SVG Sit Down: Endeavor Streaming President Fred Santarpia on a Noisy Marketplace, Quality User Experiences, and FAST Channels Sorting through streaming chaos and the patience and investment it takes for a client to find success By Ken Kerschbaumer, Editorial Director Thursday, November 7, 2024 - 9:20 am
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Sportel in Monaco always provides a great opportunity for those involved with rights to mix with those who are involved with technology. SVG Co-executive Director Ken Kerschbaumer had a chance to sit down with Endeavor Streaming President Fred Santarpia who has had a career that put him at the center of the digital revolution in both the music industry (while at Universal Music) and publishing at Cond Nast. Ken and Fred discussed the state of the U.S. streaming market, what makes for a great service, and much more.
The U.S. streaming market is in a bit of chaos right now, with consumers griping, teams looking to have their own streaming services, and more. What do you make of this whole current state in 2024?
Fred Santarpia, Endeavor Streaming, president
The first thing I would say is it's very noisy, and what we tell prospects and clients is there really isn't a simple answer. In fact, a big part of our business is not just the technology and delivery, but really the business of streaming. And we'll talk to lots of rights holders who are thinking about a direct-to-consumer option, are thinking about streaming, and they have not done it before. We'll talk to them and start breaking it down so they can understand the rates of acquisition, what the churn rates look like, and what it's going to cost you based on your content and addressable market.
Ultimately the picture we want to paint is direct to consumer is not a flip of a switch to replace your traditional revenue. And we want to make sure that we're helping set those expectations for decision makers and stakeholders on what they're in for, which is really a multi-year period of investment. And while it can be profitable out of the gate, is it going to be profitable to the same extent to what you were receiving through your previous licensing model? Probably not. But it can be a very meaningful business model, and you've got to be committed to it over the next couple of years in terms of content, in terms of marketing, in terms of just general patience for what you've got to be able to do as a business. So that's number one.
But if we would call out a single issue, discoverability would be the single issue everyone is facing. We've seen it with all sorts of rights holders, and we've seen it with all sorts of demographics, particularly when someone's audience was on a predominantly linear experience. Those services have a large older demographic audience, and they are really handholding those people to understand how things work in streaming.
What about pricing? Some of the DTC services are expensive, in part to protect relationships with cable providers, but do you see a day when those services drop in price?
I don't see that happening. I really don't. I think one of the early reasons why streaming adoption was beneficial to the consumer was from an economic standpoint and over time the offering for the consumer is less and less, but pricing is up. For things like month to month we don't see prices going down and are priced excessively high. And I think the customer is going to have less options on when they can cancel a subscription. I think that's a challenge the industry needs to figure out and solve for the next couple years with the economic pressure so high.
When you start your conversation with a potential client, what are there any common misconceptions that you find when they come in? Or are they well-versed now in terms of what it takes to launch a service?
I think a few years ago it was more of a blank slate and people were unclear about the economics and the dynamics. But now most decision makers and organizations are more educated and knowledgeable about the economics and the space. So, what we try and do, more than anything else, is give them an objective third party view of what we think the opportunity looks like for them and things like how we see pricing evolving, how we see acquisition costs and pricing leveling out, and just providing that clarity and objectivity to our clients.
As for misconceptions, we don't really see that anymore as everybody at this point knows this is hard to get right. Anytime you're taking on a direct relationship with your customer there's a lot more operational concern than you would otherwise have. And that takes planning for everything from not just the technology but then the programming, the marketing, the data, and the analysis that needs to happen on the back end.
How do they do that?
Ideally you don't silo those things like previous industries have done and instead make sure it's an integrated part of the operation. And I think to the credit of a lot of organizations that we work with, they're being very methodical and cautious about their approach, and everybody wants to be careful, thoughtful, and make sure that when they do make these moves, they make them in the best way that they can and with the best information they have.
One of the challenges is that fans now expect a quality experience with quality coverage, even for niche sports.
Everybody's not just competing for attention of fans but you're competing for a share of the wallet. We have a lot of very successful niche content partners that we work with, and they have very nice profitable businesses. But yes, when you're asking somebody to pay, you've got to deliver a high-quality service, give them something that they're happy to receive.
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