Maximizing ROI in the Streaming Era: New Strategies for studios, distributors, platforms and operators

The evolution of the media market has brought new strategic challenges for content rights owners, studios, distributors, platforms, and operators. With the arrival of FAST channels and the growth of aggregation, these stakeholders must rethink their routes to market to stay relevant.

Initially, the leaders of the global SVOD market, seemed to be taking away the choice from content owners by increasingly requiring all rights exclusively and becoming content owners themselves. This left traditional content owners with no option but to develop their own global services with exclusive content to avoid disintermediation.

However, in the last round of the fight for the global SVOD market, the major studios are reconsidering this strategy and are exploring new ways to maximize ROI. With the emergence of FAST channels and AVOD outlets globally, the choices are complex and varied. There is no one-size-fits-all approach, and content owners, studios, distributors, platforms, and operators must understand their markets fully before developing their content strategies.

Several factors are changing the sector, including the emerging ceiling for SVOD stacking, demand for local content, the end game for FAST channels, and addressable advertising. To develop a content exploitation strategy that involves multiple routes to market, stakeholders must first establish the ROI of using their content themselves versus licensing it to third parties, considering the current routes to market, such as thematic pay TV channels, SVOD, and FAST channels.

This calculation can be complicated, especially where different routes to market exist in different territories, each facing different competitive dynamics. The potential for multi-territory licensing deals for some or all content also means that the ROI calculation for different territories is not independent. Stakeholders must determine whether a hybrid approach produces the best ROI and what the optimal mix of exploitation windows is. They must also consider the appeal of owned and operated services, the strength of the content in question, and its ability to support the desired positioning and value-adding power of any current or future owned and operated services.

Once the route to market strategy is established, stakeholders need a detailed understanding of how to track and optimize their offer and the specific value of their content to different buyers. They must devise the specific content offer for each route to market, understand the cost, carriage terms, and optimal price for any D2C services.

Why Viewers are Choosing Free Over Paid Services?

In the past, I have written extensively about streaming including?FAST Forward: The Future of Free Ad-Supported Streaming TV,?Is TV dead?…Not so FAST?and?Developing a modern digital monetisation strategy for your content.

The world of streaming has undergone a dramatic shift in recent years, with ad-supported services now emerging as a more attractive option than traditional subscription models. A Deloitte survey conducted last year found that 44% of people had canceled at least one paid streaming service in the previous six months, with an increasing number of users seeking cheaper, or even free, alternatives. It is in this context that ad-supported services have gained in popularity, with the likes of Netflix and Disney Plus now offering lower-priced options that are supported by advertising.

One of the major advantages of ad-supported streaming, or FAST (Free Ad-Supported TV), is the ability to offer more targeted advertising to viewers without compromising their privacy. By using contextual targeting, advertisers can reach a wider audience by targeting universal category IDs, such as “dog owner” or “sportswear shopper.” This approach also allows brands to choose where their ads run within a show, based on its format. However, it’s important to note that demographic-based targeting remains an important and effective strategy, particularly for direct-to-consumer brands that want to complement their linear TV campaigns for branding purposes.

FAST platforms also offer increased personalization, which can lead to greater audience engagement and retention. By collecting data around viewer behavior and preferences, content providers can produce progressively more relevant content that resonates with audiences. This, in turn, leads to higher viewer retention and more impactful advertising. Personalized digital channels provide a seamless navigation experience for the user, helping them avoid the dreaded “choice fatigue” and extending the shelf life of content.

Furthermore, ad-supported services are increasingly appealing to key demographics, such as Gen Z and Millennial CTV users. These viewers are more likely to use FAST channels regularly, viewing them multiple times per week, and are also more likely to tweak or cancel their subscription-based services due to factors such as an uncertain economy and subscription fatigue. As the largest age cohort of parents, with considerable spending power, Millennials provide children’s brands with a massive opportunity to reach target audiences through FAST networks. Similarly, as more original content is created for these channels, they are expected to attract more Gen Z viewers.

In the ever-changing world of media and streaming, content owners, distributors, and platforms must continually reassess their routes to market to stay competitive and maximize ROI. With the rise of FAST channels and ad-supported services, the choice of distribution options is complex, and there is no one-size-fits-all approach. To develop a successful content exploitation strategy, stakeholders must carefully track the ROI across the multiple routes to market.