About the author: Andy Eldrige is a director and co-founder of XYZ Communications, a data-driven B2B PR and content marketing agency. PR Week 30 under 30 and finalist for PRCA Rising Star of the Year.
125 million hours. On average, that’s how much Netflix’s 100+ million paying subscribers stream per day.
And yet, amazingly, that figure is rather low for the OTT video king. Back in January, Netflix topped its own record by delivering more than 250 million hours of TV and movies in a single 24-hour period – an incredible achievement for the company and a stark reminder for the rest of us about how viewing habits have changed forever.
If you could get hold of the average video consumption metrics of Netflix, Amazon Prime, Now TV, and the many other platforms vying for our attention, you’d end up with a number that truly demonstrates the money to be made. If you then introduced YouTube into this particular mix, those viewing metrics would become significantly larger, making the sharp uptick in consumer demand in recent years an even clearer representation for why so many tech players are now betting bigger on video than before.
For example, in the past six months we’ve seen Facebook launch Watch, which marks the social networking giant’s attempt at a more structured video platform. Netflix and Disney announced plans to part ways in a spectacular fashion, representing a move that’ll send shockwaves through the industry in due course.
More recently, it’s also been suggested Apple will launch its own on-demand video subscription product next year. This seems likely when you consider how the tech giant outbid Netflix for a new original TV series from Jennifer Aniston and Reese Witherspoon earlier this month.
Disney/Netflix: The catalyst for change
TV has changed once more before our eyes as a result. Increased competition like this, particularly in light of the Disney/Netflix rift, has lead to further fragmentation in the market and a change in what’s to come.
By letting the deal with Netflix lapse, Disney is walking away from millions of dollars in licensing fees, swapping guaranteed revenue for the hope of a brighter future. For anyone other than Disney it’d be seen as a high-risk strategy. But there’s no doubt the brand’s loyal fans will follow it across to a new streaming platform to keep accessing the type of content they’ve grown to love.
You can see why the decision was made. Yet the Disney/Netflix rift is just the tip of the iceberg.
The media landscape is increasingly being defined by direct relationships between content creators and consumers. It’ll undoubtedly create a scenario where more rights holders follow Disney’s lead in the near-term, meaning consumers will need several subscriptions to watch the shows they’ve invested in – expensive and inconvenient, no?
Some players are allegedly planning to undercut Netflix in a big way. Disney is one of them, although the approach is akin to using a plaster for treating a third degree burn. It’s not gone all the way towards fixing the problem. Instead, it’s sparked further discussion around alternative revenue models.
Earlier this week, for example, reports circulated about how Amazon was launching an ad-supported version of Prime Video. The company quashed the rumours shortly after, but it still seems probable given the above.
The potential for media vendors
Regardless of how revenue models are structured in the future, OTT-as-a-Service and other video solutions players should be excited about rights holders looking to launch their own platforms in new and inventive ways.
Granted, a giant like Disney will run things in-house, particularly after taking majority control of BAMTech. BAMTech describes itself as “a leader in direct-to-consumer streaming technologies and marketing services, data analytics, and commerce management.” So, for Disney, it’s close to a one-stop-shop for getting this new service up and running in the first instance.
Other players though – especially smaller rights holders looking to separate themselves from Netflix and carve out their own direct-to-consumer relationships – will need a partner (or likely series of partners) to help reduce the barriers to entry and launch their own platforms as quickly and efficiently as possible.
Content discovery, in all its forms, will also become all the more important in this new environment. It’ll help keep consumers engaged and subscribed to new services as they pop up and try to stand out.
Equally, considering the weight of video traffic on networks today, players that can help streaming platforms better handle traffic requirements, manage international distribution, or address processing and transcoding challenges, all the way through to streamlining delivery through new encoding efficiencies, injecting AI, and maintaining a consistent UI/UX blend across multiple devices, should be excited too.
It remains to be seen precisely how the drama in the broadcast sector will play out. Regardless, all the signs point towards good news for vendors in 2018.