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Streaming Services Market Saturation

Green Line Solutions > Uncategorized  > Streaming Services Market Saturation

Streaming Services Market Saturation

When Netflix entered the streaming business in 2007, they were one of the first players in the new field that changed how media is consumed on a global scale. Being such an early adopter gave the company a huge leg up, a lead which they still hold with nearly 130 million US customers., nearly half of American households. This figure jumps to two-thirds when rival streaming services Hulu and Amazon Prime are added to the mix, according to data from Nielson.

Yet the streaming craze may just be getting started, as evinced by the networks and media companies that are pulling their content from other services in favor of creating their own. This allows them to have access to audience data, control over distribution, and receive direct revenue. While some new streaming services may survive due to an increasing number of cable TV cord-cutters, the market may already be nearing saturation.

According to a poll by PCMag, about 75% of subscribers to the big three (i.e Netflix, Hulu and Amazon) say they don’t plan on adding any new streaming subscriptions. This appears to be true, considering just 16% of U.S. broadband homes subscribe to three or more video subscription services. Nevertheless, the number of competitors continues to grow with some offering niche streaming — such as the horror-centered service Shudder — while others rely on brand-loyal fanbases, such as Disney+.

Still, the streaming market can only support so many players and Tony Maroulis, research manager at Ampere Analysis, warns that the US “may be near saturation” in terms of new homes that are willing to pay for streaming. This means that any growth will depend on consumers that are willing to pay for multiple services. “Someday, there will have to be competition for wallet share,” said Netflix CEO Reed Hastings, “we’re not naïve about that. But it seems very far off from everything we’ve seen.”

When it comes down to deciding between rival services, exclusive content is a deciding factor but not necessarily the only consideration. Big-budget originals draw customers, as does a broad range of films and shows, an ad-free viewing experience, and licensed network content. An article from Digital Content Next argues that beyond content there are three factors that will determine which streaming services make the cut: user experience, availability, and entrenchment.

When it comes to user experience, Netflix, with their straightforward and easy-to-use interface, multiple user accounts and a kid’s mode is the standard against which all other services are compared. Availability refers to being able to stream content on any device, cast to TVs, or download an app. Any new services must not only make apps for mobile devices, but also for several gaming consoles and different brands of Smart TVs to reduce any friction for new customers. Lastly, entrenchment is a factor for many consumers who see Netflix as a given considering their long-time subscriptions. While conversations may debate adding new services, far fewer concern removing Netflix from the equation, which is significant when many consumers are only willing to pay for two or three.

Despite limitations on the possible overall growth of the streaming market, there doesn’t currently seem to be an end in sight. Growing customer dissatisfaction over the total additive cost of subscriptions combined with the continued splintering of the market and ongoing battles over content licenses means that competition will only get fiercer in the next few years.

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Dan Mirza
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