What do TV content buyers want? The answer is straightforward: international TV streamers aim for high subscription rates, low churn rates, and buzz surrounding their service. In essence, companies strive for success and profitability.
Achieving such success entails persistent hard work, a dash of luck, and fortunate coincidences. Behind the vibrant offerings of streaming platforms and channels lies a spectrum of journeys—some have navigated long and challenging paths to success, while others have had smoother passages with substantial support from a loving parent (company).
In this article, inspired by this year's MIPTV conference in Cannes, allrites takes an in-depth look at the arduous journeys international streamers and channels undertake. We explore their strategic planning in pricing, monetization models, content sourcing, and offerings, all aimed at achieving their ultimate goal: profitability.
Strategic Harmonies: How TV Streamers Services Change the Tune for Profit
The monetization options for an entertainment platform are vast, including SVOD, TVOD, PVOD, and now, peaking in popularity, AVOD and FAST (according to top media executives in 2023, incorporating an ad-tier and launching FAST channels are high priorities for digital TV initiatives). The chosen model depends on various factors: the market in which it is launched and serving, the demographics and their purchasing power, content sourcing and production methods, industry shifts and world’s crises.
Finding the right strategy is crucial, but it doesn’t necessarily have to be perfect from the start. It’s acceptable to begin with one model, then switch to another, or mix and match tiers and models for your entertainment service. Tom Ryan, CEO of Pluto, said, “As all startups do, you sort of launch a product with a thesis and some of that thesis turns out to be right. Some of it turns out to be wrong, and you learn and iterate, and hopefully, you find a way to a sustainable business.”
Even a giant like Netflix adjusts its strategy and vision over time. For years, the company maintained that it would not introduce an AVOD tier, despite competitors already engaging in ad-business. However, in 2022, Netflix launched its ad-tier, explaining the decision by stating it was what consumers wanted. Sticking to your word is commendable, but ultimately, what companies seek is profit. Therefore, recognizing red flags and aligning with consumer desires is critical - in 2020, Netflix experienced its weakest growth since 2015, and its stock was down more than 40%.
Now, in 2024, Netflix, previously averse to an ad-tier, boasts over 23 million monthly active users on its AVOD platform and is experimenting with ad-tier variations to offer its audience the smoothest experience in ad-supported streaming.
Synergy and Strategy: Monetizing Streaming Services
Tom Ryan, CEO of Paramount Streaming and co-founder of its FAST platform Pluto, shared that launching as a FAST platform was easier for them due to the revenue-share model used by the majority of FAST channel providers, as opposed to the high upfront costs required for content licensing, production, and marketing associated with an SVOD service.
Nevertheless, VOD services can significantly benefit from being part of the same family with FAST channels. There is a notable synergy between Paramount's FAST service, Pluto TV, and its VOD sibling, Paramount+. For instance, Pluto TV attracts subscribers to Paramount+ by advertising and promoting premium shows on its channels. Moreover, Pluto created a dedicated channel, "Paramount+ Picks," which aired free first episodes of Paramount+ shows, significantly boosting paid subscriber numbers.
NBCU’s streaming service Peacock also benefited from the mixed model synergy—its content strategy with three different tiers proved to be profitable. A few years ago, the service offered customers a variety of options suitable for any budget—a free AVOD option with fewer titles, a middle tier with fewer ads and access to premium content, and an ad-free option with access to all titles. Recently, Peacock eliminated the free tier, leaving only two paid options, which are among the most affordable of the major players. While some may question the wisdom of changing a successful model, others believe the free tier served its initial purpose—drawing a large number of people to the service, and now it's time for monetization.
Moreover, our earlier mention that a streaming model might be shaped by global crises wasn’t a coincidence. Peacock’s initial strategy to launch as a free service was compelled by COVID-19 and its complications. Launched in 2020, Peacock was intended to offer Tokyo Olympics content and ceremonies; however, the Olympics were postponed to 2021, leaving the service without additional value-added benefits to offer for the money.
Another player with a distinct monetization strategy is FOX's owned streamer Tubi, which was built as an AVOD service and remains free. Tubi identifies itself as a non-competitor to major streamers like Netflix or Disney+ because it does not charge for its service. Tubi has expanded its offerings but has not altered its strategy of being a free service. They have developed FAST channels that also attract viewers to its AVOD offerings, creating significant synergy between the two. Paul Cheesbrough, CEO of Tubi Media Group, claims they have a library of over 60,000 titles on its AVOD platform that can cater to any audience due to its vast variety across demographic niches. It is evident how advertisers, who finance free platforms like Tubi, benefit from this segmented approach, enabling them to reach any demographic they target and ensuring their offerings are seen.
From Content Strategy to Competitive Pricing
TV Streaming platforms must understand the markets they serve not only for rights management purposes but also to identify the content their audience demands. These understanding shapes their content supply strategy. Content demand varies significantly across regions due to factors like local trends, culture, political climate, and economic conditions. For instance, while the most globally demanded genre is drama—a term that encompasses a broad range of subgenres—preferences can vary locally. In 2023, for example, LATAM, Eastern & Southern Europe showed a preference for animation, whereas South-East Asia and the MENA regions leaned towards action.
Each company needs to carve out its own unique selling proposition (USP). However, monitoring competitors and learning from their successes and failures is crucial. For instance, although HBO's "Game of Thrones" was not initially available on a streaming platform, its success inspired others to create similar history-themed fantasy series, such as Netflix's "The Witcher" and the "Vikings" on the History Channel.
However, this strategy does not guarantee success as there is no "secret recipe" for a hit show. For example, "Electric Dreams" by Amazon and Channel 4, created to emulate the success of Netflix's "Black Mirror," failed despite its similar anthology sci-fi format, standalone episodes, and Hollywood stars like Richard Madden and Bryan Cranston.
Close competition observation can also inform pricing strategies. In 2021, after Amazon Prime increased its subscription prices by 50% in India, Netflix countered the next day by reducing its prices by 60% to attract Amazon Prime’s disenchanted subscribers.
Adapting pricing strategies based on various factors, including the business model, vision, target demographic, and the global and local economic contexts affecting customer purchasing power, is crucial. In late 2023, over 62% of people in Canada and the USA reported cutting their entertainment spending due to the global recession, monitoring their subscriptions more frequently as a result.
Here is another Netflix's approach in India that illustrates how different markets require tailored strategies. It offered up to a 50% discount for an annual plan, using the opportunity to gather data on new subscriber preferences. The goal is to encourage regular use of the service, convincing subscribers of its value and retaining them post-discount.
Partnering can enhance pricing strategies, offering mutual benefits. In the competitive streaming market, bundling has become a strategic tool for engaging consumers and driving business growth. For consumers, bundling offers cost savings and simplifies subscription management with a single interface, enhancing content accessibility without the hassle of multiple subscriptions. For businesses, it fosters customer loyalty, enhances retention, and opens avenues for cross-promotion and broader audience reach. Moreover, it provides valuable cross-service user data that can refine content strategies and personalization efforts. Bundling, whether through ecosystem integration, cross-platform collaborations, or content amalgamation, allows providers to tap into new revenue streams and solidify their market position. For instance, Paramount+'s bundling strategy, which includes partnerships with Sky, Canal+ in Europe, and Walmart+ in the US, is a key component of their approach to attract and retain subscribers at low cost.
Partnerships with exclusive content suppliers also drive high subscription rates. Roku’s collaboration with the NBA to offer a FAST channel and NBA Zone content hub exemplifies a win-win scenario for all parties involved (Roku Channel, NBA, and advertisers), boosting interest in live games, attracting subscribers and advertisers by reaching a wide audience of sports fans.
More on bundles, their types, and examples, refer to our previous article.
Harnessing Data for Strategic Marketing in the Streaming Industry
In order to succeed, streamers and channels must be known, seen, and remembered. Achieving this visibility can be accomplished by developing effective marketing strategies and engaging with target audiences. After all, the majority of people select what to watch based on word of mouth, advertisements, and social media.
Word of mouth, in particular, is a highly influential tool in the TV streaming industry. Over half of U.S. respondents choose content based on someone else’s recommendation (Tubi Stream Report 2024). The influence of word of mouth on TV streaming choices varies significantly by market: it is most influential in countries like Mexico, Spain, and Hong Kong (above 70%), the UAE and India (64%), and least influential in Denmark and Sweden (below 40%).
Social media also serves as a significant source of inspiration, particularly among younger audiences. Forty-five percent of Gen Z viewers select titles based on social media buzz, and 48% choose titles to keep up with trends discussed by their peers, even if those titles are not their first choice. The buzz around Netflix's fraud documentary "The Tinder Swindler," which went viral online, flooding the internet and social platforms with memes and discussions, led it to be named the most in-demand documentary of 2022 by Parrot Analytics.
This buzz phenomenon can also be strategically leveraged—streamers and producers can capitalize on trendy topics by creating related content. For instance, the well-known chef Gordon Ramsay is planning to create his own TV show with Fox following the viral success of the "idiot sandwich" meme—potentially, it could be Tubi’s next big original hit.
Speaking of Tubi, being a free service gives them more opportunities to collect data, which they then use to process and identify key demographics for targeted marketing. There is no better way to understand your audience than by utilizing the data collected on their habits and content preferences. Farhad Massoudi, CEO of Tubi, stated, "We just looked at the data. We realized that these consumers are just looking for that content. And we found many of those. Black cinema was one of them. But I mean, I feel very proud that we’ve been able to serve that community. And we continue to even make originals these days for Black cinema fans." Tubi’s segmented marketing approach—analyzing subscriber data and engaging with them through social media, influencers, and communities—shows their commitment to connecting with their audience segments through the most effective channels.
About allrites
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