Streaming platforms are now more in demand than ever, with more consumers working from home. A report by streaming analytics firm Antenna, reported on Forbes, said the likes of Disney+ in the US have more than tripled in signups over a three-day window of 14 to 16 March 2020. This coincided with the school closures, and with companies moving to a work from home measure.
Disney+ wasn’t alone in its spike. Premium streaming services HBO Now too saw a 90% gain in users. The figure is inclusive of free trials, active users as well as subscribers. Meanwhile according to Antenna, Apple TV+ had a 10% rise in new subscribers on the week of 14 to 16 March 2020 compared to the week before, while Netflix saw a 47% increase in the number of subscribers in the US alone. Netflix’s content officer, Ted Sarandos, said in a CNN report, that the company has seen an increase in streams, but did not disclose numbers. Since the increase in streaming of its content, Netflix has also resolved to reduced streaming quality in Europe by about 25% to ensure the system does not collapse, while still allowing users to access and watch content on its platform. It took a similar stance in Malaysia since the end of March. Similarly, Google-owned streaming platform YouTube too had to minimise stress on its system by reducing streaming quality due to the strain of unprecedented usage.
Who will come out on top?
According to a research report by analyst firm MoffettNathanson, with the temporary closure of entertainment outlets outdoors, people staying home will resort to keeping themselves entertained online and via streaming platforms. During this period, revenue wise, Netflix is predicted to come out victorious, as unlike its competitors Netflix does not rely on advertising revenue and almost entirely dependent on subscriptions alone. According to MoffettNathanson, Netflix also performed better with an increase in its stocks as compared to other media and internet companies.
Because ad budgets will be one of the first areas to be impacted, should the economy goes into recession, the likes of Google and Facebook will face a dip in incoming ad dollar led revenues, the report explained. Keeping in mind this school of thought, it is understandable then, why this could potentially also impact players such as iflix in Asia, which draws approximately 19 million monthly active users, and offers sponsorship and programmatic solutions apart from running ads alone to advertisers. Also no stranger to the hybrid model of ad and subscription is Swedish audio streaming giant Spotify. The music streaming platform not only brings users the biggest music hits at their fingertips, but has also integrated podcasts on its platform and has over 124 million subscribers, 271 million users across 79 markets. Both iflix and Spotify did not comment on Marketing’s queries.
But despite the findings of the report, industry players Marketing spoke to still believe relying on subscription alone cannot ensure prosperity of streaming platforms. Partha Kabi, managing director at MediaCom Indonesia, was of the view that whilst OTT platforms stand to win big in the current climate, they should not be reliant on subscription revenue alone. According to Kabi, majority of OTT platforms across Asia will now consider adopting an AVOD (Advertising Video On Demand) model as consumers are overwhelmed with subscriptions.
"In many instances, the emerging market consumer cannot justify paying for dozens of streaming services in an already-crowded OTT space. Streaming platforms will need to rely on ad-supported streaming models similar to YouTube, rather than pure subscription revenue of Netflix," he explained.
Ashish Bhasin, CEO, Dentsu Aegis Network (DAN) Asia Pacific added that while for the foreseeable future, advertising revenue "is not going to come back to normal", advertising will be around wherever there are eyeballs. While it might not be business as usual and ad spend might currently look grim, with media consumption rising, ad dollars by no means will diminish. Meanwhile, DAN's global ad spend report also corroborated Bhasin's point, adding that with a lens on China, ad spend growth for the country in 2020 is forecasted at 3.9%. While the COVID-19 pandemic might cause activity in the first quarter to dip, DAN's report explained that government measures to support economic growth and consumer confidence provide a positive boost to the second half of the year.
Strike while the content iron is hot
Nonetheless, Bhasin added that there is "a great potential" to increase market share and for streaming platforms, and now is a good time as any to log in new subscribers.
“The entire world economy is going to be challenged so the amount of ad dollars is going to decrease," he said, adding:
Brands should thus not to bank on ad dollars, but move more into subscriptions.
But, none of it will be successful without the power of great content, he said. “A lot of people have more time on their hands now. By putting in more and better content, more subscribers will come in. Using promotional offers that people appreciate will help.”
Agreeing with Bhasin, Kabi too said that localising content has proven successful with players such as iflix building deep libraries of strong local content as a strategic differentiator in the region. In addition, another avenue Kabi suggests is to create customised offerings for the different market segments. Citing several research reports, he said that in some Asian countries over 62% of free users are willing to switch to paid services if the monthly subscription cost is lowered, adding:
This opens doors to newer revenue access from your existing base of customers.