Who will be the winners in video as the walled gardens of entertainment recede?

Protectionist measures that kept the streaming wars alive are being wound back. Licenced content is back in vogue, despite streaming TV being built on exclusive shows. Competitive tensions are cooling as entertainment looks to bundle services to combat the cost-of-living crisis, and super aggregators are making it easier for consumers to switch between streaming services like linear TV channels. So, who triumphs in this frictionless world?

This is a good thing for consumers who value simplicity and ease of access to content. For streaming TV services, the risks and rewards are more finely balanced. The strategy shifts outlined above have the potential to diminish in-app engagement time. Fewer new shows could cause consumers to churn once they have exhausted the back catalogue. Bundled services may boost sign ups, but at a cost to revenue per subscriber. Improved search technology on super aggregators will cut the time consumers spend looking for shows compared to the time spent watching them. Yet, it will also make it easier for viewers to switch to a rival service. While streaming TV can take some comfort from this landscape applying to all, the bigger shake up comes when factoring in social video.  

YouTube’s disruptive play

Take YouTube Primetime Channels, for example. In October 2023, YouTube announced that its Channels business, which hosts third-party streaming platforms such as Paramount+ and Lionsgate+, would expand into the UK following launches in the US and Germany. YouTube’s attempt to recreate cable TV in the streaming era is significant because of its key role in video consumption. Over two thirds of consumers watched at least one video on YouTube each week in Q3 2023. Netflix consumption was around ten percentage point slower over the same period. While streaming TV services must pay to access this significant reach, it is still reportedly less than Amazon Prime Channels. Prime Video takes a 20% to 50% cut of each subscription sold by a third-party service through its Channels business, according to The Economist. YouTube’s Primetime Channels may be playing catch up with Amazon, but the ability to leverage the power of both its search engine and pre-existing social video content is a significant advantage. If YouTube decides to do so, then expect the walled gardens of entertainment to recede even further.

Here is why. Up until now, YouTube has been the de facto home of video fandom. The Star Wars franchise may be found on Disney+, but the fan channels – like Star Wars Explained with 798,000 subscribers – are found on YouTube. By bringing premium content and social video under one roof, YouTube can help narrow the gap between content producers and the fans. There is a sweet spot to be found for avid fans who can watch a premium title followed by videos created by the fandom community. Forging interactive entertainment such as watch parties is also simpler with YouTube’s livestreaming service. There are already early signs of how YouTube could enforce this engagement feedback loop. YouTube’s Paramount+ channel not only hosts movies and shows, but Paramount’s long-form YouTube videos, Shorts, and an Instagram-style pictures feed. Each Shorts video comes with a sign-up button so viewers can click through and pay for Paramount+ if they want the premium content. By narrowing the gap between streaming TV content and social video content, YouTube can offer a wholistic experience for entertainment fans. It can boost in app engagement time because premium consumption and fan video consumption is happening all in one place.

Ownership of fan engagement

However, the downside for streaming TV providers is that they will not own this behaviour. One-way streaming TV services could do this is by evolving their experiences beyond mere libraries of content and into fandom hubs with multiple touch points of engagement spanning premium content, creator content, gaming, and audio. This approach will help boost engagement within the walls of their own service by giving consumers more reasons to spend time there– even if they could never recreate the level of fandom engagement found on YouTube. The other option is to remove the friction between premium and social video by integrating services directly into YouTube through Primetime Channels. As discussed above, this allows streaming TV services to tap into a vast network of fans who can be directly fed by the search algorithm towards their premium content. However, it is YouTube not the streaming TV services who will ultimately reap the benefits from the increase in-app engagement time. Afterall, by creating a wholistic fandom experience on YouTube, fans and consumers have fewer reasons to open the same streaming TV app outside of the YouTube ecosystem. It becomes a vanilla experience with fewer reasons to engage.

There is also a wider question here of the competition for time spent. By dismantling the walls between streaming TV and social video, these two areas of video will now compete more directly for consumer attention within a common ecosystem like YouTube. This could pose a challenge for premium video content because it is not designed for algorithmic discovery in the same way as creator content. While YouTube will find ways to window premium content on the homepage so it is seen, the real value will come from recommendations made after a consumer has already watched a video.

Some streaming TV bosses may simply shrug their shoulders if it leads to more subscribers in the long run, even if it means emboldening an industry rival in the process. For YouTube, Primetime Channels represents a significant opportunity to become a powerful player in connected TV and secure its position as the video industry’s “everything app”. Such a strategy allows it to forego the significant cost of making movie and TV content, while enabling it to extract revenue from streaming TV services that are shouldering those production costs. However, the extent of Primetime Channels success will come down to how adept it is at forging fandom hubs around premium TV and movie content.