Some Strategic Keys to the Fight of Video On Demand vs. Television

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With direct consumer access (DTC), the big news for the video in 2019 They are loaded with risks for television networks, which have grown in audience and financial success in terms of traditional agreements with cable and satellite operators.

Since the growth of the cable in August 2015, networks have been pressured to mitigate their distribution risks by passing television operators and going directly to the consumer with their own demand video distribution service. However, building a DTC business that is sustainable requires a specific repertoire of skills that go beyond simply managing a service. business-to-business.

Along with the challenges of reach, interaction and retention of subscribers, there is also the inevitable challenge of creating a proposal that attracts enough consumers to pay for it.

Starz is a good example of the risks and rewards that television networks in the United States are dealing with. Starz was acquired by Lionsgate in 2016 after having developed a successful business as a provider of Premium content. Shortly after its acquisition by Lionsgate, Starz launched its DTC application.

In the highly competitive world of these services, the Starz application has managed to be relatively successful in acquiring its users, having its subscriber base (for the first quarter of 2019) just behind Showtime Anytime (source: MIDiA Index ). However, for Starz to achieve its difference of up to 10 times between its television audience and its streaming audience, it had to address an important point in its DTC proposal: Diversity of content.

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With regard to information on gender preferences among Starz fans, we have that fans are not only interested in movies, drama, comedy and children's shows. Starz fans are also interested in sports, much more than average consumers, and, they are also much more interested in horror and science fiction movies than the average audience. In the traditional pay-TV ecosystem, these traditional gender preferences are served by other networks of cable and satellite operators. However, in the new world of DTC, consumers have to use complementary video services to access non-popular genres. This results in two things:

  • Consumers perceive the service as specialized, and for that reason, they see it as an additional service rather than as a complete service.
  • Consumers become more likely to make "wild changes" (subscribe and discover strategically to obtain gender-specific services).

The net result is that the consumer is always just one step away from discovering these types of services.

DTC services need a next generation of re-aggregators to continue scaling

At the center of the challenge is the need to replicate the old world to return it to something newer, faster and more evolutionary, so that it can adapt to the new digital era.

The era of pay-TV solved, at the time, the tyranny of consumer choice and discovery, and as DTC services remain in good positions within their respective areas, they may fail to try to become a viable substitute for traditional television. The possible re-aggregators are technological companies that build relationships to offer the unified experience of the platforms and the average audiences to the networks. When that happens, the DTC will change from: Being well, to be a necessity for the average television consumer.


Source: www.midiaresearch.com

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