New data shows the true nature of the fight between Netflix, Disney +, and other SVODs

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You might think of a streaming service like Netflix (NASDAQ: NFLX) or Disney + of Walt disney (NYSE: DIS) needs a combination of quality and quantity to attract new subscribers. That is, viewers not only want entertainment that grabs their attention, but they want a lot of it. After all, these video-on-demand (SVOD) streaming equipment competes with cable TV, which offers a small universe of channel choices.

It turns out, however, that this is really not the case. A wide range of TV fans sign up for a particular service to watch a specific show, and they haven’t learned about it through an advertisement. On the contrary, friends and family have probably recommended it. Once they’re hooked on a particular program, however, they’re much more likely to stick with that streaming service.

The implications of this nuanced consumer behavior are enormous for the video-on-demand industry.

Image source: Getty Images.

Survey says sizzle sells

Streaming players like Disney, Comcast‘s (NASDAQ: CMCSA) Peacock and Netflix don’t need a lot of originals and exclusives. But what they have should be very engaging for as many different demographics as possible. A recent survey by Hub Entertainment Research suggests that 74% of consumers who sign up to watch a specific show will stay with the service after watching all episodes of that show.

So what does it take for a streaming platform to get viewers addicted enough to a series to keep them interested until its finale? Most viewers are addicted to a show after watching a single episode. The Hub Entertainment Research report found that 74% of streaming customers watched an entire series after watching the first episode of that full multi-season series. If a show was particularly publicized before its premiere, 95% of viewers remained loyal to the program after the start of the first episode.

There is, however, a catch here – perhaps. While fans of a specific show are likely to become fans of a particular streaming service, getting fans to watch that first episode is a challenge. Hub Entertainment Research found that only 34% of consumers subscribed to a specific streaming service like Disney + or Netflix to watch a particular program. Presumably, the remaining 66% of new subscribers were more interested in a streamer’s entire catalog. Arguably, however, over 34% were primarily encouraged by a certain program and secondarily encouraged by the rest of that provider’s content library.

It is revealing. In a market where streaming services tout the number of hours of programming offered while touting the number of exclusives and originals they offer, a significant number of consumers are not impressed.

They are also not very impressed with the promotional efforts of a streaming company. Among survey respondents, 33% of consumers who watch their favorite streaming program online have heard of it. by their friends and family – it’s advertising that costs nothing. Indeed, only 12% of them found out about their favorite streaming show through an advertisement.

Join the dots

The implication is clear: if streaming platforms such as peacock or Disney + wants to keep adding customers, they need to build organic and natural hype program by program. And they have to do it in the first episode of a series.

That’s not to say that Netflix and Comcast should just ditch less-watched series, or advertising. These things always matter.

However, it wouldn’t be a crazy idea to cut down on programming that doesn’t create buzz and expand the franchises and topics that do. Just look at the data collected by subscription analytics company Antenna to see the importance and impact of the hype. The antenna notes that registrations for Disney + more than quadrupled their normal pace over the weekend as the second season of its rented The Mandalorian the series debuted.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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