The cola wars, the burger wars, the cable wars — marketing has always been a battleground. And the latest war? Streaming services.
Video streaming is a huge business. In 2020, it’s expected to generate revenue of close to $26 billion, with an annual growth rate of 4.1%. In households that use OTT (over-the-top media services), 19% of the time is spent streaming TV. Netflix is, of course, a veteran in the industry, having been founded way back in 1997. Over the years, as streaming became more popular, Netflix cemented its position as the industry leader and today has 167 million subscribers worldwide.
But success inevitably brings copycat competitors. Once Netflix proved the viability of the streaming model in the market, other companies followed suit. Netflix faces constant and growing competition from the likes of YouTube, Hulu, Amazon Prime, and more. Recently, two new players — Disney+ and NBCUniversal’s Peacock — arrived on the scene, disrupting the industry once again, and taking the streaming war up a notch.
Let’s take a look at how these two challenger brands are attempting to break into the competitive streaming market, and how their approach to marketing can guide any brand facing tough competition.
Lesson 1: Create Original, Exclusive Content
In the TV industry, syndication deals, licensing agreements, and other streaming services make it hard for broadcasters to offer exclusive content. This means that streaming brands have to find ways to differentiate themselves. One way they’ve done this is by becoming TV and film production studios themselves, creating original, high-quality content in-house that rivals that of traditional studios. Examples include Netflix hits House of Cards and Orange Is the New Black, and Amazon’s The Man in the High Castle or The Marvellous Mrs. Maissel.
As part of the Disney mega-brand, Disney+ already has exclusive access to some of the world’s best, original content. However, the streaming service went a step further with the production of The Mandalorian, the first live-action Star Wars series — which is credited with helping to make Disney+ the most downloaded app in the U.S. in Q4 of 2019.
Whether producing a TV series or writing a blog post for a company website, the key is to deliver original content with added value that customers won’t find anywhere else.
Lesson 2: Hook Customers In With Something Irresistible — Then Cross-Sell
The new NBCUniversal streaming brand, Peacock, is scheduled to provide five-hour daily broadcasts of the 2020 Tokyo Olympics. This offering will certainly hook in plenty of viewers and even new customers, many of which may decide to stay on and enjoy the rest of the programming offered by the brand.
The Olympics broadcast is also a great strategy for cross-selling the Peacock brand to NBC’s traditional cable audience. These customers may too decide to try out the new streaming service to watch the Olympics. Then they can be exposed to additional complementary content and original programming, creating an opportunity for them to experience the added-value of a Peacock subscription first hand.
After all, every savvy marketer knows that retaining customers is easier than acquiring new ones. In fact, the chances of cross-selling to an existing customer are around 60-70%, while the chance of acquiring a new customer is just 5-20%.
Lesson 3: Vary Your Offer to Capture Different Audience Segments
Peacock has taken a flexible pricing strategy for its streaming services, with something suitable for everyone. It offers a free option (which competitors like Disney+ and Netflix don’t), a Premium option, with extra content and ads, as well as a Premium Plus option, which is more expensive than Premium but without the ads.
In a highly competitive market, providing a variety of offers to suit many budgets and customer preferences is a smart strategy. The freemium model may seem counter-intuitive, however, in the B2B world, the freemium strategy has been shown to yield a conversion rate of between 2% and 4%.
Lesson 4: Offer Extras That Make All the Difference
As a new kid on the streaming block, Disney+ has built some smart extras into its package that make it more attractive than even a long-standing brand like Netflix. The basic subscription of Disney+ and Netflix are the same price, yet Disney+ includes 4K viewing, while Netflix customers have to pay extra to enjoy 4K. Even HD streaming on Netflix comes with an extra fee.
In addition, Netflix only allows one viewer at a time for its basic subscription, while Disney+ offers more bang for the buck with up to four viewers on one subscription.
These may seem like small details, but when going head-to-head with an established brand, it helps to offer extra benefits and features. These provide customers with added value that may help convince them to try out a challenger brand versus defaulting to the current market leader.
Lesson 5: Mind Your Brand Values
Disney+ is the streaming service of one of the world’s most beloved, family-friendly brands. The values that Disney stands for are wholesomeness, safety, and nostalgia. Yet despite its mammoth backing, the streaming service still needs to compete with other powerhouse brands, such as Netflix, Amazon Prime, and Apple TV, who offer a wider range of content aimed at mature audiences — and who aren’t stuck with the limitations that a century-old brand identity can impose.
This presents some serious challenges for Disney+. To date, most of its original streaming programs are aimed at children. According to some critics, if Disney+ is going to maintain the momentum of its initial successful launch (over 28 million sign-ups in the first three months), it will need to rethink its brand identity and create more original content in line with it. Can a family-oriented brand stay true to its values while offering the kind of content that will draw a wider audience and attract customers from competitors?
Lesson 6: Stay on Your Toes! The Competition Is Right Behind You
All marketers know one thing for sure — while they are watching the competition, the competition is watching them right back. A brand like Netflix does not become an industry titan by falling into complacency. The launch of Disney+ caused a massive shake-up in the streaming industry, and newcomers like Peacock and HBO Max are going to shake it up even more. With competition growing steadily every year, existing streaming brands have to work hard to maintain their industry footing.
In fact, within two months of the launch of Disney+, Netflix began making moves to conquer the one area where Disney is the uncontested global leader: animation. Recently, Netflix signed a deal with Japan’s equivalent of Disney, Studio Ghibli, to produce more animated films to entice the family audiences which are critical to Disney+. Netflix has already achieved much success with animation, for example, with its Oscar-nominated Klaus. Some in the entertainment industry doubt the ability of Netflix, or any company, to best the Disney animation powerhouse. Still, every brand must remain acutely aware of the competition at all times, and be as proactive as possible to counter any threat to their position in the market.
Streaming is a fascinating, fast-moving industry. In less than two decades, it has completely upended the TV viewing habits of a global audience and disrupted a massive market. How? With smart strategizing and branding by just a handful of companies.
Yet, with new competitors cropping up on a regular basis, streaming services are fighting a daily war for viewers and revenue. And that means they are constantly working on new marketing strategies to stay ahead of a powerful game.
It’s not just the streaming companies — in every industry, brands and businesses are fighting similar battles to gain market share and increase sales. Luckily, many of the successful marketing strategies used by streaming companies can be applied and adapted by any business. Whether it’s staying true to the brand’s values, creating original content or cross-selling to boost customer retention rates, marketers and advertisers can learn a lot from the streaming wars about how to break into a competitive market and emerge as the winner.