Real-time Interactivity: the Missing Monetization Piece for Emerging Streaming Businesses
The streaming business is more competitive than ever. Amid a proliferation of content and viewing devices, battling for consumer attention is tough. Keeping it is even harder. In a market where profitability and engagement are key, real-time interactivity has emerged as a streaming powerplay that can turn passive viewers into active participants and revenue game-changers. But here’s the issue: the cost barriers associated with delivering high-quality video are preventing many emerging streaming companies from experimenting with interactivity.
Rethinking the status quo: Why it’s time to find your own monetization play
High operational costs, market saturation, and the constant need for fresh and original content strategies make it difficult for new entrants to carve out a niche or gain a foothold. Parks Associates estimated subscriber churn reached almost 50% at the end of last year. It’s within this context that folks are beginning to question whether traditional monetization strategies such as advertising and subscriptions are enough to move the needle, particularly for market disruptors vying for their slice of the action.
Relying solely on ad-based business models presents several challenges. Advertisers are demanding higher engagement and measurable ROI, while viewers are growing weary of excessive ads interrupting their content consumption experience. Additionally, ad revenues are susceptible to market fluctuations and changes in viewer behavior, making them an unstable foundation for long-term profitability. For new entrants in the streaming market, balancing the need for ad revenue and providing an engaging, high-quality viewing experience can be challenging, especially with increasing costs and tight margins.
Subscriptions, while effective for some, can limit audience reach and engagement — and many viewers are already reaching the upper end of what they are willing to pay for. Squeezed home budgets are pressurizing the number of streaming subscriptions households maintain, currently at an average 3 in the U.S, according to Forbes research. The same study found that 90% of consumers would discontinue those subscriptions if higher prices or stricter password sharing were to be enforced, underlining the potential fragility of subscription-based business models.
So, what are the alternatives? Interactivity is a dynamic and flexible alternative monetization strategy. By offering interactive features and a community-driven, viewer-centric streaming experience, video businesses can create multiple revenue streams and enhance viewer engagement. Elements such as real-time audience interactivity, betting, live transactions, or e-commerce mechanisms enable engaging viewer experiences that directly translate into higher viewer retention rates and platform loyalty.
Real-time interactivity is a revenue game-changer
Today, emerging streaming businesses are disrupting traditional norms by pioneering interactivity as a pivotal revenue driver. Take Fishtank for instance, an interactive streaming platform and 24/7 live reality show which builds a highly-engaged audience and generates significant revenue through live transactions and viewer donations during streams. The show has now surpassed one million viewers and $3 million in revenues — harnessing an interactivity-driven monetization model to generate over 100 million viewing minutes, with more than 85,000 fans taking the opportunity to pay to shape the direction of the show.
Looking wider afield, we’re seeing huge innovation in real-time streaming interactivity among non-media enterprises. For example, Zara, a major fashion retailer, is planning to implement interactive live streaming events in Europe and the US after a hugely successful launch in APAC. These events allow customers to interact with hosts, ask questions, and make purchases in real-time, significantly boosting sales and customer engagement. While teleshopping as a concept isn’t new, enhanced levels of personalization and seamless digital transactions now make it easier than ever for retailers to win big via interactive livestreamed events, using a range of features such as live pricing, auctions, personalized notifications, audience chat, and order tracking to deliver fresh and engaging shopping experiences. Meanwhile, in the online gaming sector, platforms that allow players to seamlessly interact with streamers in real-time have consistently noted higher player retention and increased monetization opportunities through tip features and special in-game purchases.
Interactivity also unlocks valuable data, enabling streaming platforms to collect real-time feedback and preferences directly from viewers. This data can be leveraged to tailor content more effectively, push targeted promotions, and ultimately drive higher revenue.
Sidestepping cost barriers to unlock real-time interactivity
Implementing interactivity can be a financial challenge for new entrants. Traditional cost barriers of cloud video solutions and content delivery network (CDN) infrastructure limit experimentation in real-time interactivity for growing streaming companies. Facing high baseline costs for transcoding and delivery, streaming businesses are often left facing an uphill profitability challenge — and that’s without investing in a range of real-time interactivity elements. However, innovation in streaming technology is democratizing access to these features. Opting for a decentralized network approach, for instance, offers a more affordable and scalable alternative to long-established methods.
Decentralized content delivery networks made up of professionalized computing and data center resources distribute transcoding workloads across multiple nodes, reducing reliance on centralized servers and cutting costs significantly. Leveraging a decentralized network approach has been proven to reduce delivery costs by up to 80% for streaming companies, enabling more budget to be allocated towards enhancing interactive features. Specific features of decentralized networks, such as peer-to-peer (P2P) video streaming, allow content to be shared directly between viewers, further reducing the need for expensive server infrastructure. This model not only lowers costs but also improves streaming quality by minimizing latency and buffering times, providing a better user experience.
To keep pace in a tough market, streaming businesses must look beyond traditional revenue models and embrace the potential of interactivity. By thinking differently about streaming business models and the technology that underpins them, disruptive video streamers can not only survive, but thrive. Think of interactivity as more than a feature; it’s a powerful monetization tool that, if utilized wisely, can change the business of streaming.
[Editor's note: This is a contributed article from Livepeer Studio. Streaming Media accepts vendor bylines based solely on their value to our readers.]
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