Redefining Entertainment: Long-Video Streaming Services

Jenna Walesh
BCOM 214
October 29, 2023
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Table of Contents
Introduction............................................................................................................................1
Industry Landscape.................................................................................................................1
Impact of the Coronavirus Pandemic................................................................................................1
Increasing Profitability.....................................................................................................................2
Current Trends........................................................................................................................2
Moving Away from Cable.................................................................................................................2
Differentiation Among Competitors..................................................................................................3
Target Market.........................................................................................................................3
Millennials and Gen X......................................................................................................................3
Income Bracket................................................................................................................................3
Competitive Environment........................................................................................................4
High Level of Competition................................................................................................................4
Key Players......................................................................................................................................4
Conclusion...............................................................................................................................4
References..............................................................................................................................5

Introduction

After reviewing your request, I have gathered information on the success of the long-video
streaming service industry and its investment opportunities. Over the past decade the
entertainment industry has been transformed by technology, that has caused a major shift in
the way we consume content causing the rise in video streaming services. I recommend that
you urge your clients to invest in the video streaming service industry, as it will have very
promising results. This report will identify the long-video streaming service industry’s success in
landscape, current trends, target market, and competitive environment.

Industry Landscape

Impact of the Coronavirus Pandemic

As a result of the Coronavirus Pandemic beginning in 2020, the long video streaming service
industry experienced an increase in revenue growth. Demonstrated in Figure 1 from Statista,
revenue growth hit a peak in 2020, with a 28.6% revenue growth because of the demand from
consumers at home desperate for entertainment. In comparison to 2019, this was a 7.6%
increase. Although this percentage growth has declined, revenue is predicted to continue to
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increase in the upcoming years. Ultimately, streaming services have shown their potential in
2020, and continue to remain popular with revenue continuing to increase in the future.
Figure 1
Revenue Growth: Video Streaming in the US

(Source: https://www.statista.com/outlook/dmo/digital-media/video-on-demand/video-
streaming-svod/united-states)

Increasing Profitability
In terms of profitability, streaming services have struggled from the costs of production,
however services such as Netflix have found ways to increase their profitability. Specifically,
according to Whitten, Netflix added an ad-tier plan to incentivize consumers to purchase a
cheaper subscription compared to their basic plan. This ad-based product caused membership
to grow by nearly 70%. As well, in terms of profitability, Netflix’s expects in 2023 to have a 20%
operating margin and in 2024 a 22% operating margin (Whitten, 2023). Although production
costs may be growing for streaming services, companies have found ways to increase profit to
remain a successful industry.

Current Trends

Moving Away from Cable

As the video streaming service industry gains popularity, there has been an increase in
consumers moving away from traditional cable television. Specifically, some consumers strictly
use their cable for the “television channel that carry live sports”. However, as streaming
services have been able to acquire the right to stream sports, “the bigger threat they are to
cable” (O’Donnell, 2022). Not only do video streaming services have hundreds of television
shows at the click of a button, with the addition of live sports, consumers have not found a
need for cable anymore.
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Differentiation Among Competitors

With a gain in popularity of this industry, there has been an increase in competitors, causing
companies to take initiative to differentiate their services from one another. One way of doing
so is by producing original content which “piques [consumer interests through] …
announcements of new movies and tv shows” creating an incentive for consumers to buy a
subscription as the only place to watch the content is on their platform (Stoll, n.d.).
Additionally, home internet services are now creating bundles with streaming services “to win
over and retain new customers” while also giving them additional benefits (O’Donnell, 2022).
Ultimately, the newest trends that have continued to arrive in the video streaming service
industry are because of companies attempting to differentiate themselves from one another
causing an increase in streaming service subscriptions and entertainment available to
consumers.

Target Market

Millennials and Gen X

The majority of video streaming service consumers consists of individuals ages 20 to 49 due to
their buying habits. The entirety of the Millennial generation & majority of Gen X “make up
almost half of the consumer base” and are the largest market for video streaming services (Bari,
2023, Major Markets). This is because this generation buys for convenience and often does not
consider the prices of the video streaming service(s) they purchase, as “the average American
spends $39 per month of streaming subscriptions” (Glover, 2023). Essentially, this consumer
base is looking for the easiest options, regardless of cost causing individuals ages 20 to 49 to be
the target market for long video streaming services.

Income Bracket
A major advantage of the streaming service industry is that consumers range across all income
brackets. Figure 2 below from Statista demonstrates the percentage of consumers in video
streaming services based on income in 2021. This chart demonstrates that although high
income individuals consist of 41% of streaming service consumers, medium and low income
each hold nearly 30% of the consumers. Therefore, income bracket does not significantly
impact whether an individual is a streaming service consumer or not, and the long video
streaming service industry is available and consumed by all.

Figure 2
Demographics: Users by Income
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(Source: https://www.statista.com/outlook/dmo/digital-media/video-on-demand/video-
streaming-svod/united-states )

Competitive Environment

High Level of Competition

As the long video streaming service industry has become increasingly popular among
consumers, there has been an additional increase in platforms available to consumers causing
intense competition. Specifically, this gain in popularity has led to “fierce competition” among
platforms as the number of companies joining the industry continues to increase rapidly (Bari,
2023, Executive Summary). As companies have begun to jump on the trend of streaming
services and joined the market, competition has grown to be extremely competitive.

Key Players
Although the number of platforms in the long video streaming service industry has continued to
expand, many big-name companies continue to remain key players. One of the biggest names
in the video streaming service industry is Netflix as it has “been the market leader for more
than a decade”. Being available in over 190 countries and having 231M+ subscribers, Netflix
continues to experience growth in revenue and subscriptions (Frost & Sullivan, 2023). Another
big name is Amazon which offers the prime package that bundles “multiple services including
video and music streaming, as well as free package delivery” (Frost & Sullivan, 2023). Doing this
has caused an expansion in Amazon’s overall customer base and success. Although, new
platforms continue to emerge, consumers continue to gravitate to these key players as they are
the backbone of the streaming services industry.

Conclusion

This report outlined the long video streaming service industry’s landscape, current trends,
target market, and competitive environment. As entertainment continues to be redefined as a
result of technological advancements, video streaming has experienced positive growth and is
predicted to continue to do so in the future. With entertainment being available to consumers
by simply just a click of a button, streaming services have revolutionized the way we consume
content, and it continues to shape the future of the entertainment industry as a whole.
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References

Bari, S (2023, October) IBISWorld Industry Report US OD6197. Video Streaming Services in the
US. Retrieved from IBISWorld database.

Frost & Sullivan. (2023, May 23). Frost Radar™: Video on Demand (VOD) Market.
https://store-frost-com.ezproxy3.library.arizona.edu/wip/K8A4-01-00-00-00

Glover, E. (2023, March 9). Nearly 50% Of People Pay For Streaming Services They Don't Use,
According To New Forbes Survey (S. Allen, Ed.). Forbes. Retrieved October 8, 2023, from
https://www.forbes.com/home-improvement/internet/streaming-

O'Donnell, F. (2022). Streaming Video [PowerPoint slides]. Mintel. Retrieved October 8, 2023,
from https://reports-mintel-com.ezproxy3.library.arizona.edu/display/1100415/?fromS
earch=%3Ffreetext%3DStreaming%2520Services%26resultPosition%3D5

Stoll, J. (n.d.). Streaming Wars: The Value Of Original Content To Streaming Service [PowerPoint
slides]. Statista. Retrieved October 8, 2023, from file:///Users/jennawalesh/Downloads/
study_id89572_streaming-wars-the-value-of-original-content-to-streaming-services.pdf

Video streaming (SVOD) - US: Statista market forecast. Statista. (n.d.). https://www.statista.com
/outlook/dmo/digital-media/video-on-demand/video-streaming-svod/united-states

Whitten, S. (2023, October 19). Netflix Profit Beats Expectations, AD-Tier Subscriptions Rise.
CNBC. https://www.cnbc.com/2023/10/18/netflix-nflx-earnings-q3-2023.html#:~:text=N
et%20income%20came%20in%20at,and%20claw%20to%20become
%20profitable.&text=The%20company’s%20dominance%20shows%20in%20its
%20pricing%20power.