The Streaming Space: Navigating Change and Maximizing Customer Engagement

The streaming space is currently facing unprecedented change. Four years ago, new entrants were emerging rapidly, with every major studio eager to launch its own streaming platform. Now, we’re seeing an increase in the number of content bundles, suggesting that consolidation and strategic partnerships are the new normal for streaming services as they strive for profitability and work to increase revenue.

We’ll take a look at why this is happening, how streaming customers are reacting, and what marketers in the industry can do to better meet their customers’ evolving needs.

The Streaming Macro Environment

Every day, a new bundle with one or more streaming services seems to appear. The question is: Why is this happening? And why now?

In essence, streamers today are taking a page from the cable playbook, potentially as a way for them to help stop churn. While we often talk about cable TV as a monolith, it was always sold as a bundle, bringing together a range of different channels offered by an array of different companies. Having that variety created a backstop for cable providers, increasing the odds that viewers would find something they could engage with as they browsed—after all, when your favorite show had its season finale on HBO, your second-favorite show might well be able to start its run on USA, and your kids’ favorite show was always running on Nickelodeon, giving you reasons to keep subscribing. It seemed to work for all parties involved; cancellations were generally low, and each channel wasn’t dependent on having a hit at all times. Cable companies bundled internet and phone services to further add value to customers and mitigate churn.

Today’s media and entertainment brands are putting together their own bundles—from the Disney Bundle (Disney+, ESPN+, and Hulu), to Walmart+ including Paramount+, and Instacart+ including Peacock Premium.

Beyond bundles, streaming services, like record companies before them, have reluctantly turned to big tech to solve their business model problems. Aggregators like Amazon Prime, Apple, and Roku are leveraging their platforms to create a one-stop shop for streaming content by allowing customers to purchase third-party streaming service subscriptions that operate alongside their own exclusive content. Aggregators then use their direct relationship with customers as leverage to exert dominant market power over suppliers (i.e. streaming services) to extract a large percentage of the payment associated with each subscription.

Many customers love aggregators because they make things easy in a seemingly fractured media landscape. Streaming services can benefit from the arrangement—since it can help to reduce churn, reduce costs and effort associated with payment processing (as each aggregator uses its own billing), and make content discovery easier—but it can also cut into their margins, making it important for brands to think through how they engage with aggregators and what impact there will be on the customer relationships and bottom line.

Sports and Ads

“Entertainment is a swamp, and sports is the only firm ground.” — Former Fox Sports chief David Hill.

The latest news in streaming is all about sports and lower-cost ad tier offerings. These trends are connected and key to the future of streaming. If you search for the top-watched programs in the US over the last few years, what do you see? OK, we did it for you: Football dominates the landscape for our attention, with other sports rounding out the list.

You can see why streamers looking to fight churn would be interested in doubling down on sports content. Sports drove stickiness for cable subscriptions, and streamers are hoping to benefit from the same dynamic. Sports also has commercial breaks, which align nicely with ad offerings that streamers began rolling out in recent years. Beyond creating ad inventory for the new sports content, introducing ad tiers also allows streamers to offer lower-cost ad-based plans, lowering churn at the low end while simultaneously charging their most cost-inelastic customers more for ad-free plans (well, ad-free except for sports, where the ad breaks are mandatory).

One thing to note is that professional sports leagues understand the situation outlined above very well and are using their leverage to squeeze every last penny out of the networks bidding on their rights.

Even in a time where overall viewership of non-football sports is declining, the leagues are increasing their fees by multiples. The NBA’s new TV deal is worth approximately $76 billion, almost triple the previous deal. But as Brent Magid, CEO of media consulting firm Magid, states, “Yes, there’s risk at these fee levels given recent ratings, but they are also looking at the downside of the games being on competing services. Which is worse?”

Creating a Cohesive Customer Lifecycle

With all the different ways a viewer can now interact with your brand, how do you create a cohesive lifecycle? Before bundling and aggregators, brands held the keys to most interactions with their viewers. People watched content directly in their streaming service apps through their phones, tablets, and websites, meaning the brands had access to all touchpoints with the viewer and control of all the data tied to that user.

With the rise of aggregators, bundles, and partnerships, brands need to go back to the drawing board when it comes to customer outreach. Streaming brands are no longer the sole owners of all viewer data; with an aggregator, it’s often hit or miss what data is being passed back to the streaming brand, and you may no longer be able to reach a customer on traditional channels like email or push notifications. And when it comes to things like partnerships and bundles, streaming services have to grapple with the fact that they may not even be the reason the viewer signed up in the first place.

The number one thing to deliver to your viewers is value. Showcasing trending and exciting content, making it easier for viewers to find something to watch on a Friday night, and delivering targeted and personalized recommendations are crucial. Showing the value of your brand and your streaming content creates stickiness and drives revenue.

The question then becomes, how do you showcase value in a space full of competitors and with subscribers who are much more likely to cancel than in the past? By understanding and leveraging your first-party data and making the most of the messaging channels you have.

As the prevalence of bundles and partnerships rises, and as more viewers stream content through aggregators, first-party data and a cross-channel strategy becomes that much more important. The first step is understanding, for each type of subscriber (that is, subscribed through an aggregator, subscribed through a bundle, came in through a partnership, or subscribed to your app directly), what kind of data you have available, and what channels you are able to reach them on. There is no one-size-fits-all approach when it comes to user messaging, and it is important to tailor the experience to each type of user.

Once you know how you can reach your viewers, you can get creative with the type of outreach to send to create unique and fun, brand-building moments with your viewers.

Final Thoughts

With the unrelenting pace of change in the streaming environment, it can be tough to keep up even if you work in the industry. At Braze, we keep our finger on the pulse, working with many of the top streaming services, and can help you build a customer engagement strategy that fits with your business strategy.

Let's start a dialog on how you can adapt and thrive in this new world. To learn how Braze can help you to effectively navigate these changes and to deliver exceptional value to your viewers, talk to your customer service manager or use the Braze contact form.

Want to further explore these topics and more? Join Erin and Dave at Forge 2024 in Vegas, where they will be presenting a deep dive into the state of the streaming ecosystem during their session Curtains Up. Sign up for Forge today!