By Paul Erickson, Director, Research, Parks Associates
The adoption and consumption of streaming video services are taking place within a highly competitive business environment where consumers have a multitude of choices, and can hop from one service to another with relative ease. The need for intelligent data with which service and content providers can optimize revenue, streamline operational efficiency, improve customer experience, and reduce subscriber churn is as high as ever.
The consumption of streaming video services among US households was already accelerating prior to COVID-19, and service adoption has continued. In the US, the percentage of people with an OTT video subscription has surpassed the percentage who subscribe to traditional pay-tv. Parks Associates’ research reveals that as of Q3 2021, US broadband households now subscribe to an average of 5.6 OTT video services each. OTT video is now the primary way that US consumers access video, and their appetite for content continues to grow.
Eventually, consumers will experience subscription fatigue and start to limit the number of services they adopt. People have only so many hours and so much attention they can devote to video. The more services competing for pieces of that whole, the harder it is for individual services to be sticky, engaging, and secure in consumers’ stack of must-have subscriptions every month..
Video services have options available to entice their users. Parks Associates found that when presented with a list of standard retention options, 21% of users referenced the ability to pause a subscription and 21% also cited the availability of a lower-priced tier. Given the variety of methods available, and with no single one dominant, correctly selecting the relevant retention options to offer an individual subscriber is of high importance in driving successful retention efforts.
With no logistical barrier to consumer churn, services must forge an emotional connection to their subscribers, which is done through a positive combination of content and user experience that drive perceived value – and better, more insightful, and more actionable data is key to achieving this relationship. Video services are seeking ways to optimize the performance of their businesses in as many dimensions as possible. Data, insights, and actions enabled by the application of artificial intelligence (AI) and machine learning (ML) can maximize their abilities to compete and thrive in the current high-pressure streaming video landscape.
Activity in the over-the-top (OTT) streaming video service market is at an all-time high, with consumers benefiting from an abundance of choice from a multitude of service providers offering a variety of content and subscription models. For streaming video service providers, the environment is fraught with challenges. It is a crowded competitive landscape, but opportunity continues to be plentiful, as consumer uptake of OTT services continues to grow. Decisions driven by more intelligent and insightful data will key in services’ ability to gain advantage, optimize operations, and maximize their success in this competitive environment.
Download Parks Associates’ recent research whitepaper, in partnership with Symphony MediaAI, which explores the drivers and use cases for artificial intelligence (AI) and machine learning (ML)- enabled data in the video services market. The research firm will be hosting in-person and virtual sessions for their Future of Video: OTT, Pay TV, and Digital Media executive conference, bringing together industry leaders to share insights on new trends in the video and connected entertainment industries throughout 2022.