Linear television continues to decline, content-on-demand is reshaping the video landscape
The video landscape has gone through a massive transformation over the past few decades in all dimensions — content, distribution and user experience — and from a consumer standpoint, I might say it is for the better. In the early days of video, distribution was perhaps the most problematic dimension that prevented creators from sharing their content. One platform rules the entire medium. Scary right? Imagine, television was the only place where you can put your video content. Unless you were doing a motion picture, which qualified you for a cinema presence, but that space was also highly guarded by only a few big players. However, similar to many other industries, technology allowed for greater connectivity and flexibility, which turned an underdog into a content champ aka. YouTube and later paved the way for content on-demand innovators like Hulu, Netflix and Amazon Video. Now, let’s take a look at the current video landscape?
The good old tradition/linear TV.
The Millennials and Gen Z are definitely pulling away from traditional television, as the medium poses restrictions that those generations were not born with. Wait for your favorite show? Get interrupted by ads? Can’t watch on the bus? Come on, you know better than that… The data is right behind that same premise (graph below), the younger you are, the less likely is for you to consume traditional television.
Of course, television is not going away anytime soon. Even though experiencing negative YoY growth, linear TV is still keeping the frontier with 45 billion person viewing hours/month on all devices. Just to put that into perspective, all forms of digital media occupy about 30 billion person-hours/month according to Nielsen’s latest figures. Therefore, as viewers’ perception of video content and consumption are changing, we will see the traditional TV space leaving the old content format and hopefully evolving into a new modern platform (consider Hulu as step 1).
On-demand, please?
This is a tricky one. Indirectly, the social media platforms (Facebook, Twitter, LinkedIn and later Snap) along with YouTube laid the foundation of the on-demand promise, making them the users’ favorite outlets for “snackable” and easy-to-access content. Naturally, the vast majority of people (myself included) expected that those pioneers will leverage their expertise and take on the networks and studios to challenge their dominance in the long-form video content. However, they were either too late to the game, perhaps focusing on their advertising engine or entered with an unclear value proposition (Twitter Original Series. Did you even know that existed?).
Here is an example: When YouTube Red began creating and distributing their own content in 2016, Netflix already had 52% market share in the streaming on-demand category with 126 original series/films released on their platform. Not to mention the hundreds of licensing deals that Netflix has in place to ensure constant flow of fresh content and diversity.
Seemingly, the leaders in the new era of long-form video are going to be the so called SVODs (Subscription video on-demand services) such as Netflix, Hulu and Amazon Video. In fact, according to Statista, they are expected to account for 30% of worldwide digital video users, with forecasted revenues of around 16B U.S. dollars by 2021. Unlike traditional television, the SVODs are not only trying to build a sustainable (+ modern) distribution network, but also create unique content that leverages user data. While you are watching, they are watching [you] as well. More on data-driven content creation can be found in Sebastian Wernicke’s awesome TEDTalk — How to use data to make a hit TV show ;)
The (potential) obstacles?
All sounds like a plan up to here, but there might be a few caveats. Firstly, the SVODs are following a subscription-based revenue model that does not bring any ad revenue, which has the potential to be detrimental to their bottom line. Secondly, the new generation of users that have been brought up in the digital economy have way higher expectations when it comes to video content. For an instance, take the Canadian SVOD Shomi (Joint venture between Rogers and Shaw Communications), the service was discontinued in 2016 after only two years of operation citing “changing climate of the online video marketplace and greater than anticipated challenges in operating”. In other words, the service had a tough time acquiring subscribers and keeping them on the platform. The highlight here being, pure scale does not necessarily guarantee success in this new market. Even though Shomi’s joint partners already had a significant user base that they could cross-sell to, the consumers were expecting a flawless experience and new content by the minute. Tough to keep up with, right?
In Summary
- Content quality is still going to matter immensely, but distribution and user experience are going to be the key weapons in the new SVOD space.
- Over time, traditional TV is probably going to migrate its content to a Netflix-like model. Cords will be cut, internet providers will gain huge power, as most of the broadcasting will be happening via the Internet.
- “Snackable” size video is going to remain in the hands of the social giants, lead by YouTube as a video hub, until the other platforms catch up.
Honorable Mentions (if you made it this far, might as well):
- Remember torrents, the copyright leakage? Interestingly, only 3% of Americans use “BitTorrent” to watch long-form video content, which marks another heavy hit on the torrenting legacy. As society is becoming more conscious of data-security and accessibility is no longer an issue, I don’t see the new generation even knowing what a torrent is.
- Another buzzy trend that goes by the name of “HQ Trivia” is reforming the game show space with some unique distribution. The LIVE trivia game app gathers 1–1.2M viewers every night on their phones. Not that small of an impact, right?
Hope you found this useful, there will be more to come. Feel free to connect on LinkedIn or drop a comment below, if you have any questions.
