Did you miss the SVOD & AVOD Industry Outlook Q&A hosted by BWG Strategy LLC last week? Don't worry, we've got you covered with a short and sweet recap of the key points highlighted by Pickaxe's Andrew Grosso.
Q: Are you optimistic about the future of SVOD & AVOD?
Consolidation should make it easier to find content; it will give users fewer services to search through to remember if New Girl is on Netflix or Hulu. And things like the new NBA’s next streaming agreement might help solve the question or whether a game is on TBS or TNT or ESPN or is streaming but only in certain zip codes. And there are a lot of partial solutions for cross-provider search (search on Roku or Apple devices across apps), but I’m bullish that someone will figure out a way to monetize this solution in a way the users love. TV Guide 3.0.
Quality of experience are challenges that every service faces. Netflix offers amazing playback performance across old and new devices even at low bandwidths; it sets the bar and not many other providers match that. As those other service mature and are able to fix bugs, they’ll either improve their playback experience or churn customers and get rolled up into a larger service. New technologies should help with this as well. One thing we can’t expect is that users are going to upgrade their device every year. A smart tv isn’t a phone. A customer expects that once they’ve hung it on a wall, it’s going to stay there until they move out.
After playback, discoverability is probably the most important product feature for any service. Some providers like Peacock do a great job; every week when I stream Poker Face, I see trailers for Mrs Davis. This is critical for decreasing churn. And the services that are doing this well with effective sizzle reels, thoughtful recommendation rails, and promotion slots are going to keep their subscribers. It’s a challenge of content, editorial choices, and algorithm. As content providers get more data, they can get smarter about how they merchandise their content, and which content they promote.
Finally, I think the popularity of genre focused content like Crunchy Roll or Britbox has proven that users are willing to pay for certain exclusive content. Sometimes like with WWE, someone might decide it makes more financial sense to join with a partner rather than be a stand alone service, but the key point is you still have a small number of users who are absolutely willing to pay for certain content. That and the enormous data charges on our collective phone bills over the last 20 years show that a big part of the country is willing to pay content.
Q: What about AVOD?
But, for the users who don’t want to pay, AVOD is a fantastic win-win. There’s certain content I’ll happily sit through ads for in order to watch. In order to do well as an AVOD service you need scale and targeting capabilities- consolidation and technology improvements will help with both. And interestingly, there’s a real opportunity to show ads to paying users – the middle tier where a user pays for access to exclusive content, but has a reduced price in return for watching ads is another win-win.
Q: What do you think will happen if the writers strike continues for months and starts impacting content supply? Do you think users will start watching video games on a Tuesday night instead?
Grosso: No, not unless they’re already playing video games on a Tuesday night. One thing we’ve seen in viewing data over the last six year is that users tend to repeatedly do the things they do. For instance, users who watch a little at night on weeknights tend to continue doing so over time rather than suddenly binging or watching only on weekends. And vice versa. People don’t tend to change their behavioral patterns!
However, discoverability is still important in getting users to consume new content and crossover between different types of content can happen. So it might not be about the size of your catalog, it might be about how easily (and appealingly) you make it discoverable to your current subscribers.
