Why Diversification Matters for Your D2C Streaming Service

Patricia Corral Alava
Updated November 11 2021
Girl selecting content - Why diversification matters for your D2C streaming service
Patricia Corral Alava
Updated November 11 2021

Growing content availability and the constant turmoil of new streaming services make it challenging for direct-to-consumer services (D2C) to get discovered by consumers. Yet, there is an excellent reward ahead for broadcasters, content owners, and rights holders ready to embrace flexibility and variety in their content offering, distribution channels, and business models to meet the full potential of their target audience and reach new global heights.    

 

This article reveals why adopting diversification strategies at all levels has become a strong accelerant for media companies’ global success and is now key to unlocking the full potential of D2C streaming services willing to entice broader audiences. 

 

Successful Growth Starts with a Varied Content Offering 

The latest binge-worthy Korean series “The Squid Game” is an excellent example of how content created for a local audience can become a global phenomenon. Barely a month and a half has passed since this k-drama was released, and it is already the #1 show watched on Netflix in 90 different countries, adding 4.4 million subscribers on its way. 

 

We live in a golden era for media and entertainment, where content owners and rights holders have reasons to think BIG. Since the American streaming giants began producing, commissioning, and promoting local shows, viewers have become open-minded to varied, well-plotted, and acted programming in any language. That is the reason why successful series such as Netflix’s latest hit are reaping tremendous success by being exposed to a global audience.  

 

As a result, the wind favors nowadays those TV services that offer a great variety of profound stories to choose from, regardless of content type or format. Content diversity is key to making a D2C service extremely attractive to a larger audience. Peter Rosberg, Head of digital and linear broadcasting at the Danish Broadcasting Corporation, explains it this way: “A platform needs pause and needs live. It needs flesh and blood. […] The strategy we are all in right now is diversification. Before we competed with local competitors, now it feels like a World Cup every single day.”   

  

Diversifying Distribution to Compete in the ‘Media World Cup’ 

We all agree that D2C services have transformed traditional mass media distribution. Yet, a strategy solely based on internal distribution means is not enough to gain the necessary scale for worldwide reach – one of the most critical challenges media companies face. In this regard, market diversification and cooperation through universal syndication look promising to complement the D2C approach.  

 

Contrary to the complex distribution chains and intermediaries that before blocked content from reaching global audiences, barriers in media distribution have blurred now. If there’s demand, supply will come. And whether a show becomes an international success essentially depends on how its rights owners diversify distribution channels.  ZEE5 streaming service, available across 197 countries, is an excellent example of how diversified distribution of local content through worldwide aggregators can successfully reach a diaspora of global target viewers, which would be very costly to engage solo.  

 

“The opportunity to be “frenemies”, having local competition but global cooperation, can be a defining force [of today’s industry].” explains Nuno Sanches, General Manager of Media and Telecom at Kaltura. “Usually, there’s been a tradition of underestimating the potential of the rest of the world when it comes to consuming local content. Still, the numbers have been a surprise for those [D2C services] who have tried.” Monetization, margins, and the ability to pay for certain content might vary significantly in different markets, so content providers must be open to expanding their presence and trying their luck unveiling new profitable revenue streams they never expected to have.

 

Family watching streaming service together - Diversification for D2C streaming services

Single Monetization Blurs in Favor of Multi-revenue 

As the video streaming market becomes crowded, media companies also realize they cannot solely rely on one form of monetization to be successful. Revenue streams are fragmenting amidst a tsunami of streaming demand, and the traditional dominance of a single-monetization approach, whether ad, subscription or transaction-based, is disappearing in favor of hybrid monetization. A recent study shows that 76% of media executives plan to diversify revenue models in 2021.  

 

Media companies and broadcasters need to give viewers the freedom and flexibility to access content on their terms. And of course, this also entails being prepared to offer different business models from a proposition and technological standpoint 

 

The transition from the traditional ad-based linear model to a multi-revenue stream is still ongoing in broadcast and media. Yet, there’s a lot to come to exploit the revenue potential of D2C services further. Hybrid business models are just one of them, but new opportunities beyond traditional monetization approaches could soon make their way. In-app e-commerce, like within social media, could be the next step to squeeze the revenue-generating possibilities of that sweet moment when users are entirely engaged and watching their favorites.  

   

“If you look at Instagram, it is completely based on advertising and monetizing many data. But these monetization mechanisms and the world of video – where eyeballs largely are– have not yet converged.”, states Sanches. “There isn’t any reason you will buy a blouse from an influencer and not from a movie actress, so these opportunities have to be explored.”   

   

Diversification  Is the Market    

D2C services have surged and established themselves as a new outlet for the consumption and distribution of video content. However, its economic weight within the global market remains limited and, generally speaking, a financially sustainable distribution and monetization strategy cannot be based on one approach alone. 

 

The art and science of diversification strategies lie in finding the right mix in content types, distribution channels, and business models that best accommodate a particular audience’s needs, regardless of the country where they watch content from. 

 

At Kaltura, we are ready to help broadcasters and media companies of all kinds develop winning diversification strategies to expand content reach with our flexible, scalable and syndication-ready Kaltura TV Platform. Contact us to understand how our Cloud TV solution can help your company reach new global heights! From then on, creativity will be your only limit to worldwide success. 

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