By Greg Oxenberg, Assoc. Director, Data Innovation & Strategic Initiatives
As we settle into 2025, the competition between streaming services that has defined the media landscape for the last several years shows no signs of abating.
But what was once a game played around content is now one focused on the consumer… and rightfully so. While the market is as saturated and competitive as ever, customer growth is declining, churn is increasing, and fragmentation of both audiences and content remains a frustration for all.
Wall Street has demanded a renewed focus on profit, resulting in cutting back content acquisition costs, adding ad-supported tiers, password-sharing crackdowns, and price increases. But playing defense only goes so far.
The winners in this new game will be those who can best cost-effectively acquire qualified subscribers, minimize churn, and reduce the friction remaining between viewers and the content they seek.
Like any new strategy, the best way forward is to first look at the lessons of the past and understand how we got here.
The Netflix Revolution
In 2007, Netflix revolutionized TV viewing when it pivoted from a rent-by-mail DVD service to an on-demand streaming platform. Audiences, historically beholden to traditional TV broadcasts, now had the freedom to watch whatever, wherever, and whenever they wanted at far less than the cost of a typical pay-TV package.
This move was fueled by licensing classic linear TV shows like The Office, Friends, and Grey’s Anatomy, which legacy media companies profited from handsomely. But then in 2013 Netflix began venturing into original programming, investing heavily in critically acclaimed, well-produced content available exclusively on its platform.
What’s more, Netflix made all episodes of its series available at once, allowing viewers to stream them in their entirety without waiting for new episodes to drop. The Binge Era had begun. Taken together, these innovations would completely disrupt the ways that entertainment companies would invest in and profit from TV content.
The Media Pivot
Soon, it became clear that media companies would need to provide streaming solutions of their own to keep up with public demand rather than simply license their content to others. So, despite some uncertainty regarding the fundamentals of the streaming business model, each pushed one-by-one into the streaming future.
For instance, CBS launched CBS All Access (precursor to Paramount+) in October of 2014. NBC Universal debuted Seeso (precursor to Peacock) in January of 2016. Even the cable guys got in on the action, with HBO Now (precursor to Max) going live in April 2015 and Disney+ in November 2019.
These services and others reclaimed the rights to their own hit shows and made them largely exclusive to their own platforms. This of course had several ramifications. Each had to acquire and retain viewers directly rather than relying on carriers to do that job for them. And viewers found themselves struggling to navigate a suddenly far more complicated content discovery environment.
Thus began a period of content consolidation.
The New Reality
The cost of building their own streaming platforms, investing in original content, and competing for subscribers was ultimately unsustainable. Wall Street demanded companies prioritize profitability over growth.
As a result, legacy media companies resumed licensing some shows back to different streaming platforms, with titles appearing and disappearing from platform to platform. As the dust settles, audiences are now fragmented across a range of services. Churn between them is high as viewers dip in to watch a popular show, only to jump out once finished.
The singular universal viewing experience enjoyed during the linear TV days is gone. The new reality is that audiences are heterogeneous, composed of different people with different backgrounds, interests, and needs.
Streaming viewers today face a paradox of choice, spending more time deciding what to watch without understanding the full breadth of the content available to them, or knowing where to find where the content they want is available.
While the promise of watching “whatever you want, wherever you want, whenever you want” brought us to our current reality, limited content discoverability has left viewers frustrated and overwhelmed, rather than liberated and empowered. That confusion will only amplify as we move into a reality of multiple, staggered windows for theatrical releases.
Algorithmic recommendations are not enough to solve this problem. The answer comes in the form of good old-fashioned marketing but amplified with the tools and capabilities of today’s digital environment.
Ultimately, it’s a numbers game. Our data suggests that the more streaming services can get viewers to engage with their app, the less likely it is they will churn. This is particularly true in the early weeks and months after first signing up, as the level of activity in a user’s first month with a new app is highly correlated with a likelihood to return to that app.
Users who initiate two app sessions in their first month with a service churn less frequently (from about 44% to 37%), and those with more than eight qualified sessions have churn rates below 10%.
One way to maximize sessions is to promote content from these apps as broadly as possible, with the VIZIO Home Screen serving as a highly visible and actionable place to do so. But the Home Screen’s impact is not limited to influencing new users in their first month of app activity alone. When focused on retention of new users, the Home Screen can prove just as vital.
Across app partners, users retained in their second month of app activity were 34% - 57% likelier to have been exposed to paid Home Screen impressions for the app during that month.
Thanks to our granular real-time data, VIZIO can automatically help identify users who may churn using first-party data and serve them with impressions to minimize the risk.
If the streaming revolution splintered content and audiences into a jigsaw puzzle of scattered pieces, CTV offers the roadmap to piece it all back together again to form a clearer picture.
Now, more than ever, audience segmentation and media optimization are crucial to reach and acquire the most qualified audiences, educate existing subscribers on content offerings, and retain subscribers for as long as possible.
