Industry Voices—Groch: Uncovering the marketing tactics behind the streaming wars

Netflix sign Los Gatos
(Netflix)

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Emily Groch Industry Voices

The “streaming wars” are afoot, and with hundreds of options to consider, marketing strategy is key to winning consumers’ hearts and wallets. Each provider is taking a different approach to attracting consumers, and many have made shifts in their tactics and messaging as a result of COVID-19. By looking at the contrasting marketing approaches from two SVOD leaders—Netflix and Disney+--along with the fast-rising FASTS, we can gain a better sense of what’s working and the challenges that lie ahead.

Disney+

Disney+ came out of the gate strong at launch in November 2020, bolstered by its impressive pre-launch offer strategy, which began in August 2020. With 10 million sign-ups at launch, the service had a solid foundation on which to build. Disney+ has looked to drive and maintain awareness by sustaining a level of marketing spend that dwarfs its competitors. And during the pandemic and the ensuing economic downturn, when it is arguably more important than ever for brands to maintain or increase their marketing share of voice, Disney+ captured more than 40% of the digital marketing share of voice among top streaming video competitors in the U.S.

Of course, Disney+ did more than just outspend its competitors during the COVID-19 crisis. It fortified its success by doing exactly what Disney does best – surprising and delighting consumers. As so many consumers found themselves trapped indoors, facing uncertainty about their health, jobs, and lifestyles, Disney+ didn’t simply offer an escape for them and their children with a “business-as-usual-approach.” Instead, Disney+ surprised consumers with a string of early content releases, beginning with "Frozen 2" coming to the platform three months early (complete with millions of dollars of marketing to spread the word). The strategy paid off, as the platform reached an impressive 54.5 million subscribers by early May (up from just under 29 million subs at the end of January). If Disney+ can continue to surprise and delight its subscribers, it is likely to continue attracting new users—and also to drive loyalty.

Netflix

Unlike newbie Disney+’s generous helping of delight during COVID-19, streaming incumbent Netflix refrained from surprise content releases and heightened marketing spend, instead banking on widespread brand recognition and its wealth of content to attract consumers who had more time for streaming. Netflix benefited from its regular investment in a wide, varied, and sometimes kooky content library when Tiger King unexpectedly became just what shut-in consumers wanted to see. Its success could not be attributed to marketing for the title but, rather, its surprise virality.

One key marketing change that we did observe from Netflix in response to the pandemic, however, was its ramped up winback activity. In March, it was sending an average of four winback emails to formers subs, compared to an average of 1-2 per month earlier. In addition to heightened winback, Netflix continued to test new engagement marketing approaches to build loyalty and preserve its base. For instance, it started sending proactive emails to customers featuring the week’s “Top Ten” titles in their country, which reflects the new “Top Ten” feature in the platform. It also started sending new emails to encourage subscribers to re-engage with content they’d already seen. Engagement and loyalty tactics will remain vital for Netflix as it approaches market saturation.

FASTS

While there are plenty of new subscription streaming services looking to give Netflix and Disney+ a run for their money in 2020 and beyond, we should not overlook competitive pressure from free, ad-supported services, many of which have been recently purchased by larger media companies with big marketing budgets. Two key players in particular accelerated their marketing spend during the COVID-19 crisis: Pluto TV and Tubi TV. Pluto launched a new digital marketing campaign in response to the pandemic, while Tubi TV flexed its newly expanded marketing muscle (it was acquired by Fox in March) with high-budget commercials that reinforced its key messages about its differences from Netflix, including that it’s free. FASTS were already poised for growth, as Comperemedia identified in its 2020 Telecom & Media Marketing Trend “Streaming Free-for-all,” but COVID-19 has expanded the opportunity for FASTS. The pandemic has created more time for streaming, tightened household budgets, and production gaps in the original content that makes SVODs so appealing. Many of these effects will persist as we move into the “next normal.” As such, we can expect marketing—and usage—to increase across FASTS in the months ahead.

Interested in more data on this subject, as well as more research and consumer insights on the broader streaming television industry? Please register for our virtual StreamTV Summer Research Summit on 6/29-6/30 here, where a collection of top industry analysts will be releasing a treasure trove of exclusive data and forecasts across a wide variety of leading trends in OTT. It's a one of a kind event you won't want to miss. We hope to see you there.

Emily Groch is Comperemedia’s Director of Insights, Telecommunications. She pairs her deep knowledge of marketing within the telecommunications industry with Mintel’s consumer research, trends, and competitive marketing intelligence to build timely, meaningful stories for Mintel and Comperemedia telecom clients. Emily travels throughout the US and Canada to present industry marketing trends and insights to major TV, Internet, and wireless service providers, and their advertising agencies.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceVideo staff. They do not represent the opinions of FierceVideo.

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