Another year has come to a close, and another year of predictions is upon us. Clearly, no one has a crystal ball, of course, that doesn't stop any of us from offering up our insights. In early December, Techcrunch had already come up with predictions for digital media in 2018, including:
- “… blood in the escalating battle amongst premium OTT video giants ….”
- “…OTT video market entrants in this beyond-crowded premium OTT video space — including so-called niche-focused OTT video services — will be swallowed up or simply languish, squeezed out by market leaders and the sheer scale of Google and Facebook…”
- “Brave new technologies like AI (via virtual assistants Alexa, Siri, and Google) flood the mainstream and increasingly impact the worlds of media, entertainment and advertising, while blockchain technology captures industry mind-share and begins to infiltrate mainstream conversations.”
- “… data finally becomes a high-profile, high-priority ‘missing link’ in the strategies of most media and entertainment companies that will try to correct course.”
An industry report on TV and Media 2017 by Ericsson Consumer Lab highlighted these findings:
- VR would reignite the campfire experience of TV.
- Smartphone viewing will double.
- On-demand will soar by teenagers — 16–19 year-olds spend more than half of their time watching on-demand, an increase of more than 100 percent, or almost 10 hours a week since 2010.
- By 2020, half of all viewing will be done on a mobile screen, half of this will be done on the smartphone alone, and a third of consumers are projected to use virtual reality.
So given this, we thought we would share our insights with you on what we predict will be happening, or not happening, in the video services provider market in 2018 — from our perspective of course:
Say Goodbye to Linear TV — Fundamental Changes Taking Place
This space is fundamentally changing as companies look to deliver video in new ways. Many young consumers today — meaning millennials and younger – don’t even know what linear TV is anymore. They want to consume content on the spot on a broad range of devices and even on social media platforms. Many of these trends are irreversible. Companies like Direct TV are even disrupting their own businesses. And content publishers and creators such as Fox and Disney are trying to reach consumers directly by building Netflix-like offerings. At Evergent, we see the transformation happening and believe we are at the forefront – while one step removed — we play a pivotal role in helping our customers service their customers.
The Three Cs — Competition, Confusion and Cord-cutting
Competition among major OTT brands will overwhelm subscribers with many confusing offers. Everyone is trying to beat Netflix including Facebook, Google, Disney, and Apple. In fact, we think many content producers will offer a direct-to-consumer service, fragmenting the market. The more traditional PayTV providers will look into offering a streaming PayTV service like DirecTV Now and NowTV (aka BskyB).
In mature markets, consumers will have so many choices that they get overwhelmed and confused. Subsequently, they demand higher standards in terms of payment options, uptime/availability as well as user experience. Successful upstarts innovate by building on existing systems, UX and standards so they can get up to speed fast and may appear to other players to have come from out of ‘nowhere’. Localized content will keep in-country offerings attractive—rather than watching all U.S./UK shows. The largest players will start competing on price to knock the smaller ones out of the market.
In addition, cord-cutting will pick up steam — even more so than this year. Facebook, Android, YouTube, and Hulu will reshape linear TV. And major linear channels will go direct to consumers as a streaming channels, including ESPN. PayTV operators will offer streaming skinny bundles to defer cord-cutting, and consumers will watch more content than ever before. And new movie releases will be available upon release creating new windows for private showings.
Global Footprint Will Drive Scale, Acquisitions/Consolidations Will Flourish, Data Becomes Key
Having a global footprint will help scale the media business for direct-to-consumer, and the bigger companies will have the margins to plow back into original content that feeds additional users/increases retention of existing ones. Our premise is this: fragmented choices will not survive/flourish as the cost of development, acquisition and retention are too high — they will fold into larger players. We also think that every Telco in high average revenue per user (ARPU) territories will start adding media bundling (AT&T: DirectTV Now, T-Mobile: Netflix/Layer3, Verizon: NFL Mobile, Spring: Amazon Prime/Hulu, etc.)
In fact, more industry consolidations will take place in 2018 with Facebook, Google, or Apple buying a studio and/or broadcaster. We think regional cable and telecoms will expand into new global markets. And in terms of the central theme of strategic decisions? Owning customer relationships and data becomes key. Media companies will start to think more like consumer product companies, expanding into related e-commerce areas beyond content.
Your thoughts on any of this? Reach out to us and let us know. We’d love to hear from you.