After a boom year in video streaming, what comes next?

In 2020, more than two-thirds (68%) of US households maintained their cable TV subscriptions, the same share as in 2019. But these same consumers also spent time with streaming video, watching subscriber supported video-on-demand (SVOD) almost twice as often as ad-supported (AVOD) content (62% versus 32%). In 2019, survey respondents used, on average, slightly more than 6 streaming services, a total that grew to almost 8 in 2020. Pay TV subscribers aged 35-49 showed the strongest inclination to use additional services.

Consumers accessed content on a variety of devices, either directly, through apps or through content aggregators such as Amazon Prime, Apple TV, Roku, and others. And they have an enormous variety of content to choose from. With all of these choices and options, it would be reasonable to expect winners and losers in the streaming wars; consolidation will continue to change the landscape.

Our analysis shows that breadth of content still is the major factor consumers weigh when choosing a streaming service. When asked what they liked about their favorite services, “ease of use” was the most influential factor, and “I know I’ll always be able to find something to watch,” outranked the quality of content.

This speaks to the importance of a clean, intuitive user interface (UI) that understands consumers even better than they know themselves. Streaming services are already making headway on UI; as consumers juggle multiple services, it will take on increasing importance. The ability to delight customers and exceed their expectations can be a crucial differentiating factor.

Nearly one-third (31%) of survey respondents, for example, said that easy, personalized content recommendations would be a reason for staying with a streaming service. Even amid the generally favorable view of video entertainment, 29% of respondents said they were often “frustrated”  or “overwhelmed” by the array of choices on offer. 

To avoid such frustration, streaming services may need to kick their recommendation algorithms up a notch, perhaps through more seamless integration with social media platforms, gaming networks, and other hubs of digital consumer experience.

The importance of advanced personalization can be seen in survey respondents’ wish list for better content discovery that includes viewing recommendations based on factors such as mood, length of content, who they are with, and what content they are currently watching.

Companies could improve discovery in ways consumers may not yet have considered—perhaps by tapping into the effect of social media on consumer habits. Search algorithms could factor in the influence of a consumer’s network of Facebook friends or gaming enthusiasts, or filter recommendations based on viewer responses to prompts during the search process, perhaps asking who’s with them or what mood they’re in, if their search process stalls.

Implications: The secret to better search lies in data

To make search and discovery ever-more customer-centric, TMT companies need to fundamentally change the way they present content to subscribers, evolving from the era when “content is king” to one when “consumer is king.” 

Consumers have more premium content at their disposal now than they can possibly consume. But it is increasingly scattered across platforms, so the mantra “if you build it, they will come” doesn’t apply anymore. Content providers need to think about how their customers will search for — and easily access — the content they seek.

So how should TMT companies approach this challenge?

Data is a start. Companies will need to find ways to leverage the massive amounts of data about consumer behaviors and preferences currently generated by streaming services themselves, by third parties such as aggregators and smart device manufacturers, and by consumers themselves.

• Develop a customer identification strategy and supporting technology infrastructure plan. Without a means to collect, collate, and resolve customer data down to an entity (device, household, user), there is no way to provide personalized content discovery.
• Apply advanced analytics, AI, and ML techniques to blend data where direct matching is not feasible. For example, if a customer cannot be matched by email across devices or touchpoints, companies could use matching algorithms to predict the likelihood of it being the same customer based on other attributes and look-alike models.
• Ensure access to consumer behavioral data, either directly or through a business partner, particularly as data privacy regulations are tightened and the use of third-party cookies is phased out. Build trust with consumers so that they are willing to share this--and offer value in return.
• To gain the greatest value from analytics, review internal processes to ensure that any insights gained inform business decisions, and that outcomes of those decisions become data points for future analyses, not just on your streaming platform but across the breadth of the organization.

In taking control of their viewing experiences, consumers clearly notice what it feels like to use a streaming service — how easy it is to join, to use every day, to leave and potentially rejoin. In effect, consumers are taking unbundled content and re-bundling it according to their personal preferences. Consumers may find this more difficult as content is moved into “walled gardens” — unless companies are willing to offer recommendations beyond their own platform. (Some start-ups are already seeing the need for this type of service.). 

Our survey revealed factors other than cost that influenced consumers to unsubscribe from a streaming service, as well as factors that might induce them to stay.

Services now have the technology to treat each consumer as a “category of one,” creating the kind of personal experience that cements customer loyalty. For consumers who agree to be identified by logins, services could create hyper-personalized bundles of content, making their service a “must have.”

As the streaming market becomes more saturated, and with the cost of developing or acquiring content running into the millions — and even billions — of dollars annually, emphasizing customer-centricity and attending to the entire customer journey takes on much greater importance.

Implications: Smooth the customer journey with data

Data is essential in attracting potentially profitable customers and keeping them. It is also critical in managing the customer journey — one of the reasons companies like Disney, NBCUniversal and others have established direct-to-consumer relationships.

• Find ways to build direct customer relationships instead of relying on third-party data. As necessary, collaborate with business partners to obtain the kinds of analytics insights that clarify customer behavior and preferences

• Strive to define a “category of one” for every customer, then reinforce this personal relationship at every touchpoint and phase of engagement.

• Enhance existing customer analytic capabilities to devise pricing, marketing and retention strategies that mesh with enhanced customer journeys.

• Customer insight should lead to specific, measurable strategies related to managing customer relationships and customer journeys.