Study: Turning content dollars into audience - Page 21


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.