The worn-out content is king mantra is definitely still true.
Over the last decade or so, we’ve witnessed many new types of content emerge. From video streaming platforms, live streaming events, and interactive storytelling pieces, to short-form video content, podcasts, e-sports, mobile-first content, virtual and augmented reality — the options indeed seem endless.
This is especially true for video streaming services, with the notorious “streaming wars” still raging across the globe (and in our ads). The number of people paying for (at least one) video streaming platform is on the constant rise, with the 2020 pandemic acting as a significant catalyst to drive this trend even further.
But what happens when the number of content kings (or types of kings) is downright overwhelming?
For example, Netflix generated $24.9 billion in revenue in 2020 alone, which is a 23.8% increase when compared to 2019. The brand also had an operating profit of $4.5 billion in 2020, which is a 73% year-on-year increase.
So what’s the big secret? Personalization. In fact, Netflix has been one of the first to adopt mass scale personalization leveraging AI technology.
Video streaming is replacing legacy media platforms
Traditional TV appears to be fading as more and more people of all age groups are subscribing to paid video streaming services. According to a Deloitte Insights October 2020 survey on digital media trends, 76% of US-based users said they subscribe to at least one paid service, which is a 21% bump in the numbers since 2018. This trend of numerous users cutting the legacy cord and subscribing to paid video streaming services is an ongoing process that may, in the long run, completely phase out regular TV subscriptions.
On the other hand, entertainment companies need to find a way to stay in the game and handle this change the right way, as merely launching a streaming service is only the first step of many.
On top of this, the modern stream-based entertainment landscape is extremely dynamic. The target audiences are evolving and becoming highly picky and demanding. With their gamut of options widening with every new streaming service that emerges, it is becoming quite challenging to engage, acquire, and keep the users for longer periods of time.
Why video streaming services are experiencing a bigger churn rate
While the COVID-19 pandemic has fueled the trend of people using multiple video streaming platforms, the users are now also leaving streaming providers more frequently.
Between January and October 2020, the number of surveyed users who reported leaving a video streaming platform rose from 2 to almost 5 out of 10. During the same year 23% of surveyed users reported they had started using a new streaming video service, with only 9% of those who both added and left video streaming platform services since the start of the COVID-19 pandemic.
These numbers suggest that the video streaming landscape is becoming increasingly dynamic and the market more mature and competitive. For example, more than half of consumers, who have cut at least one streaming service since the pandemic started, state that they only subscribed to watch a specific show and then left the service once they finished watching the show.
This trend puts video streaming services in a tough position as they have a very narrow time frame of opportunity to respond and keep those consumers as long-term subscribers.
Are consumers winning the streaming wars?
As the consumers are now in control — enjoying the content at affordable rates and can leave whenever they wish — it is up to the service providers to invest in their retention.
In order to reduce churn, platforms must be able to quickly learn as much as possible about their new users so they can curate better content for them and be able to predict who the churn candidates are before they actually cut their service. Especially because the providers spend heavily on both the content they offer and the marketing efforts to attract subscribers.
Personalization takes center stage
The best way to attract and keep more subscribers is to utilize the power of personalization. The user needs to be able to separate the signal from the noise. To do that in this oversaturated video streaming space, they need trusted filters that can provide personal recommendations optimized for their own unique preferences.
One of the ways they can achieve this is through recommendation engines based on AI and ML that improve user and customer experience.
These systems are helping content providers win over users, build their trust, and retain them through smart personalization algorithms. The user needs to constantly receive the content they need and want, regardless of the fact that their tastes and preferences tend to change over time. For example, over 80% of the content users watch on Netflix gets discovered through the platform’s recommendation system based on AI and ML.
Here are some of the benefits that AI- and ML-powered video content personalization can bring to modern media and entertainment OTT platforms:
Increased content consumption — Based on the content consumption data, platforms are able to curate highly relevant content to each individual and therefore improve overall engagement and content consumption.
Improved new content discovery — Subscribers are able to get and easily find the latest content that is tailored to their own unique tastes and preferences. As digital audiences have a decreasing amount of browsing patience, it is up to the streaming service to recommend interesting and relevant titles as quickly as possible. For example, it takes 60 to 90 seconds for a viewer to decide which content they’ll watch. If the consumer doesn’t find a content piece that satisfies their preferences, the chances for churn spike up significantly.
Enhanced binge-streaming functionality — To increase revenue, platforms must encourage users to spend more time streaming content. Personalization and recommendation engines help services suggest their most binge-worthy content and enable consumers to engage more deeply.
Highly personalized advertising and ad placement — streaming service providers can use AI and ML to personalize pre-roll, mid-roll, and post-roll ad placements and therefore increase their ad revenue through better targeting.
Improved marketing communication — Subscribers can opt to receive personalized marketing emails and push notifications that inform them about individualized content recommendations they are highly likely to engage with.
Paving the future of live streaming
Streaming video providers have a world of opportunities to explore in order to come up with the best strategy on how to get much closer to their audience, make them stick around and build trust.
HTEC Group has dived into a number of interesting projects and envisioned, designed, and delivered different completely new entertainment and streaming TV platforms of the future providing end-customers with unique personalized services to meet their ever-growing expectations. These solutions enable viewers to jump between devices, access features and content more easily, have complete control of the ordered features including user management and subscription packages, and create groups where they can interact and communicate, and so much more
Audiences are hungry for new forms of entertainment and their demand and needs are changing at the speed of light. How can streaming video services combine latest technologies, great content and the winning strategy to keep their subscribers long-term?
Reach out to us to find out how our deep domain expertise and knowledge will help you build a solution to create a highly personalized experience for your audience and drive revenue now and in the future.