Picture this: you've just splurged on a fancy new TV, but you don't have a satellite dish. Well, guess what? Who needs one when you've got apps like YouTube, Netflix, Spotify, and Disney+ catering to all your entertainment needs?
Let's talk about the incredible world of OTT, or "over-the-top" streaming services. OTT platforms have revolutionized how we enjoy media content by delivering it straight to our screens through the power of the internet. Whether you're in the mood for some Spotify tunes or in the mood to binge-watch Grey’s Anatomy, these platforms have given us the power to choose what we want to watch and when we want to watch it!
In today's fast-paced world, with all the technological advancements and unexpected situations like the COVID-19 pandemic, OTT has become our go-to source of entertainment. When movie theaters shut down, we found solace in the comfort of our own homes, devouring the latest movies and binge-worthy TV shows through streaming platforms. It's like having a cinema experience right at our fingertips, minus the hassle of leaving the house.
The Streaming Wars
But the financial success of these platforms is critically dependent on strong levels of customer engagement. The number of competitors in the industry and the rapid fluctuations in consumer preferences can significantly affect customer engagement. Poor engagement directly and negatively impacts a company's overall performance.
So, how do OTT companies get around these obstacles to win the streaming war? What effective media management strategies do they employ to mitigate some of the challenges they face?
The short answer is that by focusing on customer retention, these companies can maintain a competitive advantage and maintain customer loyalty. To do so, these companies often focus on catering to their niche audience and applying audience- centered tactics. Another secret to their success is their employment of a modern human relations approach.
Catering to the OTT Niche Audience: Audience-Centered Tactics:
Over-the-top (OTT) media companies adopt various strategies to effectively cater to their niche audience. By understanding the specific needs and requirements of their audience, OTT companies develop or curate content to meet these needs. This approach helps them broaden their customer base, increase engagement levels, and sustain adequate retention levels.
One main example is Disney's approach for audience retention. They often recycle their content and create familiar frames to provide a nostalgic experience for their audiences. This creates a feeling of trust in their viewers, fostering consumer loyalty, which explains why Disney keeps on releasing new films that are basically a renovated version of our childhood films.
Disney, Netflix, and other subscription-based business models use an audience-based approach to maintain effective financial performance. By catering to different consumer segments and maintaining high levels of consumer retention, they addresses the demands and preferences of its niche audience. These strategies not only lead to the growth of the OTT market but also demonstrate the importance of modern media management in addressing consumer engagement challenges. By continuously adapting to the ever-changing preferences and needs of their niche audience, OTT companies can thrive in the competitive landscape of the media industry, ensuring strong customer loyalty and financial success.
OTT media companies also employ audience-centered strategies such as user-centric fragmentation which allows the company to leverage content fragmentation to maximize its capacity to satisfy specific needs and preferences. The user-centric approach employs technological innovation to optimize Netflix’s capacity to cater to individual consumer wants. Precisely, the user-centric fragmentation approach constitutes the use of algorithms that is designed to organize and suggest various content based on specific consumer traits that stipulate their preferences (Pajkovic, 2022). In particular, the algorithms utilize customer specific information including their search history and the type of movies the user often watches. The algorithm then combines and consolidates the different data sources to develop a feasible overview of a specific customer’s specific preferences. Once a base line is established on the specific customer’s preferences, the algorithm compiles similar or related content that the customer is likely to enjoy. This user-centric fragmentation approach allows Netflix to leverage content fragmentation to optimize its capacity to engage more consumers by catering to their specific needs and requirements. As such, the company creates an opportunity for growth by maximizing on its media content delivery.
A Modern Human Relations Approach
Netflix also leverages a modern management approach to optimize its engagement by optimizing its employees’ capacity and resourcefulness (read more). Netflix has invested in creating an innovative human relation approach and a cooperative culture that value its employee’s needs. The company pioneered various innovative human resource management strategies such as a provision that enables employees play a direct role in determining the appropriate vacation time (McCord, 2014). Precisely, the culture sustains increased motivation levels among the employees by ensuring taking into consideration their opinions and suggestions. It ensures that the employees play a role in their own management which sustains increased satisfaction levels. the talent management strategy also provided the employees with a level of autonomy that positively influenced their productivity levels. In so doing, the company, optimizes the employee’s commitment to the company’s operational efficacy which includes effective consumer engagement levels.
In the following video, we can explore Netflix's growing journey. This video also reveals some specific challenges it and some other OTT Media companies are facing (due to competition), and how they are dealing with them during the evolution of the streaming war.
Conclusion
OTT media service providers such as Netflix operate in an environment that is highly dependent on effective customer engagement levels to sustain adequate financial performance. The issue of fluctuating customer engagement is exacerbated by the number of competitors available in the industry as well as changes in consumer preferences that dictate retention levels. To get round these adversities and challenges, OTT media companies employ various innovative approaches designed to mitigate these obstacles while increasing engagement levels.
Bibliography
Liu, X. (2023). Analysis of Netflix’s strategy and Innovation in a global context based on BCG matrix. BCP Business & Management, 42, 168–173. https://doi.org/10.54691/bcpbm.v42i.4577
McCord, P. (2014). How netflix reinvented HR. Harvard Business Review. https://hbr.org/2014/01/how-netflix-reinvented-hr
Nator, K. (2019, July 1). Consumer engagement remains challenging for Ott Players in Asia. S&P Global Homepage. https://www.spglobal.com/marketintelligence/en/news-insights/blog/consumer-engagement-remains-challenging-for-ott-players-in-asia
Pajkovic, N. (2022). Algorithms and taste-making: Exposing the Netflix Recommender System's operational logics. Convergence, 28(1), 214-235. https://doi.org/10.1177/13548565211014464
Park, S., & Kwon, Y. (2019). Research on the Relationship between the Growth of OTT Service Market and the Change in the Structure of the Pay-TV Market.
Tang, W., & Wei, M. (2023). Streaming media business strategies and audience-centered practices: a comparative study of Netflix and Tencent Video. Online Media and Global Communication, 2(1), 3-24. https://doi.org/10.1515/omgc-2022-0061