4.4 Streaming and On-Demand Services
3 min read•july 30, 2024
Streaming and on-demand services have revolutionized how we consume media. Unlike traditional broadcasting, these platforms let viewers watch content anytime, anywhere. They've shaken up the industry with personalized recommendations, global reach, and fewer regulations.
This shift has sparked a trend, as people ditch cable for streaming. It's forced broadcasters to adapt, launching their own platforms or partnering with existing ones. The result? A fragmented audience, tougher competition, and a push for more targeted, niche content.
Broadcasting vs Streaming
Traditional Broadcasting Characteristics
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- Linear programming where content is scheduled and aired at specific times
- Relies on advertising revenue and subscription fees for income
- Typically regulated by government agencies (FCC)
- Generally limited to specific geographical regions due to licensing and distribution agreements
Streaming and On-Demand Service Characteristics
- Allows users to access content whenever they choose
- Primarily generate income through subscription-based models and, in some cases, advertising
- Subject to fewer regulations and content restrictions compared to traditional broadcasting
- Offer personalized content recommendations based on user preferences and viewing history
- Often provide a global reach, not limited by geographical boundaries
Cord-Cutting Impact
Cord-Cutting Trend and Consequences
- Growing trend of consumers canceling traditional cable or satellite TV subscriptions in favor of streaming services
- Leads to a decline in revenue for traditional broadcasters
- Forces traditional broadcasters to develop their own streaming platforms (, ) or partner with existing ones to retain viewers and maintain market share
Audience Fragmentation Challenges
- Viewers divide their attention among an increasing number of content providers and platforms
- Makes it more challenging for advertisers to reach their target audiences effectively
- Increases competition for viewer attention and advertising dollars
- Pushes content creators to produce more targeted, niche-oriented programming
- Compels the industry to adapt its business models, content strategies, and distribution methods to remain relevant and profitable
Broadcast Adaptation Strategies
Launching Streaming Platforms
- Traditional broadcasters are launching their own streaming platforms (/Paramount+, NBC's Peacock)
- Compete with established services (, )
- Invest in the production of original, exclusive content to attract and retain subscribers
Embracing Hybrid Models
- Offer both traditional linear programming and on-demand streaming options to cater to different viewer preferences
- Leverage extensive content libraries to provide a mix of classic and contemporary programming on streaming services
Partnerships and Collaborations
- Collaborate with technology companies (, ) to expand reach and improve user experience on streaming platforms
- Allows broadcasters to tap into established user bases and technological expertise
Original Content for Streaming Success
Differentiation and Attraction
- Original content serves as a key differentiator for streaming platforms in a crowded market
- Exclusive, high-quality original programming (Stranger Things, The Marvelous Mrs. Maisel) attracts new subscribers and retains existing ones
Buzz and Engagement
- Original content generates buzz and social media engagement
- Leads to increased brand awareness and subscriber growth for streaming platforms
Brand Identity and Loyalty
- Investing in original content allows streaming services to build a unique brand identity
- Cultivates a loyal viewer base that associates the platform with quality, exclusive programming
Additional Revenue Streams
- Success of original programming can lead to additional revenue streams (merchandise sales, licensing deals)
- Contributes to a platform's financial success beyond subscription fees and advertising revenue
Key Terms to Review (25)
Ad-supported streaming: Ad-supported streaming refers to a model of delivering video or audio content over the internet where users can access media for free or at a lower cost, but must view advertisements during the playback. This model relies on advertising revenue to sustain operations and provides content creators with an alternative to subscription-based services, allowing them to monetize their offerings while reaching a wider audience. By integrating ads within the streaming experience, platforms can balance user access with financial viability.
Adaptive Bitrate Streaming: Adaptive bitrate streaming is a technique used in online video streaming that allows for the adjustment of video quality in real-time based on the user's internet connection speed and device capabilities. This method ensures a smoother viewing experience by minimizing buffering and interruptions, adapting to varying network conditions. It works by encoding the same video at multiple bitrates and resolutions, enabling the streaming service to dynamically select the best version for playback at any given moment.
Amazon: Amazon is a multinational technology and e-commerce company known for its vast online marketplace, cloud computing services, and digital streaming platforms. As a leader in e-commerce, Amazon has transformed the retail landscape by integrating various services and technologies that cater to consumer needs, contributing to convergence in media through its expansion into areas like streaming content and digital marketplaces.
Apple: Apple refers to a leading technology company known for its innovative products and services, including the iPhone, iPad, Mac computers, and Apple Music. The company's strong brand identity and ecosystem of devices promote convergence and integration in media, as users can seamlessly access a wide range of content across platforms. Apple has also made significant strides in streaming and on-demand services, allowing users to consume media on their own terms.
Binge-watching: Binge-watching refers to the practice of watching multiple episodes of a television series in one sitting, often facilitated by the availability of streaming services that allow for easy access to entire seasons. This behavior reflects a shift in how audiences consume media, emphasizing viewer control and a desire for immersive storytelling. The rise of binge-watching has transformed programming strategies, audience engagement techniques, and the overall media landscape, influencing both consumer expectations and innovative business models.
Buffering: Buffering is the process of preloading a portion of data before it is played back to ensure smooth streaming of audio or video content. This technique helps manage varying internet speeds and prevents interruptions, allowing users to enjoy continuous playback without lag or delays. In the realm of streaming and on-demand services, buffering plays a crucial role in enhancing user experience by maintaining the flow of content delivery.
CBS All Access: CBS All Access was a streaming subscription service that allowed users to access live and on-demand content from CBS, including television shows, movies, and original programming. Launched in 2014, it marked a significant shift in how traditional networks engaged with viewers, offering a more flexible viewing experience in the rapidly evolving landscape of streaming and on-demand services.
Churn Rate: Churn rate is the percentage of subscribers or customers who discontinue their relationship with a service over a specific period. This metric is vital for understanding customer retention, satisfaction, and overall business health, especially in subscription-based models where maintaining a loyal user base is critical.
Content Delivery Network (CDN): A Content Delivery Network (CDN) is a system of distributed servers that deliver web content and media to users based on their geographical location. This network optimizes the delivery speed and efficiency of content, improving user experience by reducing latency and buffering during streaming or on-demand services. By caching copies of content in multiple locations, CDNs enable faster access and reliability for streaming videos, music, and other media, making them essential for modern digital consumption.
Copyright law: Copyright law is a legal framework that grants creators exclusive rights to their original works, such as literature, music, and art, protecting them from unauthorized use or reproduction. This law not only safeguards the interests of the creators but also plays a significant role in promoting creativity and innovation within the media industry. As digital content continues to proliferate, copyright law faces new challenges in enforcement and adaptation to emerging technologies and distribution methods.
Cord-cutting: Cord-cutting refers to the trend of consumers canceling traditional cable or satellite television subscriptions in favor of internet-based streaming services. This shift has been fueled by the growing availability and popularity of on-demand content, leading to significant changes in how media is consumed and distributed.
Engagement metrics: Engagement metrics are quantitative measures that evaluate the level of interaction and involvement that audiences have with content across various media platforms. These metrics provide insights into how effectively content resonates with viewers, listeners, or readers, reflecting their emotional and cognitive responses. They play a crucial role in shaping content strategies and understanding audience behavior, especially in the realms of streaming services and community management.
Freemium model: The freemium model is a business strategy where basic services are provided free of charge, while more advanced features or services are available for a fee. This approach allows businesses to attract a large user base with the free offering, converting some of those users into paying customers over time.
Hulu: Hulu is a subscription-based streaming service that offers a vast library of on-demand television shows, movies, and original content. It stands out in the streaming landscape by providing access to current episodes of popular TV series shortly after they air, alongside a rich catalog of past seasons and films. Hulu's blend of on-demand viewing with options for live television channels makes it a versatile choice for consumers seeking both traditional and modern viewing experiences.
Jeff Bezos: Jeff Bezos is the founder of Amazon, one of the world's largest e-commerce and cloud computing companies. His influence extends to various aspects of business, including network effects, economies of scale, and innovations in media distribution through streaming and on-demand services.
Net neutrality: Net neutrality is the principle that Internet service providers (ISPs) must treat all data on the Internet equally, without discriminating or charging differently by user, content, website, platform, application, or method of communication. This concept is crucial for ensuring a level playing field for all digital services and content, impacting various stakeholders from consumers to businesses and government regulations.
Netflix: Netflix is a subscription-based streaming service that allows users to watch a wide variety of movies, TV shows, documentaries, and original content on-demand over the internet. Its evolution has had a profound impact on media consumption, altering traditional distribution methods and influencing the structure of media industries worldwide.
Over-the-top (OTT): Over-the-top (OTT) refers to content delivery systems that provide streaming media directly to viewers over the internet, bypassing traditional cable or satellite television platforms. This allows consumers to access a variety of content, such as movies, TV shows, and live programming, on-demand through services like Netflix, Hulu, and Amazon Prime Video, making viewing more flexible and personalized. OTT services leverage the internet to deliver content across multiple devices, changing how audiences consume media.
Paramount+: Paramount+ is a subscription-based streaming service owned by Paramount Global that offers a wide variety of content, including movies, television series, live sports, and original programming. It is an evolution of CBS All Access, combining the library of CBS with content from other Paramount brands, making it a significant player in the competitive streaming and on-demand service market.
Pay-Per-View: Pay-per-view (PPV) is a type of broadcasting service where viewers pay to access specific events or programming on an individual basis rather than through a subscription. This model allows consumers to select and pay for only the content they wish to watch, such as live sports events, concerts, or special programming. By providing immediate access to high-demand content, PPV has become a popular method of monetizing entertainment in the digital landscape.
Peacock: In the context of streaming and on-demand services, Peacock is a subscription-based video-on-demand service owned by NBCUniversal, launched in July 2020. It offers a mix of content, including movies, TV shows, live sports, and news, catering to both free and premium subscribers. This service represents a significant shift in how traditional media companies are adapting to the digital age by providing users with flexible viewing options and a diverse library of content.
Reed Hastings: Reed Hastings is the co-founder and CEO of Netflix, a leading streaming service that revolutionized the way people consume entertainment. Under his leadership, Netflix transitioned from a DVD rental service to a dominant player in the streaming industry, shaping current viewing habits and influencing media consumption trends globally. Hastings' vision and innovative strategies have been pivotal in addressing various challenges and opportunities in the rapidly evolving media landscape.
Subscription video on demand: Subscription video on demand (SVOD) is a service that allows users to access a library of video content for a recurring fee, typically billed monthly or annually. This model provides subscribers with the flexibility to watch films, series, and shows at their convenience without being tied to a specific broadcast schedule. SVOD platforms often create original content, enhancing their value proposition and appealing to diverse audience preferences.
User Acquisition Cost: User acquisition cost (UAC) refers to the total cost associated with acquiring a new user or subscriber for a service or product. This metric is especially important in the context of streaming and on-demand services, where companies invest heavily in marketing and promotional efforts to attract new customers. By analyzing UAC, businesses can assess the effectiveness of their marketing strategies and optimize spending to ensure sustainable growth and profitability.
Viewership ratings: Viewership ratings are metrics used to measure the number of viewers who watch a particular program or content, providing insights into audience size and engagement. These ratings play a crucial role in understanding supply and demand dynamics in media markets, influencing advertising rates, programming decisions, and content distribution strategies across various platforms.