What can the media industry take away from the streaming industry shakeup?
Last updated: March 21, 2023
Remember waiting until 7pm on a Thursday night to catch your favorite sitcom? Me either.
Because the rise of streaming services in the early 2010s absolutely revolutionized the way we consume, interact with and pay for media. Besides making content instantly available, it also resulted in an explosion of new content that reshaped the cultural zeitgeist and spawned some interesting new catchphrases(“netflix and chill”, anyone?). It’s spawned the existence of the subscription economy and, perhaps, even made it easier for news companies to monetize their own content.
There’s no overstating the impact the streaming model has had on every corner of the modern economy. But this year, streamers are facing a major reckoning as increased competition, macroeconomic pressures, and decreased investments have forced them — and their subscription-based revenue models — into tumult.
Master subscription models: 9 Proven tactics to skyrocket retention & revenue:
The oversaturation — and eventual contraction — of streaming platforms has been imminent for years. But it all really began in April 2022, Netflix revealed that it lost subscribers for the first time in a decade in April 2022 and saw its stock price tumble 35% in one day. (And at one point, it was the worst performing stock on the S&P.)
Since then, the service has gotten more attention for its controversial moves to recapture revenue than it has for its programming. They’re cracking down on password sharing (or maybe they’re not). They’re cutting prices in international markets.
The uncertainty has spread to other streamers as well: Disney CEO Bob Iger is publicly questioning whether or not to retain the company’s ⅔ stake in Hulu+. HBO Max is trashing completed projects to save money on taxes.
And that has interesting implications for the media industry: Because the big streamers are finally facing the same tension between profitability and content creation that media companies have countered since their infancy. Streamers are being forced to justify the value of their subscriptions and keep their advertisers and investors happy — all while entertaining and engaging their viewers like always — sound familiar?
So what can the media industry learn from streaming’s stratospheric rise and its ensuing shakeup? Here’s what we’re seeing:
1. Content is *still* king
Netflix’s rise to prominence didn’t just come from the first-mover advantage. In their early years, their original content — the full season release of House of Cards — was differentiated enough to start the binge-watching phenomena.
That’s changed in recent years — and it’s played a part in the company’s struggles. So far, we’ve attributed Netflix’s recent issues to macroeconomic conditions, competitive pressure, and even those darn password sharing Millennials. But there’s a much simpler reason why they lost over 1 million subscribers in 2022: The content’s just not as good anymore.
Currently Netflix’s Top 10 movies have an average 45.8% rating on Rotten Tomatoes — and Netflix’s originals are the ones dragging down that average. (Representative of the problem: The Hangover Part 3 is on the Top 10 list, whereas its mega-popular prequel isn’t on the service at all.)
This problem is poised to get worse too, as some of its most popular shows, including Stranger Things and Never Have I Ever, enter their final seasons.
Netflix has also developed a reputation for prematurely canceling fan favorites like GLOW and Chilling Adventures of Sabrina, while less reputable shows and movie sequels get greenlit. (case in point: The Kissing Booth 2).
Any one of these factors might not be enough to reflect badly on Netflix. But the dip in quality is coming at exactly the wrong time: Netflix is adding advertisements to its previous ad-free platform and raising prices — increasing the cost of its service while degrading the value of its content. It’s been a long time since — and it’s only becoming more expensive to stay subscribed.
And that’s a bad combination for anyone in the content game.
What’s the takeaway for the media industry?
Ground pricing and strategic decisions in data: The need for revenue is inescapable. And it’s progressively harder to earn in the digital-first age. But you always need to ensure that any price hikes and feature rollbacks match the value that you provide your audience. ‘
Before rolling out a price increase, look at your purchase history to see how your audience has responded to previous moves. Or consider rolling out a newer, more expensive bundle rather than instituting a universal price hike (this way, your more loyal audience will likely pay more to add new features while reluctant audiences can stick around at the same price.)
Similarly, adding advertisements to your website has the potential to hurt the value of your overall product, once it hits a critical mass. So review your website analytics to see whether pages with a certain amount of ads have higher bounce rates and lower impressions. This will give you a better idea of how far you can go before your ads start harming your overall performance.
Know why people really subscribe: A lot of people subscribe to streaming services just so they can watch one or two shows. (Did anyone else buy HBO Max just for Succession?) To an extent, streaming services build their marketing strategies around this idea — promoting a few flagship shows and hoping the other programs keep them entertained after they finish Succession, Stranger Things, etc.
So review your own website analytics to see for yourself: Are they interested in the totality of your offering? Or are they only paying to access one or two specific publications? Or to hear from one or two certain writers? Every publisher has to prioritize certain types of content over another. But with a complete view of each reader, you can make the choice that pleases the most people in your audience.
2. Help customers combat choice fatigue
Is it even a movie night if you don’t spend half the evening arguing over what to watch? Is it even a weeknight if you haven’t scrolled aimlessly through your Hulu homepage before just shrugging and rewatching your favorite sitcom for the 10th time? (Shoutout to Always Sunny in Philadelphia.)
Choice fatigue is a common problem for every streaming service — and some providers are better at organizing and curating personalized choices for individual users. But with content quality taking a notable hit in 2023, this makes it even more difficult for customers to find something that justifies their spend.
What’s the takeaway for the media industry?
So how can media companies guide their readers toward the content they want?
- Segment your audience so you can provide each individual with the exact articles, newsletters, marketing communications they need.
- Make it easy for customers to opt in and opt out of specific communications with you via a preference page. That’s especially important if you manage multiple publications under your brand.
- Provide related on-page content recommendations to encourage further interaction with content that’s likely to resonate with them. (On Omeda, you can target different recommendations to different users based on their previous viewing and purchase history, so each person’s getting the recs that’ll keep them on site.)
3. Know your audience
So far, we’ve focused on streaming successes. Now let’s focus on one of the most spectacular streaming failures in recent memory: CNN+.
Haven’t heard of it? We can’t blame you. CNN’s premium streaming service collapsed almost instantly upon its release in March 2022, during which the paid service attracted only 10,000 daily users, less than one tenth of one percent of its one-year target of 2 million users.
No one factor can cause a collapse of such magnitude and indeed, CNN+ was hampered by corporate interference, changing leadership and shifting priorities at every stage of its development. (Check out this recap from CNBC for the full story.)
But really, the failure of CNN+ comes down to a complete and total misunderstanding of its audience’s priorities. The company launched its paid streaming service at a time when public trust in legacy media, including CNN, is at an all-time low. But instead of recruiting new personalities to CNN+, or regaining public trust by experimenting with different formats and storytelling methods, programming on CNN+ basically replicated the same personalities and shows on the main platform. (CNN+ programming included Book Club with Jake Tapper)
In CNN+, they asked customers to pay for a digitized version of the legacy news product in which they were already losing faith. Put that way, it’s easy to see the app failed within a month. When, if they’d taken the opportunity to address the public’s concerns and pivot their content accordingly, they may have seen much different results.
So what’s the takeaway for the media industry?
- Dig into your audience to identify commonalities among your most loyal audience members, as well as those who churn. (Omeda’s Audience Search function allows you to query your entire audience using a combination of 100+ filters, so you can do this in seconds, then apply your insights to your next campaign.)
- Consider crowdsourcing your content. Your website analytics can tell you a lot about your audience’s interests and future needs. But taking ideas straight from the source gets readers more invested in your content — and it lends important new perspectives to your content. We wouldn’t recommend doing this all the time. But incorporating reader voices into your articles helps you learn more about your audience, while also making your work a real reflection of your community.
4. Keep people in your ecosystem
One of the biggest issues for investors is that a lot of the money being spent on content isn’t hooking people into the company’s broader ecosystem. People might sign up for HBO Max so they can watch the next season of Succession, or get Netflix just to watch Stranger Things. But the streamers don’t do enough to leverage the success of their flagship series to drive viewership for their other shows, investors claim.
The same goes for media companies: It’s not enough to entice someone with one or two good articles. You need to parlay your initial success into long-term engagement.
What’s the takeaway for the media industry?
- Cross-promote and up-sell your publications, using data from your CDP or website analytics services. Use your audience data to see:
- What products/publications are most commonly bought together
- what additional content your subscribers are viewing on your website, especially if it’s behind a paywall or meter (if someone’s providing their email address to view articles related to a topic, chances are that they’ll at least subscribing to a magazine on that topic)
- your subscribers’ job title, industry, age/location and other demographic information
- your subscribers’ average order volume
- If applicable, see what sessions, breakouts and panel discussions, and webinars your subscribers attend.
- Couple your print content with email newsletters, social media and/or podcasts. Giving people multiple ways to engage allows them to interact with you on their time, on their terms. That increases the odds that they’ll stay around longer as a result.
- Look for ways to complement your print content with more social opportunities, like in-person events or even online communities. This transforms your content into a full experience and establishes a deeper emotional connection with your audience.
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