Streaming’s Urgent Need to Break Out of Its Silos
June 29, 2023
Two trends are dominating the streaming TV industry right now. The first is the pressure resulting from the fragmentation of the streaming ecosystem. TV networks and studios have made the decision no to go it alone, and after building their own streaming services, now must find a way to turn those massive investments profitable. The second is are headwinds created by a combination of the fractured ecosystem and weakening economy, and how it influences consumer behavior, most notably by pushing them towards lower-cost and partially or wholly ad-supported options.
Together, these trends spotlight the puzzle that streamers need to solve to prosper in this environment. Merely cutting costs and raising prices won’t lead them out of the woods. As consumers look for savings, maximizing revenue from advertising will be key.
But advertising has also become a different world from the one the big TV networks are accustomed to. Advertising on television used to boast access to a national audience, with Nielsen ratings as the guide to deciphering what specific demographic or geographic groups were watching what, for the purpose of getting the right ads in front of them.
But with streaming, the dynamics are completely inverted. Dynamic advertising means each viewer can see a specific ad, and the more targeted an ad is, the more valuable. While this could be a boon for these streaming services, this new environment lacks a Nielsen-style map to who’s watching what, and therein lies a problem in need of a solution.
Narrower Views of a More Complex Picture
Nielsen ratings historically provided the TV industry and its advertisers with information that is, by the standards of online advertising, very basic: location, age, gender, race, etc. From that information it’s possible to glean some other insights, for example, likely household income or political leaning.
As television shifts to the web, it’s possible to get a much clearer picture of the viewer and their interests. But there’s currently no Nielsen-style entity painting that whole picture for the entire industry to reference. While streaming service operators and device platforms both each tout having a valuable piece of that puzzle, a puzzle with 50 pieces each indifferent hands means no one has the whole image.
This problem remains, even as some of the players attempt to amass multiple pieces. Disney operates both Disney Plus and Hulu, and HBO Max operator Warner Media recently merged with Discovery, giving these two media companies a second sliver to look at. Some companies like Apple and Amazon both operate streaming services and sell TV hardware, giving them a cross-section of users across both different services and different viewing platforms. Amazon also has partnerships with other streaming providers, giving them a bit of insight, at least from users who access that content through Amazon. But even these firms are only seeing a fraction.
In other words, even the largest players in the space are blind to the vast majority of consumer viewing behavior.
Connecting the Dots
These narrow views are a symptom of the large problem with the streaming space right now. Everybody has built their own silo. This is frustrating for consumers who have to dive in and out of more of these silos than ever, and advertisers are now facing a similar problem understanding where to place their ad dollars.
Enter FreeCast, the streaming aggregator. These two problems are hand-in-hand, so while FreeCast has long been addressing the former concern, helping consumers access the content they love, wherever it resides, this also lays the same infrastructure for solving the advertising conundrum.
The various streaming services each represent a single node an ever-more complex system, and they only have a view into their own single node. What FreeCast does is capture consumer behavior outside of those nodes, and specifically, how they move between them.
Here’s why that’s a critical advantage: think of it like a children’s game of “connect the dots”. With only the dots it’s hard, if not impossible, to tell what the image will be. But the opposite is not true. If you draw all the lines, even if you remove the dots and leave a gap where the lines would otherwise connect, you can absolutely make out the underlying picture.
Imagine a consumer spends an afternoon watching one show on Netflix, another on Peacock, and finally a movie on Disney Plus. Together those choices tell a story about the consumer that may reveal their interests or preferences. But Netflix, NBC, and Disney don’t have the whole story, they only know what was watched on their platform, which alone is much less informative. If that consumer uses FreeCast to search for and navigate to those shows, FreeCast sees the whole journey. And more than that, if that consumer searched for another show but opted not to watch it, perhaps because they weren’t subscribed to the service where it could be viewed, that’s another valuable data point that FreeCast can capture that no other streaming service can.
The Economy In Mind
Consumer spending habits have already been permanently altered by the launch of all these streaming services in recent years. But that’s not the end of the story, and in fact, those trends are likely to be exacerbated by economic conditions. Inflation remains high, pinching consumers across their budgets. While consumer spending has remained curiously strong, interest rates are as high as they’ve been in a generation and many companies are beginning layoffs. While some economists are hoping for what they’re calling a “soft landing” as opposed to a full-blown recession, these terms both describe an economy that is weakening.
The media industry must be prepared to serve the consumer in these new economic conditions. Many consumers will be looking to trade down and cut costs, and streaming services have one shot to keep them in the fold. If they fail, consumers will turn to other options, from piracy to paperback books.
The best way for streaming companies to keep their services affordable is by getting more value out of advertising. And with the potential to deliver more targeted ads than were ever possible on traditional TV, there’s lots of room to grow that revenue stream.
The biggest obstacle to that opportunity, is the current fragmentation that keeps that massive potential value from being realized. The duplicated costs problem discussed previously can’t be undone, but it would be foolish to use those sunk costs to justify sticking with a bad strategy, and continue this siloed approach.
FreeCast has the technology to bring this value out. It’s designed with the current state of streaming in mind, as a turn-key solution for networks and content providers big and small. It will keep consumers in the fold by addressing their biggest pain points, and simultaneously provides multiple means for programmers to monetize their content, allowing everyone to find the best fit.
