The biggest challenges to the video streaming industry – and how to fix them

This article is part of our Opinions section.

With challenges to increasing revenue, or even simply maintaining it, coming from all angles, it’s safe to say that the video streaming industry is facing a tough period.

In a landscape of so many challenges, the most pressing issues facing pay TV and streaming operators have become unclear – and actionable solutions even more so. And yet, such difficulties must be understood if they are to be addressed and overcome.

So, what are the key issues? And what can pay TV and streaming operators do in the face of such challenges?

Too many cooks in the kitchen

First and foremost, in the context of the current climate, pay TV and streaming operators find themselves in a highly competitive industry, battling against numerous streaming services in the market. Think Netflix, Amazon Prime, Disney+, Hulu, HBO Max – and that’s not even all of them. Such a fragmented market has resulted in a battle for subscribers, which only intensifies additional issues further.

Scaling up

With this market saturation in mind, scaling up to reach more devices has become a top priority for pay TV and streaming operators. However, the cost is more than just financial. In turning to delivering their own apps on unmanaged devices such as smart TVs and streaming sticks, operators simultaneously lose control over the customer experience and give up the position of the ultimate aggregator.

Delivering high-quality content also, naturally, requires high-quality infrastructure. Companies are having to continuously invest in and upgrade their platforms to provide a seamless user experience and survive in a competitive market. To do so, operators are forced to choose between handing the task to either an in-house developer team who are often limited in size and ability, or to an outsourced team for a higher price. So, easier said than done!

The grass is always greener

Consumers nowadays are spoilt for choice, with pay TV and streaming operators consistently switching up their TV and film offerings to attract and retain as many subscribers as possible. Unfortunately, this has become something of a double-edged sword for the industry, as subscribers look to frequently switch between services, or cancel them altogether, depending on the best option available at the time.

With this in mind, operators have introduced tiered subscription levels to encourage subscriber retention, targeting a price point that achieves a level of satisfaction (or at least indifference) relative to their chosen subscriber experience.

In fact, it’s predicted that the top US providers will more than double their streaming video-on-demand (SVOD) tiers, to an average of eight tiers, with some providers expected to offer many more.

Ultimately, these top-level issues only just touch the surface of the challenges that pay TV and streaming operators are facing at the moment. Regulatory, compliance, privacy and fraud-related challenges are also all hanging over the video streaming industry.

Next steps

With these challenges in mind, we’re beginning to see a shift in the strategies that pay TV and streaming operators are looking to adopt to combat these challenges. The new focus? Targeting investment effectively, and luckily there are several ways to approach this.

Super aggregation

Defined as the bundling of online video apps, streaming services and traditional pay TV offerings into one, unified user-experience hub, has become a key business focus for operators. Over 40% of US subscribers surveyed said that they would be willing to pay more for premium services that include bundled content, even if ads are still included within this.

By appealing to a wider audience and offering more content than they otherwise could on a standalone basis, operators can reduce subscriber turnover (“churn”) and increase retention.

Diversification of revenue streams

How do you diversify your revenue stream? In this case, through the introduction of merchandise sales, live events, licensing deals and brand partnerships. Content creators are able to license their content to third-party distributors, networks or streaming platforms for syndication and/or international distribution, providing additional revenue streams and exposure to new audiences.

Increased audience reach

Translating, licensing and distributing content to other countries and markets is one way to boost chances of increasing revenue and better monetize significant investments in proprietary content. Collaborating with other media companies through partnerships and alliances can also expand reach and competitiveness. This being said, it’s worth bearing in mind cultural sensitivities, regulatory requirements and infrastructure constraints to ensure that any “globalisation” of content doesn’t backfire.

Anti-piracy measures

Whilst important to diversify revenue streams, it’s also important to protect the income streams you already have. Implementing a full 360° range of anti-piracy services including DRM technologies, watermarking, investigations and piracy detection can help to protect IP rights by preventing unauthorised access and sharing of digital content, therefore preserving income streams through the elimination of piracy competition. 

To conclude, there’s no easy fix to the challenges that pay TV and streaming operators are facing in such an increasingly competitive market, and there’s certainly no “one size fits all” solution. However, equipped with a sound understanding of what’s going wrong, you’re able to place yourself on the right track to assemble the building blocks to fix it.

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