ad inventory, coupled with robust viewer data, will propel a new era of advertising. The convergence of targeted advertising and viewer insights will empower advertisers to create more personalized and effective campaigns. However, this initially exclusive playground will be dominated by Fortune 500 brands, leveraging their resources to participate in this data-driven revolution. As technology advances, this exclusivity may gradually open, allowing a broader spectrum of businesses to partake in the evolving advertising landscape.
How do streamers differentiate in a new era of syndication?
As streaming sites syndicate original content from one another (e.g., HBO shows now appearing on Netflix), it begs the question: how will streaming sites differentiate themselves and maintain subscriber loyalty?
Original content was once a differentiator and drove subscriptions so consumers could be in on the latest trending show. However, due to the cost of original content and hitting customer acquisition potential, original content is no longer a prized and sacred asset to streaming sites.
Streaming providers now face the challenge of maintaining customer loyalty as well as differentiating themselves from other streaming services. While creating a good content mix is a great start (69% of Americans enjoy being able to watch an equal mix of old and new content), some additional ways to maintain customer loyalty include grandfathered pricing, taking a close look at data to better uncover the platform’s unique identity, and interactive experiences that move platforms from passive to active experiences.
Live sports, and with that, partnerships to obtain exclusive rights, will also be a key differentiator. In fact, 64% of consumers told us that the availability of live sports is an important factor when it comes to selecting a streaming provider. Expect this battle to heat up this year.
New experiences mean revised pricing models
With over 20 million Meta Quest headsets sold and the recent launch of Apple’s Vision Pro, streamers are expected to experiment with new experiences like mixed and virtual reality to differentiate themselves.
While it may be difficult to see beyond the hype, data shows that Gen Z and Millennials are especially interested in such experiences. For instance, 35% of viewers are interested in a VR/MR/spatial computing experience that enables them to watch the Big Game as if they were there. Millennials are the most interested (45%), followed by Gen Z (40%), with Baby Boomers being the least interested (19%).
Communication and media providers have an opportunity to reimagine their services, leveraging ecosystems featuring GenAI, mixed reality, and other immersive experiences. With this, pricing dynamics of streaming services are set to undergo another transformation, mirroring the shift witnessed with premium content like live sports.
As interactive experiences powered by augmented reality (AR) and mixed reality gain prominence, they will be priced as premium offerings, and potentially as individual, a la carte experiences to buy for major events.
Further, while streaming becomes more intertwined with our daily lives, the synergy of content, advertising, and interactive experiences will redefine the home entertainment landscape. We stand at the intersection of tradition and innovation, and the streaming horizon beckons with endless possibilities, awaiting those ready to explore and embrace the next frontier of home entertainment.
Raman Abrol, CEO of Vubiquity and General Manager, Amdocs
Raman and his team are working with major studios, broadcasters, networks and service providers across the world to build and deliver innovative solutions (for both technology and content) that help customers explore, evaluate and enjoy Media in a simplified manner whilst ensuring high quality Content Operations. Prior to joining Amdocs, Raman was SVP & Head of Telecom & Media BU at Tech Mahindra Americas, and before that he was Managing Director for Comverse BSS Business Unit (now Amdocs Optima). Raman started his career with TATA & Lucent Technologies, Bell Labs group. Raman has an MBA (Finance) from NYU Stern, Masters in Engineering from New Jersey Institute of Tech and BEng (Electronics) from Pune University.
[Editor's note: This is a contributed article from Vubiquity and Amdocs. Streaming Media accepts vendor bylines based solely on their value to our readers.]
Virtual Product Placement (VPP) is an excellent new type of CTV and streaming ad placement. Stephan Beringer, CEO at Mirriad, discusses best practices for advertisers to follow for it to work well.
Max Heiderscheid of UIC Digital writes about the opportunities that shoppable TV brings and what challenges lie ahead in weaving together the fabrics of content and commerce within the sanctity of our living rooms.
Hunter Terry of Lotame discusses Amazon's new ad-supported Prime Video, which created an estimated 100 million-user advertising machine out of the gate, and he breaks down the reasons why brands shouldn't sleep on the powerful impact of Amazon's ad push.
Netflix, which can trace its roots back to a DVD-by-mail rental business model, has mostly blazed its own trail through what was - and in some ways still is - the undiscovered territory that is the streaming video market. But how will Netflix do with its recent move into the gaming space? Aaron Jacobson of Zollpa Games explores the implications for the mega streamer.
Media and entertainment companies of all sizes struggle to attract and retain audiences eager to find and consume content that interests them. Because content is abundant with too many options to navigate and pay for—and switching costs are low—profitability has eluded many providers. How can media and entertainment companies respond? Many are turning to a new ally: AI.
Heading into 2024, new engagement-focused offerings that move beyond ads to unlock new revenue opportunities will be a crucial element in expanding free, ad-supported TV (FAST) channels. Players in the media and entertainment industry that can successfully introduce creative features and gain viewers' active involvement in content stand to benefit tremendously.
Streaming services are in a fragile state with decreasing profitability and subscription numbers. Exclusive content and bundling with other services certainly help differentiate, but the key to winning the streaming wars is keeping viewers engaged through interactive features to avoid churn and to further maximize revenue. To do this properly, the technology employed must be in real-time and in sync so everyone can engage at the same time.
Companies and Suppliers Mentioned