While we can count on every move made by Netflix, Amazon Prime Video, Disney+, Hulu, Peacock and the other streaming services from the major entertainment players being dissected on a daily basis, we don’t hear nearly as much about the rest of the streaming market.
Yet, there are hundreds of streaming services worldwide, including at least 300 in the U.S., according to Parks & Associates.
A survey by Applicaster of 95 decision-makers involved in building streaming video apps at broadcasters (52% of the sample), D2C video brands (27%), multichannel aggregators (20%) and video game developers (1%) offers some directional insights on these other players’ plans and business models.
Most (75%) of the respondents were from North America, with the rest based in Europe (12%), Latin America (8%) and Asia (5%).
For context: Applicaster offers a platform designed to help broadcasters, content publishers and OTT providers create, distribute, and manage multimedia applications across multiple mobile and TV devices. Its clients are broadcast, sports and kids video providers, including Viacom and Disney.
Most respondents (84%) said they expected audience growth in the first quarter (the survey was conducted in January) — with a third expecting organic growth, 28% expecting growth from added platforms, and 23% expecting growth from increased marketing. Just 12% expected no change, and 4% a decline in audience.
Going forward, 30% said they expect their audiences to grow by up to 25%, and 27% expect growth of up to 50%. About 19% expect growth of up to 75%, and another 18% expect growth of more than 75%. Just 6% expect no growth.
Asked if they were seeing OTT ad-fill rates return to pre-pandemic levels, 70% of those that take ads reported that was happening with mobile in early 2021, versus only 56% saying the same about TV.
Multiple Platforms Are Mandatory
The responses confirmed that a mobile-only strategy (the one initially used by the now-defunct Quibi) won’t cut it anymore. Brands that hope to monetize the tide of streaming growth have to be everywhere their viewers are, and adding new platforms is the most efficient way to add significant volumes of users to increase ad revenue and/or subscriptions, as the report notes.
So while two-thirds of participants cited mobile as a top monetization platform for this year’s first half, 53% cited smart TVs, 44% gaming consoles, 42% boxes/sticks and 40% the web.
In addition, launching on more platforms was the most-cited (by 66%) goal for 2021 — followed by creating more content for apps (57%), launching more properties and apps on existing platforms (55%), and licensing more content (49%).
‘Pure’ Monetization Models Are Rare
The services reported using an eclectic mix of business models. Most use both AVOD and SVOD, combined with other revenue streams as well.
More than two-thirds (67%) use AVOD. But of those, just 19% rely solely on advertising. The other 81% combine ads with other strategies.
Of the 58% who use SVOD, only 22% rely only on subscriptions, with 78% also using other revenue streams.
Forty percent use TV everywhere (TVE) and 39% use product placement. Again, in each case, the great majority (roughly 90%) combine TVE and product placement with other strategies.
Of those who take advertising, more than a quarter (27%) report using sponsorships and product placement.
Everywhere authentication is popular with U.S. cable brands, most of which use a matrix of monetization formats to serve cable viewers and reach the growing audience who have cut the cord.
All in all, the participants reported 19 different combinations of revenue tools being used across platforms.
Ad-Supported Model Trends
Among those that take advertising, 40% reported that local advertising was outpacing national advertising in Q1.
About half (49%) said that ad revenue generated by in-house sales teams is more valuable than programmatic. Only 20% said they have no sales teams, and rely on programmatic.
Ongoing Model Honing Is Standard
Consumers’ evolving habits and learning based on their use of specific apps is driving continual honing of streaming apps.
More than half (54%) said they were planning to change their monetization models within the next six months, and another 22% said they might do so.
Here’s the breakdown on what models respondents are considering in the next six months:
Reliance on App Stores Remains High
Nearly half (46%) say they are managing new subs for mobile and TV platforms via in-app signups that require revenue-sharing (generally 30%) with app stores, versus just 20% relying only on websites in order to avoid the app-store cut.
Another 23% are still trying to figure out how to manage subscriptions without having to revenue-share with the app stores, while 11% don’t plan to offer subs.
Nearly a third (27%) reported considering a combined AVOD-SVOD model over the next six months.