How OTT Platforms are Playing the Long Game in the Streaming Wars
Hardware, cable, and the looming threat of mass consolidation
Ever heard of the saying, “won the battle but lost the war?”
When we talk about the streaming wars, we talk about the battle for attention. Hundreds of thousands of streaming services, all wanting our eyeballs to stay fixated on their OTT apps. This is the battle, not the war.
The long game is likely determined by who owns the box. It’s the platform provider who consolidates said apps. I’m talking about OTT hardware platforms like Google TV, Apple TV, Roku, and Amazon Fire TV.
What’s in the Box?
As OTT competition heats up, it’s only natural for users to want a central location for all their subscriptions. Why bounce around from one app to another when you can find new episodes from the shows you follow in one place? Apple TV has taken this approach with their “TV” app. The same goes for Roku and its “Channel” app. These platforms take the manual work of jumping between apps out of the equation. It’s convenient for users but detrimental for the individual brands.
Platform consolidation diminishes individual brands. Let’s say you wanted to watch the latest episode of The Flash. You would consciously find the ‘CW’ app on your home screen. You would select it and be greeted by the CW splash screen. Then, you would navigate through the CW UI to find your title.
Compare that to Apple’s “TV” app. If you have CW downloaded on your Apple TV, the “TV” app can deep link new episodes of The Flash. The “TV” app launches CW and jumps straight into the episode. It bypasses the need for navigation. The CW app has essentially become a channel in the Apple set-top box at this point. Factor in voice control and you have Siri or Google Assistant diving straight into content from the home screen.
Consolidation is the key to winning the war altogether. Platforms have the hardware, software, and brand recognition to offer appealing all-in-one solutions. Many of them also allow users to sign up for 3rd-party services like Showtime or Starz directly through the box. It’s a page lifted directly from the operator/set-top box playbook. Again, more convenient for users but a critical hit to providers.
So yes, platforms are taking the old cable company strategy. It was inevitable.
Well established names like HBO are protected. HBO’s brand is so well known that even under a consolidated paradigm, it can stand out, but are they willing to give up what is often 30% of its revenues to them. The smaller brands will initially benefit as their content should be easier to find, but the box controls that too.
The Top Prize: Data
If this is a war, what do the winners get? The answer is data.
Once services are locked in, there’s nothing stopping platforms from establishing rules to further their position. They can start enforcing the release of user behaviour data which is the sweet stuff. Right now, platforms only have access to quantitative data like individual app usage, time spent in-app, etc. If platforms own the majority of the streaming experience, they can start requesting qualitative data like genre preferences.
It’s why mega-brands like Disney, Peacock, and HBOMax are pulling all their content back and going D2C. They want to lock users into their apps, own the data, and leverage all their other assets to maximize ARPU (average revenue per user).
This has turned out to be a very powerful weapon and you see it hitting headline news now every day. HBOMax and Peacock are not on Amazon Fire TV or Roku. NBC nearly pulled all their apps from Roku before reaching a deal. This is the kind of fireworks you don’t often see bubbling up and affecting millions of customers for months. It’s certainly a sign that the stakes here are very high.
Regardless, even if NBC secures back every episode of The Office, it’s not enough. They need to own the hardware to be the top player.
The way I see it, there are 3 “weapons” that dictate dominance in the media space:
- OS/Device (hardware)
- Eyeballs (reach)
Amazon for example has 2 of 3 doing very well. They have a consumer device FireTV, a massive D2C customer base, and the Prime Video app is ok but it’s no HBOMax or Disney or Peacock. Comcast’s recent news that they are opening their X1 platform to Smart TVs is certainly their realization of where they are weaker as their Flex and X1 STB’s are great but that will never get them the younger demographic. Roku is the champion today at doing this successfully as you can buy 3rd-party Smart TVs with Roku OS in most countries. I predict you’ll see more platforms and devices arise as each of these players needs all these weapons powered up and at their disposal to win the war of attention and your data.
How to Protect Your Brand
As I said, the mass consolidation of apps by platforms is inevitable. There are too many OTT services out there to expect users to manage every single one. They can and will gravitate towards a central solution.
So, how can individual services survive being absorbed by platforms? They need to invest in their brand. They need to make it so that even if users bypass the entire navigation, they still know who owns the content. An unfortunate strategy by many streamers is sticking with a simple black background app and a logo in the top corner. There is no brand individuality and hence, no chance of brand survival. D2C services are on the frontline of a good brand experience. Money needs to be set aside to invest in smoother performance, vibrant animations, bold visual design, and user-centric navigation.
In the end, as with any market, it’s the brand and brand experience that always wins.
It seems every day, there’s a new curveball thrown at the media industry. Everyone is trying to figure out how to get on top. Most of the moves are short-term plays that make a big splash for a brief period of time. In the long-term, the ones who will succeed in streaming are the ones who can create one-stop destinations that manage subscriptions. Once that happens, users will become accustomed to diving straight into content. After some time, that can affect how they perceive branded content (who owns what). The only way to combat platform consolidation and the dilution of brand is to invest more in the said brand. Keep the experience strong and memorable and keep users coming back for more.
MAINSTREAM is a reoccurring video series about trends shaping the streaming industry. Check out our previous episodes: