What business models are streaming platforms moving towards?

“We are no longer in a situation of growth for everyone as was the case during the health crisis. Companies are therefore forced to change their business model and to develop their offers”. This is what Michael Mansard, director of strategy for the subscription management company Zuora, observed for the streaming sector last year. Yet today, despite the saturation of the market and the first signs of decline appearing in 2022, the streaming market continues to grow. “It’s quite surprising and I didn’t expect it, but we are finally identifying some growth for the sector”he admits.

According to Zuora data, video streaming revenue actually increased by 6% in 2023, thanks in particular to good levels of retention (with a lower churn rate of 1.3%) and acquisition (+2.39%). Netflix, for example, went from 230 million subscribers in 2022 to 260 million at the end of 2023. And this momentum continues: the platform now has just over 280 million. On the other hand, the average revenue per user (ARPU) for the entire sector also fell (-1.7%).Streaming players have managed to better retain their customers and attract new ones but have had to concede a price war effect”summarizes Zuora’s strategy director.

Towards a “YouTubisation” of streaming platforms?

This increase in the number of subscribers and this slight drop in ARPU can be explained in particular by the war on shared accounts that began a little over a year ago and by the widespread appearance of cheaper offers with advertising (notably offered by Netflix and Disney+). “By increasingly focusing on advertising revenue, streaming players are recreating a model that already existed and that they initially did not want to reproduce. We are experiencing a ‘YouTubisation’ of streaming platforms.”observe Michael Mansard.

Another trend identified: the expansion of services offered by streaming players. Many platforms have, in fact, decided to move away from the 100% video framework by gradually integrating new features into their catalog. Illustration with Netflix: after investing in the video game sector in 2022, the streaming giant now has a portfolio of around a hundred games, including GTA: to the trilogy, Assassin’s Creed or Monument Valley.

Dazn: the example of the future economic model of streaming platforms?

The prize for this diversification, however, goes to the English platform Dazn (also called “the Netflix of sport”). Sports betting, video games dedicated to sport, online store offering sports derivative products, ticketing… In parallel with the broadcasting of sporting events, Dazn has created an entire ecosystem around sport. “I think the streaming market is moving towards this model because the platforms have every interest in making their licenses profitable.”predicts the subscription services specialist. Enough to find new sources of income and reverse the negative dynamics relating to the average revenue per customer identified for the sector.

In a somewhat different register, Netflix will soon follow in Dazn’s footsteps by inaugurating, starting next year, its first “Netflix Houses”: immersive spaces (shops, restaurants, entertainment rooms) in the image of its most iconic universes such as The Bridgerton Chronicle, The Money Heist or Squid Game.

Finally, after a first successful phase of personalization of the user experience through the suggestion of individualized content (80% of programs viewed today appear on the basis of recommendations), the streaming market should, according to Michael Mansard, gradually give way to a personalization of offers. “Today, the different subscription packages offered are identical for all users. I think that we will see more and more ‘à la carte’ offers suggested according to the consumer profile”he predicts.