The number of direct-to-consumer (DTC) TV streaming services has increased dramatically in the 13 years since Netflix’s launch back in 2007. We’ve seen the introduction of more than 10 new services in the past 12 months alone, with several coming to market at the same time – normally a recipe for failure.
While COVID-19 has created a window of opportunity, given greater time spent at home for many Americans, it’s also created a huge degree of uncertainty. Questions remain as to the sustainability of the DTC model, given the number competing services, their massive investment in original content, and incipient “subscription fatigue” exacerbated by economic pressures.
In order to become profitable in this increasingly crowded environment, all streaming services need market intelligence designed to answer three key questions:
For large streaming services to succeed in an increasingly crowded market, they need to generate mass appeal across demographics.
Content testing is key to understanding the appeal of individual shows. For example, early stage concept testing can be helpful in informing pilot greenlight decisions. Pilot testing works to maximize executional appeal and also can refine target audiences. Similarly, communications testing helps networks and streaming services refine positioning and messaging.
But creating a comprehensive slate that maximizes subscriber acquisition and retention requires more than basic content testing. Content mix modeling helps determine how well your combination of current and potential shows generates appeal across a wide base of current and potential subs (reach) and keeps them coming back for more (frequency).
Generating awareness and interest for TV shows is not a new problem. Even in the olden days of three broadcast networks, awareness levels rarely reached 50%. Even fewer viewers knew when and where to find a show of interest. Fast forward to today, with hundreds of cable networks and dozens of Subscription Video On Demand services (SVODs). Even if you are lucky enough to create buzz in this crowded market, the bigger challenge is ensuring viewers know where to find the shows people are talking about.
Awareness and viewing intent tracking helps marketers maximize ROI. But it’s even more important to gauge attribution of original and exclusive content to your service and understand which brand signals do the best job of creating direct linkage.
TV ads are not going away anytime soon. Most consumers will be unwilling to pay for more than 2-3 streaming services in the long term, especially as prices for ad-free content continue to rise as services strive for profitability.
At the same time, precipitous declines in multichannel TV subscriptions and linear ratings have left advertisers with fewer options for generating broad reach. Many viewers express openness to advertising in order to offset costs, particularly if ads are relevant and targeted to their interests. Additionally, lighter ad loads and non-traditional formats can make advertising more engaging and effective.
Services that use consumer research to get the ad experience right and demonstrate ROI to advertisers – while differentiating from competitors and maximizing awareness of their unique content offering – will be the ones that thrive in the new DTC world.
Note: LRW’s Kim Rory and Alex Steging co-wrote this article.
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