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Streaming shake-up looming?

21 January 2021

Streamed video and audio content is rapidly replacing the older broadcasting methods in many households.

Tired of relentless advertising on both free to air (FTA) TV and subscription based SkyTV, consumers are instead opting to pay a small monthly fee for an "all you can eat" selection of diverse and often very high quality content. Best of all, this content is devoid of any advertising.

As a result of the lower cost, the flexibility of "on demand" and the ad-free experience, streaming services such as Netflix, Disney+, Amazon Prime and others have experiencd remarkable growth.

Throw in the effect of global lockdowns that have forced people to remain at home facing death by boredom as an alternative to death by CV19 and we have the perfect environment in which streaming has exploded as a business.

However, all is not as good as it could be for those companies delivering their content via online streaming.

Recent reports indicate quite a high rate of churn for all the streaming services.

There is also a growing level of "stream fatigue" playing out in the marketplace which has seen the average number of services a viewer subscribes to falling in recent times.

Basically, every streaming service has used a few top-quality series to attract customers.

We've all seen the "Netflix Original" branding on our screens and Amazon Prime spent a huge amount of money to lure folks to its service when they scooped up the three guys formerly fronting the BBC's Top Gear series -- to create The Grand Tour.

The problem is that many of these streaming services are also stacked with "filler" content that, to be quite blunt, is just crap. These are often old series that were originaly broadcast on FTA many years ago and could obviously be bought up for a song by the streaming companies. Most of these series were pretty bad when the first aired and the passage of time has done nothing to improve them.

What's more, the thing that has attracted so many people away from expensive subscription broadcast services such as SkyTV is now the thing that is causing churn and customer loss on these streaming services -- price.

When you consider that SkyTV could cost almost as much as $200 a month if you wanted the full range of options, $15 a month for Netflix was pretty damned attractive. What's more, whereas SkyTV is loaded with advertising, Netflix is ad-free. What was not to like?

The final carrot was that to get SkyTV you had to sign up for a minimum contract period, sometimes as long as a year or two. Change your mind before the contract was up and you'd find yourself stung with extra penalty charges. By comparison, Netflix and most of the other streaming services were strictly month-to-month with no cancellation fees.

However, that lack of contracted period is probably the thing that is hurting streaming companies the most right now and we can expect to see that change in the near future.

According to research in the USA, people are increasingly signing up to streaming services for just a month and then cancelling. The sign-ups are increasingly associated with the release of new season's of popular content, such as Stranger Things. It appears that people sign up, binge watch an entire season and then cancel.

With all the streaming networks relying heavily on their own proprietary content to attract sign-ups, this means that the filler content is no longer able to keep them paying.

The problem is that the "quality" content is now spread very thinly across a growing number of streaming services. That $15 a month can soon blow out to $100+ a month if you subscribe to all the different services that carry the content you want to watch. Now you're back into SkyTV territory in terms of cost.

Savvy viewers will simply pick and choose what service they subscribe to as and when they need to. If the only thing you want to watch on Netflix is Stranger Things then it makes zero sense to keep feeding them $15 a month for the other 11 months of the year once you've watched the latest serices.

So here are the changes you can expect (IMHO) over the coming year or so:

Firstly, streaming services will stop dropping an entire series in one hit. Even Netflix will start doing what Amazon and others have already twigged to. They'll roll out one episode a week, just like the old days of broadcast TV. If you want to watch an entire season of a program you'll have to stay subscribed until all the episodes have dropped.

However, that alone is not enough to reduce customer churn. Those savvy viewers will simply wait until the whole series has been uploaded and then binge for a month.

So the other change we'll see is minimum contract periods, just like SkyTV.

Watch for these services to demand a 6-month or even 12-month contract when you sign up. This will ensure that cashflows are far more dependable and that customers stay long-term.

Enjoy the golden days of content streaming... because I predict that we'll never have it as good as it is right now, again.

Or... you could do what I do. Just find a good book and spend some glorious hours relaxing and replacing CGI and VFX with good old imagination.

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