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What It Takes to Win the Streaming Wars

The streaming wars are on! An accelerated level of intensity is now in play as new and established players jockey for their share of subscribers. For now, consumers are continuing to subscribe to additional OTT services, paying on average $76 per month for video content. As new entrants come on board, though, PwC’s analysis shows consumers will start making choices about which services to keep after the initial promotional offers end.

Mark McCaffrey, PwC

Mark McCaffrey, PwC

While market share is available for the taking — the OTT video market is expected to double in size globally between 2019 and 2023 — services that don’t offer exactly what consumers are seeking will fall behind.

How do media companies set themselves up for success in the months and years to come? In this hyper-competitive landscape, viewer experience matters most. To deliver that optimal viewer experience, invest in content that engages consumers and boosts growth while leveraging emerging technologies like artificial intelligence (AI).

Content Is Key

Licensed content has powered streaming services in recent months, especially new entrants seeking to entice potential subscribers. Many services have demonstrated a willingness to pay hefty prices to obtain the rights to popular content with an existing base of loyal viewers.

In fact, PwC research found that 56% of consumers define a good user experience as having easy access to favorite shows. New streaming entrants seeking to gain subscribers will need to combine popular content that consumers already love with nostalgic shows they want to revisit.

However, licensed programming is not the only path to a competitive edge. Original content is just as important, according to PwC’s analysis. Consumers have already told us they want a seemingly endless library of TV shows and movies. Given the limited pool of licensed programming available, original content becomes paramount.

As the cost of licensed content continues to escalate, original programming offers streaming providers a more hands-on approach to building out and diversifying content libraries. It also offers complete control of the format, whether it’s shorter, more bite-sized content that audiences are showing an increased appetite for, or mobile-first content such as vertically shot videos. With original programming, the opportunities for creativity are boundless.

As we continue to analyze viewer preferences over the years, one finding remains constant: content rules. For streaming providers, that means long-term success will hinge on sussing out the optimal balance between original programming and licensed content.

In our hyper-personalized age, consumers want easily accessible content tailored to their specific preferences. Streaming services that leverage AI to recommend personalized content based on consumers’ viewing history are already a step ahead.

In fact, some 20% of consumers told us their streaming services are better at finding content for them to watch than they are themselves. While that is encouraging, it does offer room for improvement with the 80% majority. Meanwhile, one-third of consumers said finding content on streaming platforms needs to be easier.

Certainly, as in all industries, AI will improve with time. Consumers are impatient, though. They expect algorithms that are predictive — not reactive — to allow for positive viewing experiences. And they expect those improvements now.

Streaming services need to invest in the technology to make AI more effective now, rather than waiting for the technology to catch up. The services that perfect the ability to anticipate and recommend personalized content to viewers will stay above the fray while others fall behind.

According to PwC’s annual AI analysis, integration features prominently among the top three data-related challenges:

• Integrating data from across the organization (45%).
• Integrating AI and analytics systems (45%).
• Integrating AI with IoT and other tech systems (43%).

For the improved viewer experience that consumers are demanding, data integration will be job one.

Outside of AI, expect the continued global rollout of 5G to provide new opportunities to reach mobile viewers. Ensuring a service’s infrastructure can handle the increased demands of 5G networks will become essential, especially in the entertainment and media landscape that this new technology promises to transform.

Forward-looking streaming services are well-advised to prioritize emerging technologies as a strategic investment that differentiates them, rather than as an operational cost to be minimized. To attract new customers while retaining the existing subscriber base, bold long-term vision is vital.

A Game Plan for Victory

The streaming wars are complex, presenting media companies with equal parts opportunity and challenge. To win requires bold vision, artful navigation and a relentless focus on consumer needs.

Consumers have been very clear. They want world-class content combined with a superior viewing experience.

By optimizing investment in content — the right mix of licensed and original programming — and capitalizing on emerging technologies, media companies can chart a course for success.

Mark McCaffrey is U.S. technology, media and telecom leader at PwC.