The Future of the Streaming Cycle
It’s 2009 and a 12-year-old Andy is tip-toeing through a maze of noisy floorboards, my eyes on the expansive case of DVDs in the study. I immediately go for the stack of Friends cases, every season within arms reach. As I watch, I find myself daydreaming about my own future as a 20-something facing obstacles in life and love in the city that never sleeps, complete with a predictable laugh-track. Although I failed to understand the host of “adult” references and jokes that littered every episode, I still became entrenched in the world of Ross, Rachel, and the whole gang.
Fast-forward to 2019 and although I am finally on the cusp of living out my much awaited Friends fantasy, in an albeit much smaller apartment, I am at risk of losing access the show itself. We have entered an age where ownership has been replaced with subscriptions, from Rent the Runway to Uber, our consumption is dictated by platforms. According to a study conducted by West Monroe Partners, the average American spends $237 a month or $2,844 a year for subscription services. Although subscriptions permeate many aspects of our life, perhaps the place it is most noticeable for many is in the world of TV, where a myriad of new services are popping up like Disney+ (#client), AT&T/WarnerMedia’s HBO Max, Comcast/NBCUniversal’s Peacock (#client), and Apple TV+. With the streaming industry poised to be overcrowded within the year, users like me are really only left with two options, shell out more cash each month for multiple services or lose access to cherished shows like Friends.
This shift in the streaming industry not only creates conflict for individuals but also shifts the way brands will advertise on OTT services. As modern day streaming services become more focused on locking audiences into their ecosystem, it will be increasingly important for brands and advertisers to find their way onto emerging platforms and leverage those ecosystems to reach the desired audiences. On the platforms that don’t have ads, product placement will also become more prevalent. Netflix, especially, prides themselves on their absence of ads and many other OTT streaming services like Hulu allow consumers to opt out for a higher priced plan. A reported 21 million users opt for these higher priced commercial-free services. Although the services have freed viewers from traditional ads, they are still capitalizing on the rise of non-disruptive ad formats like branded content.
The prevalence of these new “ads” is evidenced by data from the Branded Entertainment Network (BEN), estimating that 100% of Amazon’s original programming, 91% of Hulu originals and 74% of Netflix originals incorporate brand integrations. These brand integrations take longer to plan than the average video ad but they provide a win-win-win solution. Consumers are able to enjoy their favorite shows “ad-free”, streaming services can keep their costs low, and brands are able to access coveted audiences in a non-disruptive way. As an added bonus for brands, 60% of consumers also reportedly have a more positive outlook on brands that they recognize from a product placement.
One such campaign that produced a massively positive brand outlook is the iconic 80’s Coca Cola placement throughout Netflix’s Stranger Things. The nostalgia-driven Coca Cola branding initiative fits seamlessly into the 1980’s world of Stranger Things, where malls are the place to be seen and women flock to Jazzercise classes. Coke’s integration into the hit series serves as an example of advertising that the consumer not only doesn’t mind but actually appreciates as bringing added value to their life.
Even with branded content as a valuable tool, companies will still have to figure out where the viewers are going to be, which begs the question: how many streaming services are consumers willing to subscribe to? Personally, I already feel like I have enough services with Netflix and Hulu, which together easily satisfy my binge-watching needs and offer me tons of critically acclaimed shows as well as plenty of low-budget filler shows to watch in between recently released blockbuster seasons. According to a report by Hub Research in 2019, I’m not alone in my uneasiness to add more streaming services to my bill; They found that almost a quarter of consumers already felt that they had too many TV subscriptions, up 14% from the year before. With the average consumer already paying for content from four and a half different sources, it is no surprise that audiences are feeling maxed out. In the midst of all this subscriber fatigue and user experience fragmentation, watching Friends may seem like an impossible task but don’t worry, I can always lend you the box set :)
