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Why Streaming Services Can Learn To Stop Worrying and Love the Streaming Wars

Driving the final stake into the heart of cable, the biggest brands in media are all-in on OTT. The likes of Disney, Apple, NBCUniversal, and company are equipped with enviable billion-dollar arsenals of content and marketing budgets of mass instruction to match. Serving as market makers by expending immense resources aimed at getting every consumer of mass media onto their streaming platform. They have all taken siege of OTT with their own direct-to-consumer streaming offering. Rather than being destructive, these titans' war is creating something beautiful – an increase in monetizable users and total hours watched on OTT.

This outcome is carving out an ecosystem for mid-sized niche streaming services, advertisers, and content owners to thrive.

An Extended Quiet Before the Storm

It is easy to forget that the first commercially streamed video was distributed over a nascent internet way back in 1992. Despite the longstanding technological capabilities of OTT and its widespread appeal to consumers and content owners alike, it has taken over a quarter of a century for streaming to claim its rightfully deserved top-dog position. As one of the most entrenched incumbents in any industry, Cable TV's dominance did not erode at the quick pace many pundits anticipated – cord-cutters be damned. Only in recent years has an acceleration in momentum from cable to OTT pushed us toward critical mass. The reason for this tipping point? The ramp-up of the "streaming wars" era coinciding with increased demand for at-home entertainment due to COVID fast-forwarding the industry to an inflection point. With most large media players investing deeply into OTT, streaming has evolved in quality of offerings and awareness amongst the general public. At last, with the outbreak of war, the entertainment world's major players are now executing strategies that go all-in on streaming.

A Rising Tide Lifts all Battleships

The most apparent winners of the streaming wars will be the major brands spending limitlessly to burst open the floodgate of viewership on OTT. However, the biggest winners will be the mid-market and niche' streaming services that skillfully ride the coming flood with efficient user acquisition and revenue models; spending far less to gain disproportionate growth. Streaming services that manage to survive the perceived oversaturation at the top will come out the other end to a world where people commit most of their viewing time and viewing dollars on OTT; no longer beholden to cable and its giant monthly bill and versed on at least one streaming tech platform; be it Roku, Amazon Fire TV, Apple TV, or their Smart TV.

Every consumer whose cable viewership becomes a casualty of the streaming wars helps streaming services of all sizes in three ways:

– Increased Viewership and Engagement on OTT

-Increased Ad-Demand and Value

– Increased Consumer Budget for Entertainment off Cable

Making Time for OTT

The prognostics for OTT and cable are as equally obverse as they are correlated. Already this June, streaming overtook broadcast for overall view time by consumers for the first time ever. By 2023, the increase in cable cutting projects to push OTT's user and revenue numbers beyond that of cable. Unlike in the rapidly dwindling kingdom of cable, where the barriers of entry to compete at the national level are highly prohibitive, OTT offers parity. The draw of major brands may be what compels most consumers to swap their viewing hours on cable for OTT, however the growth from those at the top benefits streaming services of all sizes. Regardless of size, all streaming services can launch and compete on the same app platforms and access the same expanding user-base.

Take an individual who consumes 50 hours of video a week, 30 of which are spent on cable. Say this viewer is convinced to cut the cord completely thanks to the efforts of Disney Plus, Hulu and ESPN Plus budle's latest marketing push. All 30 of the hours once earmarked for cable will not necessarily be perfectly transferred to Disney screen time. Those 30 hours are very much up for grabs. This is where streaming services not swept up in the streaming wars can make a play for significant growth. Disney's heavy lifting was necessary to rip away the watch time from cable, but now smaller streaming services can nibble off precious hours by attracting users from a genre (niche) or value (AVOD/FAST) perspective.

The Ad-ded Benefit of the streaming wars

The expected increase in viewership on OTT will push the value of AVOD inventory to match the sky-high CPM's and fill of cable. Why? Targeted CTV ad inventory is more effective than most mass advertising on cable. On OTT it is possible to serve dynamically inserted ads targeted to the individual viewer of each device. Even in cases without "smart" targeting, niche' streaming services still offer a more targeted slice of viewers of high appeal to specific industries. Simply put, with better targeting, audiences on OTT are vastly more valuable to advertisers than most of cable's ad inventory. As more and more ad inventory on OTT is made available in hyper-targeted segments, the more significant interest marketers will have in OTT. This is already leading to a shift ­– providing increased demand for ad inventory on AVOD streaming services large and small. As ad inventory is becoming sufficient on OTT to take on brands' appetites from a volume perspective, the dollars are inevitably following.

Surrendered Cable Subscription Dollars

Much like shifting watch times, a similar relationship between cable cutters and streaming service subscriptions also exists. Every time the streaming wars can embolden a citizen of broadcast to defect to OTT, that refugee's cash, once budgeted for a cable bill, can be divvied into a bespoke bundle of multiple SVOD services. With competitive pricing battles taking place, even after a consumer subscribes to multiple top-tier subscription services, there is often budget left over for smaller special interest SVODs. According to a study by Vindicia, the average American subscribes to 3.4 streaming services, paying a total of $29 per month. Now compare that to the average cable bill of $109, and the potential for smaller and cheaper streaming services to rack up subscriptions is clear.

To the Victors and the Survivors Goes the Spoils

The benefits of a direct-to-consumer streaming strategy for media brands is immense. The merits of an all-in approach has drawn the major players going all-in and redefining the size of the market. Their attention brings constructive conflict alongside growth. That growth will benefit all streaming services with viable business models and scalable content libraries, regardless of their role in the great streaming wars.

Interested in Winning the Streaming Wars? Lets Talk.

OTT Studio works with content owners, ad networks, and streaming services of all sizes to provide them with distribution and monetization support on OTT. Ranging from growth strategy, branded apps, syndication opportunities, and monetization support from the best ad-ops team in OTT, our partners realize the full value of their content and fanbases on streaming.