The Changing Face of TV & Video Content — How We Got Here
At this point it’s pretty inevitable for content consumers to be aware of some of the trends of cord-cutting and the evolution of TV/streaming that have been taking place in the last 5–10 years. Whether you’re a rampant Netflix/Prime/Hulu binger and have already abandoned your cable/satellite subscription or prefer to turn to the wonderful, commercial-riddled distribution model of yester-year, you’ve at least heard of these trends (I’m going to go ahead and assume that if you haven’t, you’re probably not reading this).
In order to understand the current trends (lots of articles on that — Business Insider’s 2016 trends, EY’s Future of Television, Variety’s cord-cutting trends, Digital Trend’s cord-cutting 101, Mohu’s cord -cutting 101, amongst many others), it’s important to look at a bit of history in terms of TV, social media, and streaming. But first, some trivia (answers are at the end)!
1. In what year was the first recognized electric video presentation?
2. What company was the first to develop a working consumer TV?
3. What did RCA stand for?
4. When was the first all-electronic color TV introduced?
5. How many people watched the moon landing?
6. Which event holds the record for largest global viewership?
7. When was Netflix founded?
8. Two brands currently hold just north of 40% of the large-screen TV market — which two?
TV — Some History
From the 50s when TV started becoming the main medium for reaching the public, the multiple-system operator model became the standard for content delivery to this medium. As the name implies, it’s a system where there are multiple operators who handle creating and distributing video. The big three networks — NBC, CBS, and later ABC — became the dominant players through the 80s when Fox joined in the fray.
Roughly around the time Fox came about, the subscription model became the standard as well, and this established the current state of dedicated channels alongside local and out-of-market channels. This led to cable and satellite TV packages that included hundreds if not thousands of channels, and most of the packages available for purchase were very bulky. Customization and selectivity were not part of the picture yet.
In addition to these major networks, there are a slew of smaller ones delivering more niche content. Aside from watching programming live or in syndication, the only (successful) options for consuming televised content were VHS and DVD (RIP Betamax). That was until the internet was invested and the foundation was laid for streaming to slowly take over as dominant form of content delivery. Netflix was the first company that signified the changes to come, though that was unknown even to the company when it first started competing with Blockbuster for DVD rentals. (Some more expansive histories: Wiki, NYU professor, Guardian)
Before understanding how much streaming and over-the-top (not going through the traditional broadcasting model) content delivery is disrupting video content delivery, it’s important to take a step back and look at social media and streaming as a whole.
Social and Streaming — the Beginnings
By 2004 social media, though still in its incipient stages relative to today, was already not a new concept. The 90’s and early 2000’s saw a variety of sites come up attempting to connect people virtually for the purpose of sharing and chatting. MySpace was the first player to truly reach mainstream, eclipsing Google in terms of page views by 2006. Facebook starting rolling out across colleges in the US (already existing at Harvard since 2003) in 2004, eventually opening the site to anyone by September 2006. The site reached 1m users by the end of ’04 and would continue to have strong growth that is still going today.
Come 2005, a few former PayPal’ers launched their first video on a new platform called YouTube and officially launch by years end and amass 8m average daily views by the years end. Their first video with over a million views was a Nike advertisement with Ronaldinho that year. By October 2006 the video web service was bought by Google for $1.65bn. It took until 2011 for YouTube to enter start live streaming (Wiki for history).
A few months before that, in July 2006, Twitter launched. It is important to note that these three players helped define social media and online video sharing for the remainder of the decade. Though entrants came and went, there three gained massive user bases within a few years and defined social media and online video. By early 2008, Twitter had about 1.3m users while Facebook was already inching towards 100m and YouTube was seeing 10 hours of video being uploaded every minute.
By 2008 Netflix had been offering its streaming service for exactly a year. That year saw users go from 6.3m to 7.5m and brought the company to their first $1bn revenue.
In March 2007, Ustream was launched as the first website that offered live broadcasting. In May 2007, Livestream joined the growing space, which also included Justin.tv. By 2008, Justin.tv was the leader, though they would eventually focus on a specific niche with Twitch while Ustream and Livestream continued down the general streaming path. Since then Ustream was acquired by IBM and Livestream expanded more to being a cloud-based streaming solutions for organizations as well as individuals.
With a new decade came a natural evolution and, though not as rapidly, the integration of social media and streaming. By October 2010 Instagram launched and quickly shot up to 1m registered users by the end of the year. Comparing their growth to the aforementioned companies, it’s clear that an escalation of growth had taken place — a trend that continued with future new entrants. In its first two years, Instagram grew to roughly 15m registered users (overall growth). Instagram’s niche in the social media world was photos to start, but they have expanded to video and live video. By April 2012 Instagram had 40m monthly users and was acquired by Facebook for $1bn. By 2013 it had added video capabilities and by Nov 2016 it added live streaming.
In July 2011, Snapchat launched and its first two years saw user growth go up to 16m average daily users. This app exploded with the teen and young adult markets, allowing the sharing of photos or videos that instantly disappear. Coupled with filters, this help Snapchat differentiate itself and find a loyal following early on. They have since expanded to Stories that can be shared more publicly and are partnering with sports companies to add stories around live games, not streaming the games themselves. Snapchat is supposedly angling a 2017 IPO that would value the company at $25bn+ (user growth).
Around the same time that Snapchat launched, Justin.tv officially launched Twitch, a streaming service focused on live video gaming. Within a year and a half Twitch had 20m average monthly users, a number that would at least double into 2016, hitting 220m average monthly users by the end of 2015. In August 2014, Twitch was purchased by Amazon for $970m.
In June 2012 Vine was launched and focused on short form videos limited at six second loops. It was acquired by Twitter by October of that year, reportedly for $30m. Within a year and a half it had 40m users, growth which supposedly went from 13m registered users in June 2013 to 40m in August of that year. By August 2014 the company was reporting 100m average daily users, a number that they doubled by 2015 (user growth). As the space grew more crowded, Vine slipped out of the top downloaded apps in 2016 and was almost shut in Oct 2016. Twitter decided to keep the company open but is scaling back its capabilities in January 2017.
In August 2014 Musical.ly launched focusing on 15 second videos where users can choose sound tracks to accompany them. As of July 2016, musical.ly has over 90 million registered users and an average of 12 million new videos posted every day. On July 24, 2016, during VidCon, musical.ly officially launched live.ly, its new live video streaming platform. Although this was intended to be a soft launch, as no additional marketing had been done for this new product, live.ly climbed up to the number one position in the iOS App Store within 3 days. Live.ly average revenue per daily active user from in-app purchases is 0.8 cents, according to SurveyMonkey Intelligence. That’s better than Musical.ly’s 0.3 cents (Business Insider, Wiki, valuation).
More Live Streaming
Meerkat was launched in late February 2015 in order to allow anyone to be able to live stream from their phone. The company tapped Twitter’s API to stream to followers and had an initial push on Product Hunt, which helped them gain 8k users first weekend along with 3k streams. Within a week, they had 28k users. Within 2.5 weeks, Twitter limited Meerkat’s access due to their acquisition of Periscope. This helped gain notoriety at SXSW 2015. 40k new users joined first two days of SXSW and 100k over all of SXSW. 20% were watching over 2 hours per day (Wiki). 160k users total its first month, which rapidly grew to almost 2m users by June with celebrities like Julia-Louis Dreyfus, Madonna, and other helping its popularity. Despite the promising start, Meerkat couldn’t compete long term and shut shop in September 2016.
Periscope was being developed in 2014 and received its first funding then, however, it was purchased by Twitter before it even launched, which it did a few weeks after Meerkat in March 2015. Thanks to the platform of Twitter, they were able to get 1m users within 10 days and by August that year, Periscope already had 10m registered users of which 2m were active daily users. The company has not released user data since then and the app has lost a lot of steam after Facebook Live launched (Wiki, Fortune, TechCrunch)
Facebook Live was released over the summer of 2015, initially focusing on celebrities. In Spring 2016, Live was opened up to all users and has seen a wide variety of events use the platform, ranging from live sports streaming to political debates to cooking shows to just about anything else. By September, 51 percent of the top publisher companies posted to Facebook Live in September, up from 10 percent in January (Forbes)
Meerkat shuttering led to the creation of HouseParty, an app focused on private streaming between friends. This is an area that has received more attention in the second half of 2016, as Alively was also rolled out focusing on a similar idea.
The Streaming Universe
In 2016 Netflix spent $5bn and plans to spend $6bn on content in 2017. In 2016 it released 126 original series or films, showing its dedication to stealing viewership from traditional TV delivery. It has grown to 86m subscribers worldwide and 47m in the US, which is double where it was 5 years ago. In 2015 42.5bn hours of video were streamed — 100m hours of video a day.
Netflix is one of the big three of online video content, the other two being Hulu and Amazon Prime, all of whom stream and produce content. In the 6 main categories at the Emmy’s, out of the total of 34 shows, 6 were produced by streaming companies (Netflix had 4, Amazon had 1, Crackle had 1). For comedy 3 of 7 were streaming co’s — Master of None and Unbreakable Kimmy Shmidt from Netflix and Transparent from Amazon. The two other shows were House of Cards by Netflix as a drama show and Comedians in Cars Getting Coffee by Crackle as a variety show. Bill Murray Christmas Special was the other Netflix show (Wiki).
Individual channel subscriptions such as HBO or Showtime are also increasing the trend in cord cutting as more top-notch content producers figure out how to get their goods directly to consumers skirting the tradition broadcasting model.
People can also use their smart TVs or gaming consoles, as well as streaming devices also known as OTT delivery systems such as Chromecast, Fire Stick, Roku, Vue, and Apple TV all give people new ways of accessing their digital subscriptions on their TVs.
There are also OTT subscription services that allow people to subscribe to a certain amount of channels without having to take all of the channels that traditionally come with a cable subscription. Vue, Sling.TV (owned by Dish), Yip.TV, Direct TV Now are just a few.
At the most recent CES (consumer technology show) Mohu, a company known for creating TV anteanas announced a new product called Airwave, which will catch the signals being broadcast and allow people to watch those live through their existing OTT delivery devices.
The latest numbers on cord-cutting from research firm GfK might give a few people in the TV industry some sleepless nights. A quarter of U.S. homes don’t subscribe to a pay-for-TV service, according to GfK’s 2016 Ownership and Trend Report. About 17% rely only on broadcast signals for their TV needs, while 6% only use the internet to watch their favorite shows on a TV set, using either a device like a Roku or Apple TV or a Smart TV.
The sports streaming world is one that is going through a lot of change, especially as it’s one of the remaining bastions of live TV. Facebook Live and Twitter/Periscope are both partnering with broadcasting rights-holders to distribute sports content over their digital platforms or to add ancillary content, an area that Snapchat and others are also playing. Given that “media rights are tipped to surpass ticket sales in 2018 as the North American sport’s industry’s largest revenue stream ($19.9bn, according to PricewaterhouseCoopers)” and that many of these rights are locked in for close to a decade, it’s going to be tough to displace the old guard for now.
A lot of sports media rights owners have also created digital platforms, which include channel specific and league specific. Channels include, but are not limited to: NBC Sports Live Extra, ESPN, CBS Sports, FOX Sports Go, and ABC Sports. League specific apps include NBA League Pass, NFL RedZone (via Direct TV and available to Verizon customers for free), etc.
There are a number of companies making a splash in and trying to disrupt the sports market given that live sports is still a big pull towards live TV. However, with Amazon and Facebook Live getting into the sports picture, especially once the current licenses for the TV broadcasters are up for renewal, we can expect to see sports streaming, and the industry as a whole, go through a lot of change in the next 5–10 years.
Technology is clearly making its presence felt for the traditional TV players. In the 20 years since Netflix has been around, we have seen so much change happen in this area. Going over the history of it all helps see the path that we took to get here and the fact that we are just starting to get to the exciting changes (keep in mind, no discussion of VR and how it’s affecting TV here). The way we consume media in the 2020s and beyond could easily resemble the sci-fi of recent decades, and I don’t know about you, but I’m excited to keep binge watching and to play with some fun, new toys.
1. In what year was the first recognized electric video presentation? 1928 — September 3, 1928 Philo Farnsworth held a demo in his lab
2. What company was the first to develop a working consumer TV? RCA
3. What did RCA stand for? Radio Corporation of America
4. When was the first all-electronic color TV introduced? 1953
5. How many people watched the moon landing? 530m, 14% of the total population
6. Which event holds the record for largest global viewership? Beijing Olympics, 4.7–5bn people (70% of the population)
7. When was Netflix founded? 1997
8. Two brands currently hold just north of 40% of the large-screen TV market — which two? Samsung (26.5%) and LG (16.3)