What Is a Sales Funnel and How Does It Work?
by Isabel Greenfield
8 Min Read
7 Min Read
Have you ever been recommended a TV show by one of your friends, only to find out that you’d have to sign up for a whole new streaming service just to watch it? While this can be frustrating, exclusive access to content has historically been one of the main ways streaming platforms grow their subscriber bases. But with more and more services licensing out their content to other platforms, this might be a business model of the past sooner than you think.
Back in 2022, Warner Bros. Discovery (WBD) marked a significant shift in the way streaming services prioritize their content versus revenue when they not only canceled but completely dropped Westworld from their platform. Considering the show was once one of the biggest drivers of subscribers to their service (not to mention extremely expensive to make), many were left wondering… why?
It all comes down to dollars and cents.
Maintaining a streaming service is expensive: licensing costs money, producing content costs even more, and holding on to content means paying out residuals for the foreseeable future. But when there was such a huge market of subscribers to woo out there, the cost was worth it.
So when Netflix reported last year that they lost more subscribers than they gained for the first time, it indicated a turning point in the streaming industry. Where once streaming services were all about grabbing (and holding onto) as many subscribers as they could, Netflix’s shortfall made it clear that the saturated subscriber market wouldn’t last forever.
To be fair, we already knew that most streaming services weren’t yet turning a profit. According to IndieWire, only Netflix and Hulu made it over the profitability hump last year.
So how do streaming companies plan to change that? One way is through ad-supported tiers—which have become increasingly popular over the past year. Almost every major streaming service now has a lower-priced, ad-supported option for those subscribers who are willing to watch ads for a discounted subscription fee. That way, those streaming companies can make an additional profit through ad revenues.
But more to the point, many platforms have realized that they can make more off a show by licensing it out to other platforms. After all, dropping content sometimes means that these streaming companies can take tax write-downs—as seen with the last-minute cancellation of HBO’s Batgirl, which was almost completed before the service decided to ax it. Disney+ and Hulu also reportedly wrote off around $1.5 billion after removing content from their platforms.
So as streaming executives look to increase revenue, it looks like they’re willing to be cutthroat with their own content darlings in the process.
So did those shows just disappear forever? Nope. Many of them have found new homes, thanks to those aforementioned licensing deals. It’s how premium streaming platforms are recouping their losses—and other platforms—many of them FASTs (free-ad supported streaming services)—are picking up the slack.
To continue using Westworld as an example, WBD struck licensing deals with two different FASTs for access to the show and some of its brethren: Tubi and Roku. Both FAST platforms feature Warner Bros-branded channels where users can watch the same shows they always loved—but now with ads. That way, WBD can offload some of the fees, including residuals, associated with housing content within their own platform.
For now though, FASTs aren’t the only kinds of platforms looking to license out proven content from other platforms. WBD (yes, them again) is also considering licensing out its premium HBO shows to Netflix, which is currently on the hunt for new content. Currently, only one of Netflix’s original series—Stranger Things—is among the platform’s top-five most watched list. The rest of the slots are taken by licensed content such as NCIS and Criminal Minds. And with the writer’s strike keeping their spooky TV baby hostage, Netflix may be even more driven to make a deal.
The ongoing stand-off with the WGA—which has come about, in part, over the question of residuals and streamers avoiding paying them—have the potential to speed up the timeline for many platforms who are changing their priorities to focus on driving revenue.
Yes, streaming companies film their shows way ahead of their release dates, and many, anticipating the strike, have banked up a few shows. But even if scripts are ready to go, it doesn’t mean the shows won’t be impacted. For example, Stranger Things creators Matt and Ross Duffer said on Twitter that they’d be halting production of the highly anticipated fifth season of the Netflix powerhouse for the duration of the strike: “Writing does not stop when filming begins. While we’re excited to start production with our amazing cast and crew, it is not possible during this strike.”
Writers aren’t exactly thrilled about the offloading of their work from platform to platform. Charles Slocum, assistant executive director at the WGA West, told Deadline that the current blackbox way streaming platforms track the success of their shows prevents writers from benefiting when a show is a hit. “If you write for a streamer, you get two residual payments—one for domestic streaming and one for foreign streaming,” he said. “It’s a set amount of money. If it’s a big hit, you do not get paid more residuals in streaming, whereas in the broadcast model, you do because of its success.”
Streaming services argue that their platforms have given shows a life they otherwise might not have seen in the world of linear-only TV. Where at one time canceled shows would fade into the ether—where less popular content goes to die—a producer told Deadline, “With the emergence of SVOD platforms, these series that ran only one, two, or three seasons have the opportunity to run on an SVOD [platform] and earn these writers residuals.”
So if it’s not exclusive content getting users in the door, what will become the key differentiator for driving subscribers? It may very well be the user experience.
Viewers have long been critical of the experience of watching content on major streaming platforms, citing glitchy interfaces and overwhelming scrolling as some of their biggest pain points when trying to find and enjoy their latest streaming obsession. But at least all the major platforms had that in common. “They’re all bad. They’re all so terrible,” Stephen Shiff, executive producer of The Americans and Disney+’s Andor, told Variety. “I don’t want to say [that] because I work for all of them. But they’re all bad.”
So in a world where content lives on multiple platforms—all of which offer the same shows for free with ads—it’s likely that users will begin to prioritize those platforms that have the best curation of content, an intuitive search system, and no bugs that interrupt the time they want to dedicate to streaming.
And if this homogenized world of streaming does come to pass, advertisers will have to be less concerned with what platforms are hosting their ads, and more concerned with who is seeing them. Ultimately, with content moving around constantly and subscriber loyalty no longer guaranteed, advertisers who want to get the most out of their CTV advertising campaigns will need to take an audience-first approach to their strategies. And luckily, by working with an ad platform like MNTN Performance TV, advertisers can make that a reality.
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