News > i3

Next Generation Streaming


When Netflix’s July financial report revealed the company had lost U.S. subscribers for the fi rst time, Wall Street pummeled its stock price as if this blip augured the end of the streaming video boom. The simultaneous announcement that Netfl ix is launching an ultra low-priced (under $5 per month), limited access subscription in India added to the frenzy. In reality, Netfl ix added subscribers worldwide during the spring quarter. 

Yet the Netflix developments may mark the demarcation point between the fi rst wave of subscription video-ondemand (SVOD)/over-the-top (OTT) streaming and a new era of multi-tiered services. These changes come amid analysis that points to new programming tactics, pricing changes, increased ad-based OTT and looming video piracy threats — all emblematic of the maturing industry. 

The entrenched dominant OTT providers — Netflix, Amazon Prime and Hulu are facing new competition as popular entertainment providers prepare to off er streaming services. Disney Plus will include content from Disney’s new Fox subsidiary as well as their immense archive, debuting in November, while Apple TV Plus will also rollout this autumn. AT&T-owned WarnerMedia will begin beta-testing HBO Max by yearend, and the NBCUniversal service (owned by Comcast) is scheduled for delivery in April.

Meanwhile, researchers are identifying consumers’ willingness to pay for OTT. One study found that $17 to $27 per month is the “sweet spot” in Americans’  budgets for this entertainment. The Hollywood Reporter/Morning Consult poll determined that OTT customers pay $37 per month total, but that the typical optimum price is $21. Those fi gures may shape the demographics of subscribers to new services. Disney Plus will debut at $7 per month, while HBO Max (fromWarnerMedia) is expected to cost $17. Apple and NBCUniversal have not yet confi rmed pricing. 

Of course, these prices are small compared to typical cable bills. More than 90% of U.S. cable subscribers pay upwards of $50 per month for basic video service. AT&T says some of WarnerMedia’s streaming ventures will be optimized for mobile receivers.
 

Programming Options will Change 

While many of the shows from the OTT providers will come from their archives, they promise a plethora of original programming. Apple TV Plus has recruited such fi lmmakers as J.J. Abrams, Steven Spielberg and M. Night Shyamalan plus celebrity producers to create new shows for the service. 

AT&T promises that HBO Max will include live sports and news drawing on WarnerMedia’s relationships with Major League Baseball, the National Basketball Association and the NCAA. NBCU’s streaming service will largely consist of acquired programing such as The Offi  ce comedy series that will serve as a “tentpole,” says NBCU CEO Steve Burke. The Offi  ce was previously available on Netflix and represented about 4% of that service’s viewership volume, Burke says. Analysts are split about the impact of these varied approaches to the new streaming ecosystem. Some insist that original programming engages viewers and encourages them to retain an OTT subscription, other analysts believe audiences prefer a vast library of archival titles.

Pricing is also part of this equation. A new TDG Research study found that Netflix subscribers are willing to watch streaming advertisements if it prevents subscription price hikes. Netflix does not run advertisements and has no plans to do so. Several of the emerging OTT providers are developing hybrid approaches, which includes ad-based options. In August, Disney announced it will off er a bundle of Disney Plus, Hulu and ESPN Plus for $13. 

Separately, research from Parks Associates has quantified an emerging problem facing the OTT industry: video piracy. Parks said that OTT and pay TV companies will lose an estimated $9.1 billion to piracy and account sharing this year. By 2024, that figure will climb to $12.5 billion.

Brett Sappington, Parks Associates’ senior research director and principal analyst, observes that video enthusiasts like to “engage with many different services.” The advancing wave of streaming video options will definitely give viewers a choice of distinctive services. 

Gary Arlen

Tagged

Related