The Golden Age Of Streaming TV

Will Bundling Be The Solution To Access Most Streaming Services?

We are living in an age of streaming TV (OTT or Over-The-Top networks aka Video on Demand VOD). We have many services to choose from, all looking for new subscribers. The competition has driven prices down or kept them competitive with market rates. Demand has increased based on a drop in cable and dish TV service and growth in the subscription base of providers like Netflix and Amazon. Things will only begin to get more interesting as the market grows. There will be new players entering the fray, but do we really need more streaming service providers?

Average minutes of Internet usage compared to TV viewing (Source Zenith Research)

Today, people rarely watch TV while spending more time on the Internet. It is estimated that by 2019, Internet will surpass TV as a medium. The millennial generation is more interested in content from the Internet, whether it is videos on YouTube, movies on Netflix or live streams from IGTV. The Internet is the main infrastructure used by streaming service providers to deliver their content to subscribers. As Internet usage increases along with faster broadband speeds, the idea of an “always online” environment at home is going to appeal to streaming services. Along with IoT devices, home users will need Internet connection for work, research and most important of all to media companies, for entertainment. For streaming service providers, this is exactly what they need to get subscribers.

Getting subscribers means providing the best content available, which means quality films (Source PCMag Australia)

Joining Netflix, Amazon and Hulu are Disney, Time-Warner and Apple (among the big players). It doesn’t seem like a bad decision to launch a streaming service because there is a demand for it. More content variety which Netflix cannot offer will attract customers to try other streaming services. This changes the overall market as more competition will drive companies to come up with better ways to provide service and deliver content. That will cut into Netflix’s already lucrative market, not just in the US but around the world. Other countries will also offer their own OTT services by offering local content.

Companies like Netflix and Amazon are not just providing content, they are also creating it as well. There is greater value with producing original movies and shows featuring a variety of artists. This gives screenwriters a market for their material and new talents to be discovered. The major players like Netflix and Amazon will face stiff competition from the likes of Disney, another company that creates its own content. The advantage Disney has it that it is a recognizable brand that has global appeal.

Amazon Prime Video has the largest collection of movies available, a big advantage against the competition (Source PCMag Australia)

Netflix will lose out on certain content once Disney starts its own service. Unless there is a distribution agreement, Marvel Studios content along with other studios under Disney will now become exclusively available on the Disney streaming service. This does not seem fair at all when it comes to the customers. Is Disney actually going to make content exclusive so that people will subscribe? It will for certain movies and shows, but it is all about which can earn them more revenues. The stake are high and the competition is increasing.

While a basic subscription to a streaming provider remains cheap, it does become more expensive when as you subscribe to more streaming services. It all adds up and this may not be reasonable to those who have already “cut the cord” on cable or dish TV to reduce expenses. That is why this may lead to relevance once again for cable and dish TV companies to provide streaming services as …. A BUNDLED PACKAGE. But wait, isn’t that what cable companies are already doing?

Bundling streaming services into packages will make business sense

Cable companies have been bundling packages for a long time now. They provide different tiers to customers to choose the package they want. There are different prices depending on how many channels or services a customer wants. There are also premium services made available which offer 4K UHD streams, more channels and faster Internet connections (fiber-optic). So, it makes plenty of sense for cable companies to try and keep their customers from switching entirely to OTT, by bundling streaming services with new packages. The customers don’t even have to retain cable TV connections. Cable companies will be fine with offering Internet and streaming services.

While the number of streaming providers has exploded, not everyone is going to subscribe to every single service available. Customers who are into sports and action movies are not necessarily the same ones who would be into live music and food channels. There is a market for each one, but costs add up to the point where it makes more logical sense to pay for a single rate to get more than 1 streaming service. Another offering from streaming services are traditional OTA (Over The Air) and cable TV channels like HBO and Showtime. That creates more value for subscribers since they get more content to watch.

This is how much basic streaming service costs from 5 major providers (As of January 2019)

I am actually looking at Internet Service Providers (ISP) as potential partners since they own most of the network that run the Internet. Questions may arise as to whether they will now throttle the competition on their networks, which cannot be stopped by the FCC due to deregulation and repeal of Net Neutrality. It is now up to the FTC Federal Trade Commission to look at those matters. Time-Warner Cable is also an ISP whose networks allow competitors like Netflix and Amazon. Once they start their streaming service, will it affect the others by prioritizing their own over everybody else? That remains to be seen, but it does make business sense to prioritize your own services first. What will likely happen is ISPs like Time-Warner will provide their service and offer bundle packages with other options from competitors to be fair.

Smart TVs are ideal ways to deliver bundled packages which can be accessed directly from the screen without needing to open a computer or smartphone (Photo Source Blaupunkt)

In order to bundle the packages, there has to be ways to make it easy for customers to access. Right now when you want to use Netflix and Amazon on the same device, you have to go to a different website and use separate logins. That is for security of course. Though a single sign on would be ideal, in a competitive atmosphere it is also not a requirement. It may be easy to forget passwords or even misplace login information. A more user friendly interface that can land subscribers to a screen with the services they subscribed to is always helpful.

On the technical side of things, this is actually going to be a boom for the broadcast and networking industry. The infrastructure has been built and will only expect to get better with more fiber-optic deployment to meet demands and the deployment of 5G wireless services to allow more reach. People are watching streaming content from all types of devices and not just home TV and computers. In fact, there is plenty of engagement from users watching from their smartphone or tablet. This is the market ad and marketing firms want to target as well, and they can do so through these providers. These networks will surely have to scale to meet the projected growth in subscribers, and that is one thing FCC chair Ajit Pai wants to see investments flowing in. It will be lucrative for networks to expand and upgrade, but that will require capital investments. This could very well be a golden opportunity in this space.

It now becomes a value proposition as to why subscribers should be willing to pay for streaming services. According to Hollywood Reporter, customers pay $107 monthly on average for cable TV. Some people are even going back to OTA while subscribing to one or two streaming services over their Internet connection. If they can ditch cable for cheaper streaming services, it is a better value. This is why companies need to work out bundling packages that offer the best value for their customers. People surely subscribe to content they enjoy watching while expecting timely service, which creates great user experiences that retains loyalty. Cable companies and ISPs can surely gain from the OTT industry since they provide them the Internet that those services run on top of. One thing is for sure, without the Internet there will be no golden age in streaming TV.

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