My last column discussed the need for streaming services to up their game in terms of growing their revenue to meet investor expectations, in light of steep falloffs of new subscribers and millions of existing customers jumping ship. Where can streaming companies find this additional revenue?
Companies need to begin exploring new ways to monetize existing subscribers, beyond the obvious ad revenue. I hold that two creative options can be found in augmenting product placement and in harnessing the metaverse. Last time we ran through some innovative approaches to product placement; in this follow-up piece, we’ll move on to how streaming services can make the most of the metaverse.
While the concept of product placement is familiar to media outlets, the metaverse is still quite nascent—despite dominating headlines a few months ago. And even though interest in the metaverse has cooled recently, it remains a concept that can be valuable to streaming providers that think proactively about how to use it.
We’re already seeing robust growth of interactive customer experiences—from movie screenings in video game universes such as Fortnite, to the TikTok live stream of The Weekend concert that drew 2 million viewers, to BigScreen’s $5 virtual move screenings.
Streaming services have yet to fully capitalize on these opportunities—but they should. An important enabler are non-fungible tokens (NFTs). While the stalling sales of NFTs has stirred debate about NFTs’ future, NFTs still hold significant promise for companies that don’t simply sell them, but use them to create new forms of value. In the case of streamers, NFTs can play a big role in providers’ ability to monetize their top-tier content at the IP level (think digital merchandising). The key to success in streaming NFTs will be to create compelling, exclusive customer experiences. These could include early access to content releases, private access to unique content, interactions with content creators (e.g., actors), or backstage passes for live concerts. With this approach, streaming can better replicate the big blockbuster release experience by having ticketed events where content creators join for a live Q&A or discussion.
The annual Sundance Film Festival this year applied this concept to give a twist to what’s become the now-routine online workshops, seminars, and meetings. Attendees could spring for an additional $50 or as much as $750 and immersively attend the event—including parties, panel discussions, and moving screenings in a VR cinema—via an Oculus Quest 2 headset. There’s no reason streamers can’t offer the same experiences.
Streamers also could use NFTs to create a community where subscribers can sit with their avatar and chat with other fans of the same IP. Ted Lasso superfan group, anyone?
The point is that while the metaverse is still in its infancy and evolving, streamers need to keep thinking about ways they can adapt their service to the metaverse. That’s especially important as our consumer experiences continue to move online and become ever-more sophisticated.
Importantly, the technologies already exist to make these new models happen, and some companies already have some of the necessary pieces in place—the IP, the tools, commerce capabilities, or physical products. The key is stitching them all together, either in house or via ecosystem partners, to deliver the kind of seamless experience that will entertain and entice consumers and keep them coming back for more. The first company that figures out how to do it will have a substantial head start—and may be difficult, if not impossible, to catch.
The world of streaming runs on innovation as its fuel—it’s highly likely that, along with taking creative new approaches to product placement and monetizing the metaverse, many other new revenue generating opportunities will come into line for these companies. Necessity is the mother of invention—it’s a fact that as streamers continue to suffer stagnant and declining growth in subscribers, they’ll be looking for the next big idea. And when they find it, they’ll have to jump on it.
Mike Chapman is a Partner and Americas Media Lead in the Communications, Media and Technology (CMT) practice of Kearney, a global strategy and management consulting firm. Mike would like to thank his colleagues at Kearney, Michael Felice, Amro Messaoudi and Paul Weichselbaum, for their contributions to this article. He can be reached at [email protected].
"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 necessarily represent the opinions of the editorial board.