If the Streaming Wars Are Over, It’s Time for a Streaming Marshall Plan
May 26, 2023
Though it’s not the first time we’ve heard as much, CNBC has declared an end to the “Streaming Wars”. Let’s face it, the whole idea was silly from the start: that one media company could put together the right combination of content and other assets to emerge as superior over the others. That’s just not how the television industry works.
But the result of trying now looks more like a Cold War horror story: no winners to speak of, just massive losses on all sides. Now, not only are traditional pay-TV operators continuing to report new record-high video subscriber losses, the streaming services that were supposed to supersede them are now beginning to report subscriber losses too.
Let’s take a look at what happened, and more importantly, how the industry can rebuild in the wake of the mess they’ve made.
Networks Duplicated Costs…
Streaming emerged as a value proposition compared to cable TV in the mid-2010s. Subscriptions to Netflix, Amazon Prime, and Hulu together totaled less than $30 a month, and offered plenty to watch. With typical cable TV bills upwards of three times as much, it was a no-brainer for many customers.
This worked because the cost to provide these services were concentrated with those three providers. The networks, who did not have streaming or VOD services of their own, could easily outsource that service to Netflix, Amazon, and others. Selling Netflix and Amazon access to old content looked like money for nothing.
All the infrastructure needed to make point-to-point streaming viable on a scale massive enough to rival cable and satellite TV was massively expensive to develop and deploy. And that’s before you consider the costs of marketing, customer acquisition, customer service, creating content, and more.
Netflix saw this as it’s raison d'être; delivering flix via the net has been in the company’s name from the very start. Doing so was funded by their shareholders who believed in that vision and were willing to bet on it. Amazon, the tech and retail giant, folded the service, as well as a portion of the costs, into its Prime subscription. Hulu began as a joint venture between the big broadcast networks, sharing those costs across multiple large and profitable media corporations.
But as these three services began to cannibalize traditional television, the stage was set for the “Flixcopalypse” as analyst Alan Wolk described it. Each TV network group set about creating its own streaming service: Disney Plus, Peacock, HBO Max, Paramount Plus, Discovery Plus, and others.
These networks each though Netflix had perfected the business roadmap for them. The costs that were once borne by just three companies were now multiplied by over nine providers developing the same infrastructure in parallel.
…But Consumers Didn’t
Every network thought the same thing: if a consumer will pay $10 a month to Netflix, they’ll pay $10 a month to us. What wasn’t taken into account was that this doesn’t work across a large number of such services. Paying three $10 subscriptions to replace their cable bill made sense. Paying twelve $10 subscriptions a month made it just as expensive as cable TV, with none of the convenience of surfing through hundreds of channels in a single guide.
While consumers initially gave these new streaming services a look, they’re not sticking with all of them long-term, and “subscription stacking” has already peaked and begun to decline. Rather sustain doubled or tripled monthly streaming spends, consumers got clever to keep their costs low. Instead of subscribing to a dozen services they want, they subscribe to two or three at a time, and rotate between them once they’d watched their fill of one, taking advantage of free trials and other promotions along the way (i.e., binge and bounce).
This was a simple solution to consumers’ cost problem, but a disaster for the plans of the newly launched streaming services. These behaviors supercharged churn rates, skyrocketed customer acquisition costs, reduced the lifetime value of a customer, and created a landscape where it’s impossible for any of these new SVOD apps to make any money.
While there have been some mergers among these new streaming services, these new consumer behaviors are toothpaste that isn’t going back in the tube. And that behavior is going to affect every streaming service in the market. The idea that one streaming service can put together a permanent must-have offering that’s not subject to these trends has been thoroughly disproven at this point.
Rebuilding In the New Landscape
Much ink has been spilled about the Streaming Wars. It’s now time to turn attention to what comes next. Two world wars devastated Europe and Japan in the 20th century, but shortly after that, these regions and the US all experienced a phenomenal economic boom. This was because the US made the wise decision to invest heavily in its former rivals, realizing that long-term cooperating with those nations would prove more beneficial in the long run than the traditional “to the victor go the spoils” thinking.
It's time for the streaming rivals to take the same approach. The damage that has been done is a fact of life now, but how can the major media companies start to create a future that’s more prosperous for all?
Where the investment is needed today is in aggregation technologies. Neutral services that accept content from the systems that have already been built to serve it, and deliver it to consumers in a way that’s convenient for them and monetizable for the programmer.
FreeCast’s platform is designed to meet the needs of consumers, programmers, and advertisers. For the consumer, content from across multiple streaming services is pulled together into a single interface, available across devices. Payment and account management are simplified too, with tools for consumers to manage their subscriptions and even see all of their monthly media spending on a single cable-style monthly statement. By having consumers both watch and manage their accounts in one place, FreeCast aims to cut down on subscription fatigue and account management challenges.
For content providers, FreeCast leverages their existing infrastructure, but eliminates the problems created by the recent fragmentation of the ecosystem. Giving consumers tools to manage their media subscriptions and spending reduces churn and increases the lifetime value of a customer. FreeCast also lets consumers easily add subscriptions or free trials when they are searching for content, lowering consumer acquisition costs.
What FreeCast does for advertisers boosts revenue across the ecosystem. The company is able to collect complete and comprehensive data from users across streaming services. No one in the industry has a better view of consumer streaming behavior. This data can be used to match viewers with targeted ads, which are more valuable. Ads can then be dynamically inserted into content, based on interest or other demographic features of the viewer seeing it.
The many streaming services out there saddled themselves with high costs by recreating the wheel. While there are various players out there working on these different technologies, FreeCast is the only one combining them all, end to end. That’s critical to solving the cost puzzle, because if every service chooses different vendors for different technologies and systems, they’re going to end up with a lot of high-development-cost products with siloed data. In other words, it will be much more expensive and less effective than having a single company manage these investments and provide them across the ecosystem in a uniform way.
