Why 2022 will finally see the emergence of the streaming TV era
Amid the sharp negative market reactions to Netflix’s recent subscriber losses, the age-old business truism of responding to, rather than building consumer demand holds truer than ever before. Traditionally, subscriptions have made up the minority of TV revenues, with the ad-supported free-to-air model driving monetisation across the globe. Netflix’s 2007 pivot towards providing a subscription video on demand (SVOD) service changed the industry perception of where the ultimate value in delivering a TV experience lay. Owning the direct billing relationship with the end consumer was increasingly seen as the way to maximise return on investment (ROI) and optimise network operating margins by selling directly to the consumer, rather than going through distribution intermediaries. However, the superiority of this model rested upon two assumptions: firstly, that the consumer preferred to manage multiple billing relationships and service user experiences (UX) and secondly, that the benign macro-economic environment following the recession of 2008 / 2009 would continue indefinitely.
Consumers ultimately want convenience AND cost-savings
The Achilles heel in the drive to SVOD was always the placing of the business’s needs above those of the consumer. While streaming did a great job of driving demand for original shows made exclusively available on specific video services, the arms race for zeitgeisty originals exposed the growing fragmentation of the user journey. Legally watching multiple hit shows now requires subscriptions to a variety of competing SVOD services, each with its own billing system and UX. The result is that the consumer is confronted with managing multiple monthly bill relationships and the challenge of managing differing search and discovery experiences within individual video services. Ultimately, the content got better while the stress associated with accessing multiple must-see shows increased.
2022 is evolving into an inflationary year with the spectre of stagflation (rising prices alongside stagnating growth) now looming due to geopolitical conflict, commodity supply constraints, and the nascent de-coupling of the global economy. All of which are contributing to the increasing pressure on households to rein in discretionary spending. Streaming, having previously been a big winner of the 2020-2021 lockdowns, finds itself in the cost-cutting cross hairs of consumers in 2022.
Featured Report
The future of creator hardware AI’s new creative lane
AI tools pose a risk to the hardware funnel by becoming the go-to toolkit for beginners and a substitute for recorded footage. With AI providing solutions at every stage of the video creator workflow,...
Find out more…AVOD and smart TVs will benefit from subscription fatigue
The ultimate TV beneficiaries of subscription fatigue and digital wallet trimming will be ad-supported video on demand (AVOD) services and the smart TV. AVOD obviously offers a cost-free way of engaging with increasingly zeitgeisty content, with the consumer exchanging subscription costs for ad engagement time and viewing data. The smart TV benefits from this by providing both the distribution platform for AVOD and SVOD, alongside simplifying the over-arching UX experience.
If the first and second decades of this millennium prioritised the atomisation of personal consumption in video, then the third decade’s overarching trend will be for re-aggregation and the return to the diverse monetisation and consumption ecosystem of the TV device.
With the smart TV ecosystem becoming the cornerstone of video monetisation, 2022 is set to be the emergence year of the streaming TV era.
The discussion around this post has not yet got started, be the first to add an opinion.