Let’s have a look to video and music streaming services from a ‘Compare & Contrast’ point of view. I’ve consolidated 8 major similarities and 8 differences. Absolutely, this is not the exhaustive list, please feel free to add yours into the comments part at the bottom of the post.
1. Business Models: Both have free (ad-based) and subscription based business models. While the majority of the music services benefit both options (Spotify, fizy etc) most of the video services adapt either free model (puhutv, Hulu etc.) or subscription based model (Netflix, TV+ etc.)
2. Entertainment services: This one is trivial. Both services are designed to entertain people from a variety of age group, kids, teenagers, adults, moms, dads and even grandparents. People are paying for music and video services to relax, to have fun, to get socialized and to enrich their lives.
3. Offline content: Both services allow consumers to download content to their mobile devices in order to enjoy them in the lack of connectivity. On most of the music streaming services ( i.e. Spotify,Deezer) offline usage requires to subscribe to premium package whereas on most video streaming services like Netflix this feature is part of the subscription package.
4. Global giants: On both verticals there are very big global players those are targeting to leverage economics of scale in order to achieve profitability especially considering the extremely high content costs. Examples are Netlix and Amazon Prime on video space, Apple Music , Deezer and Spotify on music streaming side.
5. Recommendation and curation: Management teams of both video and music streaming services understood very well that people consuming digital content are expecting to get presented refined content tailored to their tastes. This can be done either by personalizing the content thanks to advanced recommendation algorithms or content that has been curated in a fashionable manner. Netflix is assumed to have one of the best recommendation systems while fizy is renowned for the variety of well-curated playlists.
6. High churn rates: Both type services are suffering due to high churn rates. Since there are many alternatives available in the market its quite likely that subscribers are hopping from one provider to another. Taking the churn rate under control is one of key challenges of the mentioned entertainment services.
7. Beneficiary of new technologies: Last but not least, the technological advancements such as superfast mobile and fixed broadband, enchanced high quality compression techniques and extremely powerful new gadgets have fueled the growth of digital entertainment services.
8. Must-have for telcos: There is an ongoing discussion about the telcos if they will end up being dump pipes simply delivering OTT services like Netflix, Youtube etc. or they will succeed to deliver their own innovative, value-added services. In this regard, both music and video services are must-have type of services for telcos. For instance, TV+ and fizy are extremely successful digital services of Turkcell while the incumbent telco Turk Telekom introduced a new music services Muud on top of the already existing TV service called Tivibu.
1.Depth of content: This is one of key differences between video and music services. On video business, we typically talk about 100+ Live TV channels and a few thousands of VOD titles. On the contrary, in music pillar, the order of magnitude of the audio assets are a few ten thousands or even more. This is basically due to fact that the production cost of a movie is multiple times greater than producing a song.
2. Switching cost: Leaving any video service and jumping to another one is relatively easy compared to moving from one music service to another. This is mostly due to the fact that generally music services are much more personalized compared to video services. People have lots of personal playlists created over a long period of time. It’s not that easy to give up those and move to another one, from Spotify to Deezer or from fizy to Apple Music. However, if you terminate your existing TV subscription and move to another one, you are fine. (Netflix is an exception, if you leave you’ll loose your personal recommendation which is obviously a barrier to cancel subscription)
3. Exclusive content: Netflix is the pioneer in exclusive content production. They invest billions of dollars to produce Netflix Originals. Other players like Amazon Prime, BluTV followed the same path and started to produce their own content that will be only available on that particular video service. This is not there yet for music services. What we’ve seen this year is that Tarkan’s new album has been available on fizy for the first time. Nevertheless, it was not exclusive to fizy, after a certain time it was also accessible through other services.
4. Content protection: Video content is DRMed while music content is typically not encrypted. DRM itself is a quite complex area. Avoiding DRM on music services allows the industry players to better keep up with the pace of the new technology.
5. Use your own device: Another major difference is Pay-TV providers historically subsidize STBs to their subscribers those are designed and developed under the control of service provider. In other words, consumers are limited in selection of the STBs that will be installed to their homes. Most of time, those devices are low spec, poor performing hardwares and the overall TV/video experience is not satisfactory. On the other hand, consumers are using their own devices to enjoy music services which allows them to decide the level of user experience on their own.
6.Who is driving? : Video services are historically driven by telcos whereas music streaming are mostly owned by OTT players. This is simply due to the way the industries have evolved. Pay-TV business is there since decades while music streaming services are quite new. ( Do you remember mp3 era:))
7.Live content: Historically, video services are born as Live TV channels, VOD arrived only after the high penetration of IP services. On the other hand, there is no Live music streaming except rare examples. The majority of music content is static content. As a consequence, expectation of subscribers watching Live TV ( i.e. football game) is high, they are not tolerant to video freeze, pixelization etc. while its relatively easier to satisfy consumers listening music on the go.
8. Medium: While TV content is consumed mostly on big TV screens, consumers enjoy music content mostly on mobile devices. In other words, user interfaces of video services are primarily designed for Remote control interaction while UIs of music services are designed for touchscreens. On top of that, since the amount of data delivered for video services is much greater than music services the dependency to available bandwidht is significanlty high. ( 3-5 Mbps vs. 200-300 Kbps )
I’ll be delighted if you contribute with your view, what else is similiar, what else is different if you think about video and music services as a whole?