OTT Streaming Companies Facing New Challenges

By: Tom Schaeffer , Sr. Contributing Analyst, Parks Associates

Content variety and relevancy are the primary triggers for signing up for and canceling services. Except for Netflix and Prime Video, consumers are likely to churn if the content library needs to be more engaging and relevant and prefer services that offer content across various genres. In 2022, Parks Associates data showed consumers becoming less sensitive to price if they can find the perfect blend of content and service options. However, price will be a much more significant factor in downward economic times.

The research firm reveals that 48% of subscribers cited content or a specific program as the primary motivation to subscribe to a new service.

In addition, most consumers feel comfortable with "service stacking" until they find the right combination of content. As more subscription and ad-based services enter the marketplace, competitive pressure increases. 

Streaming services obtain content in different ways. Content can be purchased or licensed from its owner. Of course, services operated by a studio or television network already have access to a wide selection of their own content, along with a steady source of new material as it is produced. With both AVOD and FAST services, viewers are offered a library of content from which to choose. That library is curated and organized by a broad range of categories such as genre, theme, holidays, or TV shows. The assortment is relatively stable but may change from time to time. As new content becomes available, less popular titles are culled, and licensing and distribution agreements expire.

Many licensing and distribution agreements are non-exclusive, which can result in the same content appearing on more than one streaming platform in FAST “virtual linear” or ad-supported on-demand format—or both. Sometimes, subscription-based services offer a subset of their programming in a FAST channel that is available on one or more streaming services. This helps drive exposure and awareness of their brand among a wider audience and drives additional interest in the paid service.

Fubo Sports Network, for example, is a FAST channel owned by FuboTV (a vMVPD service) and syndicated to other OTT platforms. It was launched in June 2019 as an ad-supported channel, available first on XUMO (and FuboTV), and also on The Roku Channel, Tubi, Samsung TV Plus, and VIZIO, with “more coming soon.” The Fubo Sports Network offers limited content, including sports-related stories and content that really is not sports itself, along with a selected library of pre-recorded sports content, and limited live sports content. 

Organizations seeking to diversify revenue streams must develop and maintain differentiated offerings that attract consumer interest, advertiser investment, and strategically advantageous licensing partnerships. 

The widespread adoption of OTT services has given niche content providers with a smaller footprint a platform to reach millions of consumers. Generally speaking, “niche” refers to content based on affinities such as genre, identity, and language. Unlike mainstream OTT services, the value of a niche service is driven by its appeal to highly specific audience segments. 

Niche services, such as Shudder, PokerGO, and Curiosity Stream, are seeing a significant opportunity to compete as consumers become less loyal to media brands when adding and removing services to accommodate their viewing habits.

In Q1 2022, 61% of US consumers added other subscriptions, from niche to rival wide-scale services, on top of the traditional "Big 3," with almost no one having an exclusive subscription to a single service. Comedy and drama documentaries were the most popular genres of content in the US, with a long tail of other genres being watched as well. 

This is an excerpt from Parks Associates' complimentary White Paper “Optimizing Video: Enhancing Content Performance for OTT Success,”  in collaboration with SymphonyAI Media. This whitepaper examines the current state of the competitive streaming video market, its challenges driving the need for deeper content insights, and the benefits of implementing data-driven solutions able to handle today's complex revenue models. The whitepaper includes best practices and real-world deployments of advanced content intelligence.