As consumers hunkered down at home in the wake of COVID-19 shelter-in-place mandates, they turned to online entertainment, driving a surge in streaming. With content options at an all-time high and a range of new streaming players entering the field, the already multi-pronged entertainment industry seems set for yet another big transition.

But questions remain around the resilience of these trends and whether they can last. For streaming platforms, continued success will entail looking closely at what drives consumers to streaming services, rethinking production workflows in our new era of physical distancing and investing in a wide range of content to keep up with evolving customer demand.

Streaming Traffic Trends 

The increase in streaming traffic was evident early on: During the first three weeks of March, when shelter-in-place mandates took shape, consumers recorded an 85% increase in minutes streamed, per Nielsen, against a comparable three-week period in 2019. Streaming platforms are particularly appealing to consumers — with reasonable monthly rates, easy activation and a seemingly unlimited library of content that caters to a wide age range. 

However, streaming traffic is unlikely to return to pre-March levels, as consumers have demonstrated they are willing to try new streaming options. Additionally, as the economy reopens and other options — such as sports, concerts, shopping, dining and travel — resume competing for consumers’ time, expect streaming usage to level off.

That said, the strategies already deployed by streaming services to maximize viewership are still relevant. As PwC research illustrates, consumers value an experience with easily accessible shows, a simple interface and a robust content library with original programming.

Production Uncertainty 

With production temporarily halted, releasing original content has become one of the biggest challenges facing media companies today. Projects already in the pipeline have served as a buffer so far, but as this grace period draws to a close, the effects of the scarcity will become more pronounced.

One consequence will be an increased tendency for consumers to hop between platforms in search of new shows, thus fraying the edges of customer loyalty, already strained by the profusion of recent platform launches.

The stakes from the halt in production reverberate across the entire industry: Research from Microsoft and PwC highlights how the under-delivery of episodic content could result in more than $3.5 billion in lost ad revenue for broadcasters. 

The answer, of course, lies in restarting production, but that comes with its own challenges and risks. Effective contact tracing — along with strict protocols and thorough health screenings of production staff and talent — will be indispensable for safety.

In general, doing more with less — limiting the number of people on set; reinforcing protocols and resources for seamless remote production; and creating innovative workarounds for norms (such as live audiences for tapings) that are unlikely to resume any time soon — will become commonplace.

Conversely, many of these new efficiencies could last post-pandemic. In fact, CFOs in the sector told PwC the trends accelerated by the pandemic such as the shift to increased work flexibility, resilience and technology investment will increase productivity in the long run.

Content Preferences Change

From the streaming debut of popular musicals to more talk or late-night formats, not to mention content based on the pandemic period itself, opportunities for truly original programming abound. In general, the coming months will likely feature content emphasizing escapism as streaming services continue to take on the mantle of now-shuttered movie theaters, whose escapist fare has traditionally made them countercyclical to recessions.

By the same token, content can amplify and provide needed perspective on decisive issues facing society. The recent protests against systemic racial injustice have forced industries to rethink diversity and inclusion efforts, signaling that content addressing these issues will be in high demand. And that goes for content produced by and starring more diverse talent.

Even the way consumers watch their shows is now different, with many consumers gathering virtually with friends as they comply with physical-distancing guidelines. It’s a trend likely to persist post-pandemic as a way for separated groups to connect, making even on-demand content feel like an actual event. From integrating these capabilities onto their platforms to organizing these events through social media, companies now have an array of new strategies to engage viewers. 

Keeping People Watching

While the rest of 2020 will likely present more uncertainty, new challenges and even more change, these hurdles will also serve as opportunities to connect with consumers in new ways while driving increased loyalty. Getting it right means more than just navigating this period for the short term; it means laying the framework for greater success in the years to come. Ultimately, the goal is for consumers to keep calm and stream on.

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.

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.