What the Shift to Direct-to-Consumer Entertainment Means for Content Producers

In the fall of 2020, Disney announced that they were reorganizing to shift their focus to their booming direct-to-consumer business. With a captive audience of over 100 million subscribers on their Disney+ platform, it’s no wonder this area of the business is being prioritized. 

And Disney isn’t alone. As streaming roots itself more firmly in the entertainment landscape, other major industry players are shifting to direct-to-consumer models, as well. As a result, the way movies are being created, produced, distributed, and marketed is evolving. 

While the direct-to-consumer entertainment model makes more content more accessible to more consumers at a lower price, it creates a sense of uncertainty for theaters, long the backbone of the entertainment industry, and creates new challenges for content producers. In this blog, we’ll examine how four changes spurred by the shift to direct-to-consumer entertainment models impact content producers. 

1. More content than ever before. 

Undoubtedly one of the biggest wins for today’s viewers is the sheer quantity of content available for them to watch. Content available to viewers is no longer limited to the titles at the local theater or whatever’s on TV. Now, the options are nearly endless. The biggest obstacle for today’s consumers is perhaps the volume of content thumbnails they need to sift through along their journey to finding something to watch. 

This creates unique challenges for today’s studio content production and acquisition teams. For one, they need to keep up with consumers’ insatiable appetite for new content. Streaming platforms must accept that if consumers don’t find something to watch on their platform, they’ll turn elsewhere. And that could end up costing them valuable monthly subscribers or ad dollars. A recent survey from PricewaterhouseCoopers found that 13% of consumers noted a lack of content selection as a motivator for canceling their streaming subscription. Another 11% noted new content not being refreshed enough as their reason for unsubscribing. 

For smaller streaming platforms, this is a tough pill to swallow. Netflix plans to release over 100 original titles in 2021 alone to meet this demand and keep viewers’ eyes from wandering elsewhere. Content producers must churn out a high quantity and quality of content to keep their members engaged and subscribed. 

2. Lower production budgets per title. 

The focus is shifting away from creating a few big-budget blockbusters a year to generate revenue at the box office. At the same time, it’s shifting towards creating as much content as possible to appeal to subscribers. Ultimately, production budgets for each title will decrease on average over time as a result. 

Longtime industry journalist and home entertainment expert Thomas K. Arnold explained during our January 2020 webinar about the state of the entertainment industry, “The economic realities of streaming don’t justify a bunch of $200 million movies if you’re going to watch everything for $10 or $15 a month, all-you-can-watch on a streaming service.”

Studios are less apt to spend millions of dollars on a film that will only generate revenue from member subscriptions alongside hundreds or thousands of other titles. The major Hollywood blockbuster films of times past may still exist, but the majority of films will be created instead for the small screen. This completely transforms the primary way films bring in revenue for major studios. This means that studios can no longer rely on big-budget special effects to draw in viewers. 

Arnold adds, “You don’t need to have these big spectacles if you’ve got most of these movies getting the majority of their play on a small screen.”

What they lack in spectacles, the average title will need to make up for in its story. We’ll likely see studios become more thoughtful with their content and where they’re spending money on each title as a result. Storylines will need to be interesting enough to captivate today’s distracted viewer who has the option to shut something off and switch to the next title with the click of a button. 

3. Consumer research is essential when streaming services own the customer experience. 

With a subscription-based entertainment model, the consumer holds the power to make or break a streaming platform. That being said, it’s important for streaming services to listen to their consumers as much as possible. This can be done through formal and informal consumer research to create the optimal customer experience. Consumer choices and affinity will ultimately shape who comes out of the “streaming wars” victorious. 

Providing a massive library of content has been only one of Netflix’s success factors. Another has been their use of consumer research and their extensive pool of consumer data to create the best possible viewer experience, thus keeping audiences entertained and retaining viewers on their platform. 

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For example, Netflix used consumer data from its millions of viewers to bet big on Adam Sandler movies. In 2014, they ordered four films from Sandler’s Happy Madison Productions. In 2017, they re-upped the deal for another four films. Netflix Chief Content Officer Ted Sarandos explains the move simply: “People love Adam’s films on Netflix and often watch them again and again.” In fact, Sandler’s Murder Mystery, released in 2019, was Netflix’s most-watched film of the year with more than 83 million households tuning in in the first four weeks of its release.

Content producers no longer need to wonder what will resonate with audiences before it hits their screens. Instead, they need to look critically at the viewer data available to them to identify patterns. What’s more, technology today makes conducting consumer research more efficient and effective than ever before, providing valuable consumer insights for meaningful change. When your viewers have the power to cancel their subscription with one click, it’s critical to know what makes them tick and adjust content accordingly. 

4. Content success directly relates to brand success. 

While viewers will never watch an entire library of content on a platform — which would be four years of continuous viewing if we’re talking about Netflix — their satisfaction with the titles they do choose to watch directly impacts their choice to stay subscribed. 

Listening to consumers and conducting extensive consumer research is just one way to ensure success. Content is king and good content that keeps consumers engaged will keep them around. Even data-intensive direct-to-consumer brands like Netflix formulate a few flops. But the key is to provide enough good content for consumers to keep them from turning off their subscriptions. At a time when subscriber churn is particularly high, platforms may only have one shot at showing consumers why their platform is worth their time and money. 

The shift to direct-to-consumer entertainment means streaming platforms are beginning to mimic cable networks instead of catch-all content libraries. For this reason, platform branding will take a more prominent role in the streaming wars in times to come. Brand loyalty will become a greater factor in determining subscriber loyalty as these distinct platform brand images take form. 

Take the guesswork out of viewer satisfaction

Here at Invoke, we have watched innovation and the pandemic reshape the entertainment industry’s norms. Today, it’s no longer enough to provide good content — only great content will stand out above the noise. Ensure you’re giving viewers the great content they crave. Test on real audiences and gather real-time insights about what your viewers like and dislike about your content and why. Our platform makes it possible. 

Interested in learning more and testing Invoke’s platform out for yourself? Request a demo from our experienced team.

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