By Brightcove’s Matt Smith
Change is the one constant in the world. Nothing stays the same, for if it did, it wouldn’t survive. It is no different when it comes to the world of media and entertainment. The television industry is undergoing a massive shift to streaming, but can it navigate the changing business and technical digital landscape more successfully than the music industry in the early 2000s? For record labels, it was easy to point the finger at new (and controversial) technologies like Napster, but it was the introduction of the iPod and birth of iTunes that truly signaled the recognition that consumer behavior had changed and the business needed to follow. Back then, as now, the consumer expects content at the precise moment of need on the device of their convenience.
Will the television industry succeed where the record industry struggled and was forced to morph? If so, it will need to address an evolving landscape which includes the increasing spell Netflix has us under, measurement and monetization, the role social media plays, and how to deal with new entrants into the industry.
The Streaming Spell
It is well documented that Netflix is the leading SVOD service, the most recent list from Parks Associates had Netflix outfront of competitors Amazon and Hulu. The service continually ups the game for the market, most recently by signing Shonda Rhimes to a multi-year exclusive deal to develop new shows for the service, pulling her away from a top network. This move signifies that streaming is a force to be reckoned with. Top talent is willing to work with streaming services because there is more potential for creative liberty. This move not only shows Netflix is doubling down on original content with the plan to increase its original programing but it also opens the door to more subscribers. Will the ABC TGIT fanbase follow Rhimes to Netflix? Time will tell but my guess is yes. Rhimes has such a following, it’s hard to see her loyal TGIT fanbase abandoning her, it’s more than likely her move will boost Netflix’s following at least a little. Combine this logic with the new viewing habits of younger audiences, where they seek a show and not a network – and it is easy to see a future where great content met with instant availability will continue to drive change.
It’s not all about Netflix though. Hulu and Amazon are fiercely competitive in the mainstream streaming wars. It’s not just about streaming first companies, premium networks with OTT services are gaining steam due to their show catalogue, most notably HBO Now. Lastly, another point to consider is how Disney will shake up the landscape when its service launches in 2019. And, if their talks to acquire Fox’s movie and production business lead to a transaction, Disney could be in a formidable position with a massive library of content to effectively compete with Netflix. At this point, there are so many outlets that offer different content, cable isn’t a necessity anymore. Times have changed and continue to change with younger viewers becoming more influential in how they consume content. Viewers can get all the movies, shows, and sports they want through streaming services. With this shift, one has to wonder, will big cable conglomerates become a thing of the past? I’ll predict that the answer is no, but service providers will look dramatically different in five year’s time. Their underlying technology will see massive change too, as the legacy ‘heavy iron’ systems that have provided channel lineups are replaced with leaner streaming and cloud based platforms.
Measurement and Monetization
How does Nielsen’s measurement of SVOD services affect measurement and the direct and indirect tie to monetization? Without a measurement standard that can truly measure SVOD content, it seems that monetization will be affected. Another aspect to address is whether this measurement is even working. The data that Nielsen is reporting is not accurate, not even close, and does not reflect the viewing of these shows on Netflix,” a Netflix spokesperson said in a statement. Aside from the lack of public support from Netflix, Nielsen’s new service could also suffer from the fact that it does not yet measure how many people watch Netflix programming on mobile devices. This could also extend to and affect other streaming services, including Hulu’s plan that supports limited commercials.
The Role of Social Media
Social Media platforms are a natural extension of our everyday lives. Now that more are enabling video and pouring money into developing their own content, these platforms are impacting the video consumption landscape. Viewing habits have drastically shifted in the past few years. Content providers have had to shift to meet viewers where they are, and that now includes social media platforms such Facebook, Twitter, and Snapchat.
This fall, Facebook Watch launched, becoming available to U.S. users. This new feature allows viewers to subscribe to their favorite series running on Watch. This move allowed Facebook to jump into original programming, boasting several dozen original shows, sports programming, and live event coverage. This also provides another outlet for content owners to reach new and established viewers, as well as another monetization opportunity. Is this the first move in Facebook’s offensive on the three letter broadcasters? Most likely, and it will be something to watch. Content owners have a potential social viewer pool of over two billion monthly users to tap, the reach is unparalleled and that translates into revenue.
In addition to social platforms pouring money into development of original content, social media plays a large role in the popularity of shows. The more people know about the show, the more likely it is that viewers will tune in live. Content creators and networks are leveraging new strategies to drive audience that involve including the cast and crew in a live social-enhanced viewing experience. For example, TGIT became popular because it gained a Twitter following, the amount of people that join in the conversation on Thursday nights to discuss the shows include the actors, writers, directors, and producers working on the shows, as well as fans. This allows fans the opportunity to watch the shows with the people involved in real time, follow the conversation and join if they want. It provides a different level of access to make fans feel they are watching with a community.
With the move to OTT and big announcements by Disney in terms of its impending ESPN service, is this industry truly going to see true unbundling? Will consumers realize the holy grail of choice or will they see the true cost of unsubsidized channel packages that the television industry has been warning us about?
There seems to be a new OTT service launching every other day and the industry will continue to see new entrants into the space pop up over to continue to serve audiences. One factor to consider is what is the saturation point? When will consumers start to pull back and avoid these services altogether? With so many services around, it’s the survival of the fittest. Over the next couple of years, we will start to see more consolidation of services. Revenue becomes a huge factor, and if there is no revenue, there is no service. This, compounded by the ability for the viewer to go direct to the content source (CBS All Access, eventually the NFL), will make the arms race for viewers and their subscription dollars very competitive.
Like any industry, the only thing guaranteed is change, and it is no different here. The television industry is constantly evolving to meet the consumer when and where they want. The future of TV is beginning to take shape. It’s becoming more social, sophisticated, and competitive. The future is bright, but is sure not be what we are used to.
Matt Smith: Vice President and Principal Media Evangelist Matt is Vice President and Principal Media Evangelist for Brightcove’s media business unit. He has served in a variety of roles in the industry from architecture to operations and has extensive experience in finding solutions for the challenging problems faced by media and entertainment
companies as they reach viewers on any screen. Matt’s experience spans many aspects of today’s complex video workflows and he is a frequent speaker at many industry events and conferences.