How niche streaming services are taking on Netflix, Hulu, & Amazon

Let’s face it – most of us subscribe to one, if not all, of the following: Netflix, Amazon or Hulu. But have you ever stopped to think: do I actually enjoy the content I pay for? Recent polling suggests the answer to that question is an emphatic ‘no’. In fact, the average American subscribes to 3.4 streaming services. This suggests that not only are most people dissatisfied with their streaming service providers, but that they need three services to get the content they want. Despite the fact that most users are subscribed to one of the “Big 3” streaming services, niche video services have plenty of reason to believe they can siphon off a large number of these viewers.

niche streaming services

mohamed_hassan / Pixabay

Loyalty to the customer

The most substantial way for smaller video services to make their presence felt in the market is to promote a sense of loyalty to their base and prospective customers. To ensure this sense of loyalty is conveyed to the viewer, the strategy is incredibly simple – give the viewers the content they want to watch.

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Forty-two percent of those subscribed to a streaming service subscribe specifically because of the content available. Taking this into consideration, niche streaming services are capitalizing by specializing in more focused content. From science fiction to documentaries, smaller providers are delivering the content their users subscribe to see.

Hyper-targeted content catered to a specific audience demonstrates a sense of loyalty on behalf of the provider to the user. Streaming services for specific genres are winning over customers in droves. One such alternative streaming service has now accumulated a massive base – surpassing 20 million subscribers earlier this year. While they may lack in diverse content, viewers get only the content they want without having to browse through the options they will never select.

Niche Streaming Services Gain customer loyalty

Loyalty to the customer begets loyalty from the customer. Although the “Big 3” video streaming providers hold the largest market share, subscribers do not feel a sense of loyalty toward any of the three. The fact that the average American is subscribed to all three highlights the lack of commitment, as well as a lack of desired content.

Listening to the viewers’ wants and offering just that results in committed fans. Developing a base of committed fans is critical to long-term success. Users that feel a sense of loyalty and commitment towards their service providers are far more likely to recommend the same service to a friend. Recent polling uncovered that 77% of customers will recommend a company or service after having a positive experience. Niche streaming services are finding success by catering to their specific audiences, which, in turn, is making the customers feel equally loyal to their streaming providers.

Niche Streaming Services And Pricing

Of course, content quality matters. While users certainly value quality content, they also value affordability. Seventy-nine percent of Millenials use Netflix. However, the average Millenial has a net worth of $8,000. Regardless of why Millenials are doing poorly financially, the point here is that the largest portion of Netflix users can’t actually afford to subscribe to Netflix in the first place.

Niche streaming services are poaching customers away from the biggest providers by setting far better price points. A basic Netflix streaming plan, with all the movies and shows users don’t care to watch, starts at $8.99 monthly. And, while that may not break the bank, smaller streaming services commonly are free to use. The ones that do cost money are still far cheaper than a major provider, with some costing as little as $2.99 per month. Of those who cancelled a subscription in the past year, 81% did so because the price was too expensive.

The Big 3

Niche providers have broken into the space by providing tailored content for a fraction of what major providers charge. Although the “Big 3” certainly feel as though they hold a substantial enough lead over the smaller providers, the fact that so many cancelled users cite high pricing as a reason why they left should be cause for concern. As the smaller providers continue to develop and refine their libraries, they will also continue to attract customers away from the bigger providers. Offering the content their users want at a significantly reduced price should plant seeds of doubt in the major companies.

While the vast majority of us love to stream content, it’s time we start to recognize what we’re getting for the prices we’re paying. (Especially with Friends and The Office set to be removed from Netflix in the coming year or two.) The fact is, niche streaming services are emerging as major players in the space, capitalizing on the factors that the major providers have overlooked. Establishing a two-way sense of loyalty between themselves and their customers and setting fair prices, niche services are here to stay.

M Fayaz Taher, COO of BongoBD, a large streaming video-on-demand service.

For more information, visit www.BongoBD.com




About the Author

Jacob Wolinsky
Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Prior to ValueWalk, Jacob was VP of Business Development at SumZero. Prior to SumZero, Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver