Furthermore, new market entrants like AppleTV+ should try to build a customer base by offering
known or licensed content to attract consumers, and provide original content to keep them loyal
to their services. Therefore, the right mixture of original and licensed content is necessary to
increase the number of subscriptions and to maintain the customer base; however, the ratio can be
adapted according to the stage of market penetration (e.g., new entrants: offer mostly
licensed/known content; existing players: switch to more original content to differentiate
themselves from the competition).
>> To subsume all developments analyzed, there appears to be a substantial variance across the
performance of all players in how effectively they translate content spending growth into
audience growth. Especially streaming platforms are able to generate above-average audience
growth for every dollar invested in their content. Vice versa, they are more efficient in generating
audience growth through content creation and sourcing. This development might also be based on
their business model, since it is directly dependent on the paying audience and the rather high
revenues can be immediately reinvested in content creation.
In contrast, most linear channels depend on other
revenue sources, which are not as profitable as
most subscription revenues, thus impeding
significant investments in exclusive content.
Streaming players also possess further advan-
tages that help increase customer retention: They
can accurately track and analyze consumer data
via their platforms in order to create customer
profiles, which is more difficult for linear players,
since they do not receive sufficient data.
Furthermore, streaming players can make use
of the “spray and pray approach,” meaning that
a lot of new content, especially series, is
released on a regular basis and unsuccessful
formats are eliminated quickly. Thus, content
that is not favored by consumers can be
detected much faster, and preference clusters
can be created. Lastly, streaming services generally produce original content using their own studios while linear TV channels hire
external production firms, which also
impacts the costs of production.