Measuring the Success of Today's Streaming Giants and Where We Go From Here
Back in August, the team here at Trendency released some of our latest data surrounding the expansion of streaming platforms over the past few years. Streaming is clearly the dominant vehicle for entertainment consumption in the United States compared to cable television or digital antennas, with Americans saying they spend more than half their viewing time watching streaming content and, on top of that, one in three says they stream 90% of the time. The bottom line is that streaming has begun its full takeover and it’s here for the long haul; it feels like the upward trajectory of streaming platforms and content is wholly unstoppable.
But is any business model ever truly unstoppable? We have seen continuously over the past few years how streaming platforms have aimed to differentiate themselves and push the innovation envelope, all while chasing ever higher subscriber counts. We’ve watched Netflix experience scrutiny over the past year for declining share values, sluggish new subscribe numbers, and password sharing crackdown policies. And where Netflix struggles, the other platforms are bound to experience something similar now or eventually.
Unlike many industries, where incremental change and growth provides enough positive movement forward and revenue growth, these platforms are judged on a quarterly - and most likely, monthly - basis and have to meet increasingly demanding metrics with apparently no ceiling in sight. However, there are only so many people out there in the world and a set number of subscribers to get, so eventually the agendas and milestones of these boardroom meetings will have to change and platforms will have to be judged on other factors.
Based on the Trendency data, we’d argue that the next barometer to which shareholders judge the success of their streaming platforms is current subscriber engagement. Keeping current subscribers happy and engaged with platform content and/or other offerings will be key to long-term success, success that cannot just be determined based on new subscriber numbers. The conversation, for the more established platforms, needs to be, “How do we keep our subscribers happy?” instead of, “How do we sign up new subscribers?”
And while engagement can be measured in more ways than one, our view is that there is one key element to high engagement numbers: innovation. New or fan-favorite content and technologies are constantly being churned out, and we expect that once a deal is struck in order to end the SAG-AFTRA strike, this will turn into even more of a Space Race than it already has been in the recent past.
Over the past two years, the Trendency data has shown that innovation and engagement have a mutually exclusive relationship; the more innovative a platform is viewed as being, whether that be through its content or other tools/offerings, the more value a subscriber sees in paying for that subscription. The trend we have seen is that the innovation score for every major platform is on the up and continuing to increase; this is fascinating to watch in the moment, because we don’t know where the limit will be and we can’t predict what exactly will cause a downturn in the future.
Netflix continues to be the big winner when it comes to both innovation and perceived value scores amongst subscribers, with the streaming giant enjoying an 11-point increase in its innovation score over the past year. Next up are Hulu and Prime Video, which both have interesting backgrounds in terms of subscribers; where Netflix subscribers sign up for Netflix specifically and nothing else, Hulu is tied to the larger Disney+/ESPN/ABC conglomerate while unlimited access to Prime Video is provided as part of an overarching Amazon Prime membership. At the bottom of this list, but still enjoying increased innovation scores, are Disney+ and Apple TV, which again, have more expansive backgrounds when it comes to the origination of their subscribers compared to Netflix.
While Netflix’s more singular focus on its streaming content seems to be working out for the platform, companies with more than one focus - whether that’s being part of a larger streaming service family or being connected to larger companies like Amazon or Apple - still have the opportunity to grow at similar rates and compete with Netflix.
Though streaming has become the main vehicle for entertainment consumption, differences remain between those who stream most of the time and those who utilize other tools or methods to watch television or film. Subscribers tend to have stronger opinions on platforms and their ability to innovate than the general public, ranking Netflix at the top and Apple TV at the bottom once again.
The largest gap between subscribers and the general American public exists for Apple TV, with subscribers ranking innovation for the home of Ted Lasso nearly 20 points higher on average compared to the general public. Disney+ experiences a similar pattern, with subscribers’ average innovation score ranking nearly 18 points higher than the average score among all Americans. The gap closes as you reach the top of the rankings, with the most agreement on innovation between subscribers and the general public occurring for Netflix.
When we look at innovation scores and growth over the past two years among subscribers only, there continues to be positive growth across the board based on Trendency data. The platform with the largest point increase among subscribers? Apple TV. Although they rank at the bottom of every list in this dataset, Apple TV is clearly doing something right, at some level. (If you haven’t watched Ted Lasso, Shrinking, Severance, or the Morning Show, you should.) Whether that is enough to compete with the other major platforms, however, only time will tell.
Similar to other data showcased so far, Netflix also enjoys having the highest concentration of people who feel that the streaming platform is very innovative. It’s also the only platform to have less than 25% of people fall into the “not at all innovative” category, compared to about 3 in 10 who believe that about Hulu, Prime Video, and Disney+, and 40% who believe this about Apple TV.
Netflix also enjoys the highest concentration of subscribers who view both 1) the subscription as having a high value in general, and 2) the company itself as being very innovative. Interestingly enough, one factor that does not seem to affect subscribers' views on this - at least for this measurement - is how much time they spend consuming streaming content.
This new Space Race, as we called it earlier, all has one general means to an end: subscriber engagement and happiness. The more engaged and happy a subscriber is with a platform, the less likely they are to cancel it. Rolling all of these factors into one Overall Subscription Strength Score, the Trendency data continues to point to Netflix as having the strongest position amongst subscribers in general - despite any bad press it’s gotten this year.
Apple TV finds its place at the bottom yet again, and while the four other platforms are near or above 600, Apple’s streaming platform falls well below that threshold. It begs the question again whether or not Apple TV is part of a larger set of efforts spreading the tech giant too thin; no other streaming platform is part of a company also developing the next major smartphone or tablet.
While many investor and boardroom conversations continue to revolve around new subscribers as a major metric gauging the success of their streaming platform, innovation and, therefore, engagement are clearly part of the path forward in setting up the entertainment industry for success. Rather than focusing on onboarding new users, these platforms will have to continue to make their existing subscribers happy to prevent them from hitting that dreaded “cancel subscription” button.