Miller-Jones, VP Strategy, Industry & Partnership at Limelight Networks

April 2021 Web Services: The rise of subscription services

Steve Miller-Jones, VP Strategy, Industry & Partnership at Limelight Networks chats about navigating the online world of streaming subscriptions

From major sporting events to prestige award shows, the world of entertainment has been forced to move away from public venues and into the home. As consumers moved online during the pandemic to view their favourite video content, the availability of streaming services exploded. In fact, according to Limelight Networks’ State of Online Video report, in 2020 it was more common to have at least one streaming subscription (78%) than to have none (22%). With more and more streaming powerhouses entering the market, the landscape is becoming increasingly crowded and yet it continues to grow alongside the ever-increasing demand from audiences.

The streaming wars have intensified over the past year with the introduction of new players with new content offerings challenging the incumbent brands like Netflix and Amazon Prime.

So how have newer services like Disney+ and Peacock been able to compete and is there space for more?
In order to make headway in an already saturated market, subscription services need to deliver a broad range of top-quality content to meet their audiences growing expectations. When comparing the services that the BBC currently offers under their £157.50 license fee to the services that would cost over £400 when combined, it is clear that there is a lot of competition for a share of consumer expenditure. Therefore, both quality content and high performance are key in making their services attractive to consumers.

It’s certainly true that consumers are spoilt for choice, but they will continue to look to the media industry to keep them both entertained and occupied, now more than ever. Therefore, the streaming survivors of tomorrow will be the services, which can capture and keep viewers’ attention in the long term, once the shine of free trials and new blockbusters has started to fade.

In the battle of eyeballs, how can services keep their viewers’ attention?
Consumers today are no longer hindered by the limitation of television broadcast showtimes or content availability. With a wide assortment of services available to them, they can get the content they want at a simple touch of a button or a tap of a screen. When this is not achieved, they are fast to move to services that are able to provide this experience.

In an era of immersive storytelling, the launch of Disney+ was the perfect example of a company breaking through in a difficult market. Having just surpassed 95 million subscribers in one year, they were able to use their secret weapon of nostalgia to engulf viewers in reliving their childhood favourites. However, many critics feared that Disney+ would struggle with longevity and keeping their subscribers once the excitement of re-watching movies had died down. Yet the introduction of new original content such as The Mandalorian and WandaVision has kept the Disney magic alive and developed brand loyalty as subscribers come back to the platform for their weekly dose of new episodes.

As the market and leading services mature, streaming has become a much tougher game, with viewers now having a myriad of options to pay to view content on demand and on-the-go through OTT apps. It is no secret that over-the-top (OTT) platforms such as Netflix and Amazon Prime have taken the local entertainment market by storm – almost everyone uses such a service, or even several. Yet, it’s not just their content that has kept customers coming back for more. Newer services need to have fresh offerings and have very little overlap with each other in terms of content to make an impact.

What is causing viewers to lose interest in subscription services?
The leading reason for subscription services to lose viewers is by losing their attention. With a myriad of services available, viewers have higher expectations for their content and will expect nothing less than the highest quality video experience. In fact, half of UK viewers (50 per cent) note video rebuffering as their primary viewing frustration, 31 per cent are frustrated with poor video quality and 11 per cent when the video doesn’t play.

The streaming platforms that are rising to the top will be those striking the right combination between reliable services and the range of available content. The onus is now on content providers to deliver exceptional experiences to maintain these huge subscriber numbers. They will need to concentrate on preserving outstanding video quality, ensure service reliability and low latency through robust delivery strategies. Within the OTT space, preventing any latency or friction that would disrupt the user experience is the key to success.

What is the future of content providers in this new cord-cutting landscape?
The rise of streaming superstars like Netflix and Amazon Prime has forever changed the way we consume content. Uninterrupted delivery, original content and ease of choice has appealed to the masses leaving traditional broadcast players in its wake.

Unsurprisingly, 6% of UK viewers have moved away from traditional broadcast altogether and do not spend any time watching broadcast, satellite or cable TV. Instead, they spend all the time streaming online using services like Netflix and free platforms like YouTube.

This cord-cutting trend is real. Globally, 11% of 18- to 25-year-olds said they no longer watch any broadcast, cable or satellite TV – meaning to get in front of the next generation of consumers and professionals, businesses need to pivot to digital channels. This is a big deal as Generation Z’s viewing habits are pushing these streaming leaders to move their advertising money to digital platforms – effectively changing the entertainment industry’s revenue model!

When it comes to the BBC, if they wanted to focus their efforts on OTT and be competitive in an increasingly crowded streaming market, they will need to keep their current viewership while winning over new viewers through online services. Fortunately, our research suggests that it’s not just younger viewers, 59% of 61-99-year-olds are also SVOD fanatics and are spending their time watching YouTube. This can be beneficial to the BBC as they can also keep their loyal band of older followers through accessible content, replicating the success they have had with the digital-only channel BBC Three, aimed at younger viewers.

Can subscription services build audience loyalty with what consumers watch?
2020 truly was the year of streaming. In the last year, watching online video increased by almost 14 per cent in the UK, with viewers spending 7 hours 24 minutes on average per week in 2020.

When it comes to specialised content providers such as Disney+, UK viewers spend 1 hour and 42 minutes a week watching, compared to 4 hours and 42 minutes a week watching broad content platforms like Netflix and Amazon prime and 2 hours 18 minutes using live TV such as YouTube TV.

Each service has different methods in keeping viewers coming back for more. But UK viewers are most loyal to YouTube which continues to dominate as the platform of choice for 52% who are seeking personalised user-generated content such as the online workout, cooking classes or gaming stream sessions.

Younger generations are keen to try out the newer services as only 6 per cent of 18–25-year-olds spend time on Facebook as they shift to new platforms such as Instagram (13 per cent) and TikTok (13 per cent).

Building audience loyalty has been a difficult task for services as viewers are keen to explore different platforms and keep their options open. This means content providers need to ensure the viewing experience is top notch, so their content is not lost in a consumer’s roster of services.

The million-dollar question: how many subscription services is too many?
With audiences spending more time at home, the UK has fast become a nation of streamers. The OTT landscape is certainly crowded and the number of services that viewers are able to choose from has grown exponentially. This boom in streaming services can certainly be attributed to the pandemic, but now we should ask whether the abundance in choice is here to stay or whether viewers have succumbed to streaming fatigue?

It’s true that the streaming landscape can continue to change and for OTT providers to keep up with these fluctuating demands, they need to be able to understand the consumer, the current climate and take a proactive approach to deliver quality experiences with the integration of Content Delivery Network (CDN) infrastructure within their operations.

At least for now, it’s safe to say, that consumers are enjoying the vast choice in services that has provided a means of escape in a time when viewers have needed it the most.

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