These Trends Are Defining the Video Industry

In 2021 consumers continued to voraciously consume new original content. It’s time examine several industry trends are shaping the future of competition, consumption, and consumer experience.

Research analyst Interpret has packaged five trends that defined the video market in 2021 and which will put a rocket under the industry in 2022. Let’s take a look:

Ad-Supported OTT Is Hot

Interest in free, ad-supported streaming services “blossomed” in 2021 to provide a new depth of competition and more robust services. FAST (free ad-supported TV) channels have been of particular interest — both from services offering free live channels and content rights holders seeking to create and distribute their own channels.

“The viewing mechanics and advertising of FAST channels are familiar to all viewers, regardless of generation,” says Interpret. “Importantly, no single ad-supported OTT service has captured over one-third of streaming viewers, and most stream to less than 15% of consumers overall.”

That means competition will continue to be tight in this space, with opportunity remaining for players to take a dominant competitive position.

Read more: Getting FAST—The Explosive VLinear Market and Why Content Providers Need to Jump In

Fighting Fatigue

Subscription fatigue should be a genuine concern as streamers plateaus in their US subscriber numbers. Over half of US consumers subscribe to three or more OTT video services, leaving many to question how many players can build and sustain a large OTT subscriber base.

New ways of marketing bundling promotions are being tried. Among them, Disney’s launch of a Disney+, ESPN+ and Hulu package hoping to use fans of each service to drive incremental sales for the others. MasterClass, a streaming service based on video classes by leading talent and celebrities, is offering a two-for-one special, with buyers able to purchase one subscription for themselves and one to give away.

Competition and churn will only intensify in the subscription space in 2022.

New Streaming Device Wars

The battle for primacy in TV streaming devices has taken a new turn. Key recent developments include Comcast’s XiOne streaming box in Germany and Italy and its XClass smartTV product. Subsidiary Sky introduced its Sky Glass smart TV in Europe as well, while Verizon unveiled the Verizon Stream TV Soundbar in cooperation with Bang & Olufsen in December.

Why are pay-TV operators interested in a thin-margin business like TVs and streaming boxes?

“Priority access is the answer,” says Interpret. “Comcast, Verizon, and others see that the device UX can control, or at least bias, which content services consumers are exposed to. These devices also serve as the key data collection point, allowing them to get a better, holistic look into consumers’ often shifting media consumption patterns.”

However, whether they can compete with the innovation and scale of global CE companies is another matter.

More Aggregation

Consumers may be happy with individual services, but they are less enthralled with the multi-subscription experience. Finding content is more difficult, often requiring subscribers to explore each service. Each service account must be managed separately, and each has its own payment system and credentials.

Interpret’s consumer research suggests users often do not consider the number of services that they subscribe to until they take the time to enumerate them — which they rarely do.

Several companies are seeking to fill this void, including CE makers, pay-TV providers, online marketplaces like Amazon Prime Video Channels or Apple Channels, and cloud-based content discovery platforms.

“Prepare for aggregators to take a more important role in the new year, particularly if the number of services per person finally ebbs. In this event, OTT services will be eager to work with any aggregator that can help them boost subscriber acquisitions and help maintain retention.”

New Churn Habits

Consumers are prepared to surf or hop services so while the average number of household subscriptions may stabilize at around three, the mix of those is likely to change month to month.

“At times, consumers will collect subscriptions and forget about them until they review their costs overall and cull the services they no longer value,” suggests the analyst. “Moving forward, streaming services will want to adapt their performance metrics and their approach to retention to address this new reality.”

READ MORE: Five trends that defined the video market in 2021 (Interpret)

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