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As the video streaming market becomes even more saturated, there will likely be only a small number of clear, dominant players, and new entrants will need to be able to compete and capture market share en masse.
The belief has long been “content is king;” yet for years, we at PwC have seen new media company valuations indicate that user experience (UX) pays. There’s no denying that content plays a critical role in the overall success of a video service, but what if that content isn’t easily accessible, or the entire viewing experience isn’t pleasurable?
We asked 1,000 consumers about the video services they use in order to:
- Gauge the importance of experience relative to content in driving subscriptions, engagement and customer loyalty
- Explore how much of a draw one specific show is to a platform, and if it creates stickiness
- Understand the overall value of a good experience in the video ecosystem and its impact on consumer behavior, preferences and motivations
Methodology: In March 2019, PwC surveyed a nationally representative sample of 1,000 Americans between the ages of 18–64. The online survey was conducted by a leading global research firm.
A word on price
Our findings confirmed that viewers are extremely cost sensitive. Of all possible factors, lower monthly costs has the strongest influence on a consumer’s decision to subscribe (or not) to a service, and too high of a cost is largely responsible for subscription cancellations. The following report assumes this cost consciousness while going beyond price to ultimately understand the value of content and experience.
Content and experience have equal effect on perceived value
On average, there is a high correlation between the perceived overall value of a video service and the perceived value of its content and user experience—the correlation between content to value (.73) is equal to that of experience to value (.70).
With that said, there are slight nuances when looking at services by type: overall value is slightly more influenced by experience for pay-TV and ad-supported video on demand (AVOD) services, with the reverse being true for subscription-based video on demand (SVOD) services and virtual multichannel video programming distributors (vMVPDs), where the value of content holds more weight.
"Convenient" video services used most often
Consumers use their pay-TV and SVOD services the most, with 58% and 57% reporting daily usage of each, respectively. This is followed by daily use of vMVPDs at 25% and AVOD services at 20%.
Notably, frequency of use closely mirrors perceived convenience: traditional pay-TV and SVOD services are much more likely to be viewed as “convenient” compared with vMVPDs and AVOD services.
A robust content library is table stakes
Netflix spent $8 billion on content in 2018, and analysts predict that number could climb to $15 billion this year. And Amazon, though at a smaller price tag, is estimated to spend $5 billion.
Having access to a lot of content can be overwhelming for or many—a notion largely explored in our earlier publication on content discovery—but it’s a key ingredient to gaining and maintaining subscribers. And with new streaming competition on the horizon from media giants like Disney, Apple and NBCUniversal, it’s a smart, strategic play for existing properties to continue their investment in content – considering consumers can’t get enough of it, as our research indicates.
Exclusive and original content can bring in new video subscribers
For streaming services, a significant share of binge spending on content is put towards:
- Creating their own original content (e.g., “The Marvelous Mrs. Maisel” on Amazon Prime, “The Good Fight” on CBS All Access)
- The acquisition and licensing of content that's exclusive to them (e.g., “Felicity” on Hulu, “Friends” on Netflix)
The competition for subscribers is already fierce, and it should only continue to escalate as new service launches from several media giants are forthcoming. The need for exclusive and original content has never been more important.
Our research indicates that 36% of viewers have subscribed to a new video service just to watch a show only that service had access to, original or not. Incidence is even higher among 18–29 year olds, of whom nearly half (46%) have done the same.
What’s more, a large percentage of consumers who sign up to watch this content actually stay a subscriber after finishing the show, indicating the importance of originals and exclusive content for long-term growth.
Licensed content is a premium and should be prioritized
Legacy streaming libraries were built on the acquisition of popular content from other networks and studios. And though many years have passed, the importance of licensed content hasn’t dwindled, edging out originals when looking at the share of what consumers are watching.
Ease of use is key to driving favoritism among video services
In competitive and cluttered video market, being favored can mean greater loyalty and increased usage. As such, in addition to carrying a wide variety of desirable content, video services must also give their users a positive viewing experience that’s easy and reliable. Consumers favor services that are friction-free (with an exhaustive content library) even more so than services that offer discounts on monthly cost or free trials.
Viewers are interested in browsing options beyond the norm
The presence of artificial intelligence (AI) in the world of streaming has become more and more ubiquitous. And for good reason—the best algorithms can provide adaptable solutions that prove helpful for both businesses and users; for example, justifying the hefty cost of a large content library by “helping” viewers find shows and movies they might not have otherwise chosen.
For those times when consumers don’t know what they want to watch, users show notable interest in innovative techniques to find new content.
A great user experience means favored content is easily accessible
While improving content recommendations is important, it’s not everything: consumers are much more intentional than one might realize, spending an equal amount of time looking for a specific piece of content as they do browsing for something new to watch.
So, if content providers are hoping to offer customers a good user experience, then helping them find what they’re looking for is just as important, if not more important, than helping them discover new content.
When customers were asked what makes for a good user experience in regards to a video service, three out of the top five attributes given assume the viewer already knows what they want to watch.
More weight is placed on content when considering a streaming subscription
Across all segments, the types of shows and movies offered influence subscription decisions more than the functionality of the service itself.
Together, usability and content motivate subscription decisions
Subscriptions are ultimately powered by cost, ease of use, convenience and content. Viewers care less about fancier user experience add-ons like individual profiles and the ability to watch content offline.
Full stream ahead: key priorities you can’t afford to ignore
This year marks the next phase of the streaming war, as more companies enter the fray in an attempt to wrestle consumer attention (and dollars) away from incumbents. Here are PwC's key findings to help you drive a successful streaming future:
Usability and experience are gaining on content as the factors which drive overall value in the eyes of the subscriber base and inform the consumer decision-making process around new video service subscriptions.
- Cost and advertising intrusiveness remain the most influential factors on a consumer's decision to subscribe.
Content considerations
- Content remains the great differentiator. Above all, audiences demand access to their series and films of interest. Content affiliation with a streaming service brand or legacy cable network is declining in importance.
In the 2000s and early 2010s, dominant streaming services were built on a wide breadth of popular licensed content from networks and studios. Media tribalism and the proliferation of OTT offerings is now limiting the availability of premium licensed content.
For any OTT service, the audience perception of a vast ocean of programming options remains important. In turn, OTT providers must use original or exclusive content as a customer acquisition “hook,” and deep content libraries to create subscription stickiness—in order to avoid succumbing to cyclical churn with the release of marquee series/films, or the loss of subscribers altogether.
UX considerations
- Retention and favoritism are largely inspired by usability and experience, significantly more so than “loyalty” reward programs like monthly discounts on subscriptions or free trials.
Given the apparent limitless amounts of content being offered, a strong user experience hinges on viewers easily being able to find exactly what they’re looking for—even more so than the casual browsing experience.
For years, viewers have had to deal with the same, often imperfect “personalized” recommendations that attempt to direct their attention. When a viewer is in browsing mode, it should be about the platform or content finding them, not the other way around.
Companies have spent much of their time trying to convince their consumers that they “know them,” all the while losing sight of what’s important. What consumers need is a user interface that helps and guides them through an enjoyable experience, be it finding new content for them to enjoy or making it easier for them to enjoy their favorite shows.
A desire exists for expanded browsing options, like being able to search by mood or length of content.
Action plan for providers and platforms:
Amplify content offerings.
Own indispensable content, and back it up with a deep library.
Own the customer relationship—become a central platform in how audiences find and consume content.
- Maximize convenience and focus energy on an easy-to-use search function.
- Prioritize an easy and reliable user experience over monthly discounts.
Guide content and platform UX decisions by the pulse of your audiences. Remember that data dexterity is critical to the ability of services to differentiate.
Go beyond broad genres, and look at nuanced threads within content to make predictions. The platform should recommend content to the viewer that they don’t even know they want to see.
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