Complexity Creates Operational Inefficiencies

The video entertainment ecosystem is at a peak moment of complexity. The number of service providers, paths to subscription, and viewing platforms have created an incredibly challenging operational environment.

• Volume of video services: Parks Associates’ Video Streaming Tracker profiles over 300 standalone streaming video applications in North America alone. With no long-term contracts, viewers are free to trial, join, and quit services at will, and services are in constant need of effective user acquisition and retention methods. Alongside SVOD (subscription video on demand) options, 67% of consumers watch social video, 50% watch free ad-supported video, one-third watch pay TV, and 14% use an antenna to watch over-the-air broadcasts. Content creators aim to maximize their assets’ performance across distribution options and service providers are increasingly supporting a mix of models to pair the right content with the right service model.
• Multiple subscription paths: Consumers find and subscribe to services through various paths. Just 37% of SVOD viewers subscribed to the service directly from the service provider’s website or app. Most subscriptions come through a disjointed system of connected TV platforms and bundle arrangements with other entertainment services or with internet and mobile providers. Service providers must authenticate viewers and manage subscriptions across this variety of access options.
• Fragmentation of consumption platforms: Consumers now watch videos in more places and on more devices than ever. While televisions still dominate, smartphones have exploded in popularity as a viewing platform. As of Q1 2024, 65% of US internet households reported watching video on a mobile phone in the 30-days prior to the survey, more than double the rate from 10 years ago. Broadcasters and streaming providers are challenged to deliver the right content in the right format on the right viewing platform.

Video Streaming Tech Stack: Managing Scale

Complexity in the market is matched by an underlying complexity in the tools and systems needed to produce, distribute, and monetize content. Much of the technology supporting modern broadcasting and streaming has developed organically to meet specific needs, resulting in a vast array of point solutions. Broadcasters have legacy systems that must be integrated with modern streaming and digital distribution platforms. Media production companies handle complex workflows across pre-production, production, post-production, and distribution. Streaming services process vast amounts of data requiring robust content delivery networks (CDNs), dynamic ad insertion technologies, and personalized content recommendations.

Managing scalability, data security, and user experience across diverse platforms can be complex. For example, Netflix is an industry leader partly due to the company’s meticulously built infrastructure with years of investment that leverages operational efficiencies to supply a diverse library of content to viewers, complete with personalized recommendations.

Broadcasters transitioning from linear to streaming must build robust content libraries, support flexible monetization models, and maintain high consumer engagement, all while supporting operational efficiency and effectively monetizing content. Broadcasters are increasingly transitioning to cloud-based solutions and partnering with companies that can provide the right specialized skills, technologies, and resources necessary to manage the backend and complexity. Strategic partnerships enable broadcasters to navigate the complexities of the streaming landscape, adapt to changing market demands, and ultimately drive sustainable growth and profitability.

Parks Associates is a market research and consulting company with a special focus on tracking the smart home industry. This is an excerpt from Parks Associates white paper Video Delivery: Maximizing Efficiency and Monetization, in Partnership with JWP (JW Player).