From the MNTN Slack: What Netflix’s Q1 Report Signals About the Future of Streaming
by Cat Hausler
8 Min Read
Is Double-Dipping on Linear the Key to Capitalizing on Streaming Content?
With subscriber churn and saturation driving a new focus on revenue, streaming companies are going old school in order to get ahead.
5 Min Read
As media companies continue to spend on big-budget, premium streaming content, they’re looking for ways to get more out of their investment. One of their newest methods is a bit of a blast from the past: streaming originals… broadcast on linear TV.
Traditional TV viewers may have recently seen Hulu’s hit show “Only Murders in the Building,” which showed up on ABC this January. Apparently, the streaming series performed well enough that the network now plans to air the next season sometime in the future.
Here at MNTN, we suspected this kind of homogenization was a possibility. Over the last year or so, streamers have shifted their priorities to focus on driving revenue. And while the recent ubiquity of ad-supported tiers has helped to alleviate some of that ongoing financial trouble, there’s still a long way to go before streaming platforms are solidly profitable.
These days, content is getting shuffled around faster than you can say, “Hey, where’d John Wick go?” Entertainment content is expensive, both to produce and to hold onto — much like traditional linear television content, streamers must continue to pay out residuals and fees, even after the TV season or movie has been released. Many platforms are finding that licensing out their original content makes more financial sense than maintaining exclusivity.
Ironically, broadcast TV is a perfect opportunity for media companies to get more bang for their buck — it’s another channel on which to showcase content they already paid for, with the added benefit of helping to keep their linear TV channels afloat. In the words of Paramount Global Chief Financial Officer Naveen Chopra, media companies want to get “the most we possibly can out of every single dollar that we invest in content.”
So what’s one more monetization method? Besides, there’s an added benefit to broadcasting streaming content on linear…
Two Birds, One New Subscription Stream
By giving linear TV watchers a taste of what’s available on streaming, media providers can generate interest in signing up for their streaming services.
That’s a big deal right now. While streaming is definitely still gaining in market share (and currently reaches around 71% of Americans), there’s still a significant number of households who haven’t yet hopped off the traditional TV wagon. And these days, most folks who haven’t cut the cord at least know about streaming, but have chosen to hold onto their cable subscription for one reason or another (probably non-complicated access to live sports content).
For streaming platforms, the appeal of winning over the remaining holdouts is clear. The streaming world has become pretty saturated over the last few years, with 95% of households already subscribing to at least one service. And despite cheaper ad-supported tiers making it easier to justify using multiple streaming platforms, those subscriptions can add up. Most users these days hop around from platform to platform to follow the content they care about, and avoid paying for content they don’t want to watch.
So in this case, it appears old really is gold. When “Only Murders in the Building” aired on ABC in January, half of the viewers of that rerun weren’t Hulu subscribers yet. But that didn’t seem to stop those non-subscribers from getting the rest of their “Only Murders” fix: the first two seasons of that show saw a 40% increase in streaming on the Hulu app after it aired on ABC — suggesting they may have signed up just to continue watching the show. In the words of Disney Television Group President Craig Earwich, just because the show was wildly popular doesn’t mean there aren’t folks who missed it the first time around: “…it’s a big country, and there are many different types of people who want to watch TV in many different types of ways.”
Making Hay While the (Subscriber) Sun Shines
Clearly, when it comes to driving subscriptions, there’s nothing new under the sun. And once those linear holdouts dip their toes into the streaming side, media companies need them to stay there. That means that easy-to-navigate interfaces and non-annoying ad experiences are paramount.
Luckily, media companies have already been making some new improvements, and turning to their own customers to identify where to invest in the user experience. A survey from Disqo found that streaming viewers want more control over the curation of the ads they’re shown, as well as better ad placement for the ad breaks in content that was made to be ad free (a topic we covered in depth last week).
On the ad front in particular, one thing streamers have to take into account in order to engage with viewers is second screens. Of course, there’s plenty of opportunity in the fact that 83% of viewers watch their favorite shows and movies with at least one extra device in hand. Many of those viewers use those tablets and smartphones to look up what’s being advertised, whether by exploring the brand’s website or app (34%) or through search engine (30%).
Another way that streaming companies have been seeking to increase viewer engagement in advertisements is by experimenting with dynamic ad pods. This method serves fewer ads when customers are less receptive to watching them, such as during prime-time hours, and lengthening ad breaks outside of those times. Content type is also taken into consideration: folks tend to be opposed to watching what feels like thousands of ads during a two-hour movie, but they might be more open to the same number during four episodes of a 30-minute show.
Next Time on the TV Sea Change
Ultimately, by dusting off old playbooks, media companies have been able to find new (old?) ways of putting the content they already have to work for them. The end result: more ways to funnel audiences into streaming and more investment in helping advertisers reach those new users with engaging and unobtrusive ads. All of this is just yet another example of the recent sea change in the world of television, where streaming continues to be the focus for media companies and advertisers alike.