M+E Daily

The growing number of competing, over-the-top (OTT) streaming services, inflation and consumer confusion are all presenting challenges to Netflix and other companies in the sector, according to Jeni Benhain, director of data solutions at Whip Media.

“I think we are in maybe a little bit of a wild, wild west, or a new sort of shift in consumer thinking, especially with inflation and these announced price increases of services,” she said 17th Aug during a panel discussion on US streaming video trends that was part of an online conference presented by OTT. X and BB Media.

“I do think we’re entering a period where consumers are going to be a bit more savvy and just cost conscious,” she said. “And really this is where the value proposition is going to come into play because they’re going to, I think, have to start or they are already really assessing” the available streaming services and saying, “OK, who has the content that I want to see, both originals and library?”

After all, she said, there is a “fine balance” between what the price point of a streaming service is and what one’s “willingness to tolerate ads versus ad-free” options is. Consumers “sift through” the options now to decide whether they prefer to pay for a service to avoid ads or deal with the ads to save money, she noted.

She predicted “there will be a lot of … evaluation and experimentation among consumers for a while because the options are expanding of course” among the ad-supported video on demand (AVOD) and free ad-supported streaming TV (FAST) services competing for consumer dollars.

Additionally, she said: “There’s probably even a lot of consumer confusion, I think. Some, like the average consumer, might not even know if [they’re] watching or consuming a FAST channel if it’s now embedded into your cable service.”

The challenges are being reflected by Netflix losing subscribers in recent months. What this means is that “Netflix has reached sort of a saturation point where pretty much everybody that wants Netflix under the current terms has it” already, said Colin Dixon, founder and chief analyst of nScreenMedia, who noted he’s been an analyst of this market since 2005. “They were bound to reach this point at some point,” he said of Netflix.

“That’s why you now see them entertaining advertising – because they need a new formula if they want to continue to grow and add new subscribers,” according to Dixon.

And that has ramifications for the entire sector, he said, explaining: “What it means for the industry in general is it means that the industry’s maturing. There’s no question about that. It is still growing overall but growth has definitely slowed. And the emphasis now has switched to a lot of advertising-supported services, particularly free advertising-supported services,” which he said are “growing much faster now” than subscription video on demand (SVOD).

Bruce Eisen, an attorney who runs the law firm Eisen Law, specialising in media, entertainment and technology legal issues, moderated the panel discussion, which also featured Michael Thomson, VP of global operations at BBC Studios, and Sarah Henschel, principal analyst, media at Omdia.