[NOTE: It's Thanksgiving week, so there will be no Friday Mailing barring some unusual market development happening. Wishing a Happy Thanksgiving to you and yours.]

Key Takeaways

• Growth is increasingly on the minds of both streaming services and their investors after subscriber numbers flattened in the U.S.
• Is the slowdown due to insufficient content libraries? Poor software user experience (UX) and user interface (UI)? Or both?
  
• There is plenty of evidence UI and UX matter to growth, perhaps more than well-stocked content libraries.
  
• The driving factor may be that expanded user behaviors require new software for users to consume more content.
• Peacock, Paramount+, HBO Max, Pluto TV, ESPN+, Hulu, and Netflix all offer helpful examples of this tension.
  

I continue to believe that understanding "user intent" is the difference between success and extraordinary success in legacy media and streaming.

One tension in this perspective is whether user experience (UX) and user interface (UI) matter more than content library.

Meaning, does it matter more to the growth of a streaming service that there is a library that users intend to consume?

Or, that the UX and the UI facilitate faster or better user decision-making for users?

Coincidentally, as I started writing this, I ended up starting a Twitter debate on this topic with Recode's Peter Kafka and AllYourScreens' Rick Ellis (who wrote about the exchange in his newsletter yesterday).

There were basically three perspectives:

• Content matters more to growth than software, software matters to retention, only (Kafka);
• Content matters to growth, and software also matters to growth but more on the retention/churn side (Ellis); and,
• Software matters to growth as much as content, perhaps more (me)

Growth is increasingly on the minds of both streaming services and their investors after subscriber numbers flattened in the U.S., according to both Q3 earnings calls and a Kantar Q3 entertainment report.

Is the reason for the slowdown due to lack of content library due to pandemic-related delays? Poor software user experience (UX) and user interface (UI)?  Or some combination of both?

There is not enough evidence to deliver a convincing answer for any outcome. We do not get much, if any, insight into how much a company invests in its software from earnings calls or reports.

When we do learn about it, it is typically an acquisition within a price range that is a small percentage of annual content spend:

• Disney acquired a majority stake in BAMTech in 2017 for $1.58B, or 5% of its projected $30B spend on content in 2021; and,
• WarnerMedia recently leveraged its $100MM December 2020 acquisition of You.i TV to upgrade its HBO Max app for global expansion, or 1.1% of its projected $9B annual spend on content in 2022 and beyond.

In terms of raw costs, a streaming platform's software calculates to matter exponentially less to growth than content.  

But the lens of "user intent" suggests growth will come from more being invested in software that understands user intent, and makes the user experience faster and/or better.

In other words: if "understanding user intent has been the difference between success and extraordinary success in legacy media and streaming" (as I wrote in The Metaverse, Dotdash, & Serving User Intent), then better software that better understands user intent will lead to growth.