5 Essential Insights From 2024 Frost & Sullivan Radar Report

Netflix’s Kaos Season One premiered August 29^th of this year and was cancelled less than two months later despite a positive reception. While no official reason has been given, speculation suggests that low initial viewership and high production costs were the culprit. Uproar about this sparked online debates about the fickleness with which Netflix and other streaming platforms will treat their original content. After all, why douse the flames of a good thing?

The truth is, original content is quickly becoming an essential part of most media and entertainment platforms’ core streaming strategy. And as these companies start to tighten their belts, it’s also quickly becoming a riskier investment than it was a decade ago. You could argue that Netflix give people a chance to discover Kaos before throwing in the towel. As a fan of the would-be series, I certainly hoped they might. But I was also intrigued by what this seemingly rash change of focus implied about streaming priorities for media and entertainment platforms.

Now, in light of Frost & Sullivan’s 2024 Radar Report on Online Video Platforms (OVPs) for Media and Entertainment, I think I understand a little better why positive reviews aren’t cutting it quite like they used to. With an increasingly saturated viewership, it’s likely Netflix’s concerns had less to do with who was watching and more to do with who was signing up to watch.

In this article, we’ll explore this market saturation and other insights more closely as we get to the bottom of what companies like Netflix care about most.

 

1. M&E Companies Got Used to COVID-Level Growth and Now Need to Adapt

The COVID-19 pandemic marked a turning point in video streaming across the board. For many of us, Zoom comes to mind as we reflect on the way in which the pandemic affected our working lives. However, this impact was also widely felt in the media and entertainment industry.

Video streaming was already seeing a heyday with the likes of Netflix and Hulu, but that would explode in a big way when homebound people turned even more readily to screens for recreation. According to a Nielsen study in the midst of the pandemic, global content consumption increased 60%. The Frost & Sullivan Radar Report echoes this, noting that “lockdowns spurred a massive wave of content consumption, especially through streaming.”

Naturally, the market was eager to rise to the occasion. New streaming services like ABC’s Peacock and HBO Max got their start in 2020, as longstanding brands struck while the iron was hot. Established services like Netflix and Hulu increased their original content production to capture larger portions of the public’s attention. Specifically, Netflix’s US catalog went from 13.2% original content in 2019 to 20.3% in 2020. Frost acknowledges these developments but with an important caveat that the “pandemic-induced momentum has cooled.”

Granted, the industry is continuing to grow, just at a less aggressive pace. The post-pandemic landscape is saturated with streaming platforms and content. Viewers continue to watch, but they are experiencing subscription fatigue and so are less likely to continue signing up for new services. Media and entertainment streaming platforms are coming to terms with the fact that they’ve been investing heavily in expensive infrastructure and must now either cut costs or justify them.

OVP Need: M&E companies need ways to streamline workflows for efficiency and cost-effectiveness.

 

2. Viewer Choice Drives the Need for More Unique Content and Monetization Strategies

Despite everything I asserted in the last section, I recently did the unthinkable – I signed up for a new streaming subscription. Specifically, I signed up for Peacock to get access to some Peacock originals that had caught my eye. There’s a moral here in that original content is at the heart of any given streaming platform’s value.

According to a 2024 Statista survey, just over half of respondents cited access to original content as the number one reason they signed up for a new VOD service. Clearly, quality original content or exclusive access to high-demand content are the key to converting viewers in a saturated market. Frost agrees, noting that “players in the M&E ecosystem must create and supply compelling content.”

However, they also note that the solution is not as simple as just creating more original content. Content creation is expensive and therefore difficult for streaming platforms that find themselves under tighter budgets. Therefore, hand-in-hand with unique content should be more innovative strategies for determining what content plays best and how best to monetize both new and existing assets. Additionally, as linear broadcasting loses financial momentum, more and more companies are going over-the-top (OTT) to make a fresh buck off of audiences, whether via ads, subscriptions, or pay-per-view.

OVP Need: M&E companies want flexible models with robust analytics that make it easier to measure content performance and identify opportunities for new revenue streams.

 

3. Harnessing First Party Data Can Lead to More Informed Content Creation and Viewer Engagement

This expansion on the last point really nails down what it means to strategically create content that captures viewer attention. After all, if Netflix’s recent cancellation of Kaos tells us anything, it’s not about the reviews so much as it’s about the numbers.

First-party data refers to information collected directly from customers and can include information on viewer demographics and behaviors. More specifically, viewer analytics on a piece of content could tell us how many people viewed the content, how many times they viewed it, and from where or on what type of device. This data could also tell us how long these viewers engaged with a piece of content. Did they watch the whole thing or quit partway through?

First-party data can also refer to data solicited from viewers, like direct feedback on viewer experiences and specific pieces of content. Pairing this with data gathered from analytics tools will help content providers better understand exactly what types of content are performing best and garnering the most engagement. Providers can then use this information refine their content creation or procurement strategies.

Having reliable first-party data also helps when it comes to artificial intelligence (AI) and AI-adjacent tools, according to the Frost & Sullivan Radar Report. They note that the combination of first-party data with other types of data can make it easier to take advantage of large language models (LLM), machine learning (ML), and even generative AI.

OVP Need: Here we have another compelling reason to invest in an OVP provider that has built in end-to-end analytics, including performance analytics so you can both optimize your playback performance and distinguish between dropped viewers due to performance vs. content.

 

4. Standing Out Also Means Scaling Despite Viewership Slowing

When most people think of “scale” they think of larger numbers of streams being sent out to large numbers of viewers. However, having reliably scalable streaming infrastructure is about more than just numbers. Frost acknowledges that viewership, while still increasing, is doing so at a notably slower rate than in recent years. However, they also acknowledge the importance of scaling on a variety of levels.

It’s possible your viewership numbers are holding firm, but the logistical demands of your content have increased. Maybe you’re delivering a higher quality video. Maybe you need it to be closer to real-time. Maybe you’re just sending it across larger distances and require a more extensive video content delivery network (CDN). Scaling your infrastructure means accommodating these needs as much as rising viewership. Companies should keep this in mind when considering their technical needs even in the face of a saturated market.

Frost also distinguishes between “acute dynamic scalability” and the need “win the business of large content owners and content creators.” This harkens back to my second point. Viewers don’t want a million subscriptions. They want one, two, or MAYBE three subscriptions with a million options. Now content media and entertainment content providers must scale their libraries to meet these new expectations and, in doing so, ensure they have the infrastructure to accommodate so much content in an organized and easily accessible fashion.

OVP Need: In short – servers and effective content management systems (CMS). They need to be able to store and organize their content. They also need access to a CDN that helps distribute that content across a wide geographical region.

 

5. OVPs Are Also Feeling the Pressure as They Work to Increase Their Value

Any pressure on media and entertainment streaming platforms can also be felt by the OVPs that power them. After all, the more these organizations crack down on their respective budgets, the more they have to justify the money they spend on various tools and services. As such, OVPs find themselves competing to provide affordable services with scalable costs.

With these pressures being paid forward, OVPs also find themselves trying to provide more practical value by building out greater functionality, consolidating vendors into simplified workflows, and providing new opportunities for content monetization. Such functionality, as Frost notes, includes tools for “interactivity and personalization,” both of which promise to encourage engagement and grow or sustain viewership.

However, what’s arguably of largest concern to these media and entertainment content providers is the issue of unpredictable costs. Complex streaming infrastructures may vary in cost depending on volume of streams, volume of content, and other add-ons. Back when “growth at all costs” (as Frost puts it) was the order of the day, these companies may have been happy to just roll with the invoices. However, this new world of cost control and budget scrutiny means these organizations need to be able to plan ahead, and that means knowing what they’re going to spend.

OVP Need: These OVPs themselves need to find ways to consolidate vendors for more streamlined workflows that come paired with predictable total cost of ownership (TCO). They also need to be continuously investing in new tools and features, leading innovation instead of following.

 

When It Comes to Standing Out, Innovation and Flexibility are King

These Frost & Sullivan Radar Report insights tell us that companies need OVPs that will adapt to the market by finding new ways to make workflows more efficient and cost effective while simultaneously increasing functionality and monetization opportunities. These companies also need to be highly flexible, catering to the unique needs of media and entertainment companies across a range of niches. The best OVPs are the ones leading the charge, setting the standard for high-quality video streaming infrastructure, analytics, and content management.

Learn more about what the Frost & Sullivan Radar Report has to say about strategic and growth factors for the media and entertainment industry as well as the top 10 OVPs that fit these evolving needs. Download the report for free!

In the meantime, with better ways to control costs on the back end, streaming platforms can hopefully take more risks on quality material. It won’t bring Netflix’s modern Greek epic back to the small screen, but there might be something even better around the corner.