Netflix

Streaming Video Services: An Evolution

The video media landscape has become quite cluttered. TV production companies scramble to get their videos seen in an oversaturated market and to do so they have to go where their audience is. As a result, big budget content ends up in the over-the-top video market. Subscription and video on demand services have been growing steadily in viewership and media companies know this is where they need to be.

In the OTT ecosystem, Netflix is king. Netflix along with Amazon are far ahead of the free-to-air broadcasters like CBS and the pay-TV broadcasters like HBO and Hulu. For 2018, Netflix’s development budget is a whopping $8 billion. An intimidating number to any other upcoming company in the streaming market and a bold statement telling us that viewers are looking for original content at streaming prices.

Netflix’s $8 billion budget is followed by Amazon’s $4.5 billion then CBS at $4.3 billion HBO at $2.5 billion, BBC at $1.4 billion and Facebook and Apple at $1 billion.

Original content has proven itself as one of the biggest draws to acquire new viewers. As a result, many streaming companies are running to catch up, in the coming year Apple will release ten new series while even platforms like Facebook will pay providers $3 million for every 30-minute episode of premium content.

These streaming companies have even started bidding wars for the rights to various packages, such as the Premier League. At the moment Facebook and Amazon are bidding over the Premier League rights package while services like Sky and BT already have spent a combined $6.3 billion on other international rights packages.

Netflix’s reach, however, is not all-encompassing as a few countries like France have not adopted the platform well and subscriber uptake is slow. Only 30% of French internet users have subscribed to some sort of streaming service. In comparison, 72% of internet users from the USA have a streaming subscription, 70% in Denmark and 66% in Sweden. Some other countries where uptake is slow includes Italy at 49%, Netherlands at 50%, Germany at 51%, Spain at 52% and even the UK at 58%.

French internet users are twice as likely to subscribe to pay TV over streaming subscription services or video on demand. In the US while 72% have streaming services, 71% still subscribe to pay TV as well. Despite all this, Netflix is still the most popular streaming service in France and video on demand is more popular among younger users with 61% of ages 18 – 24 subscribed to video on demand.

The reason why pay TV holds so strong in France is due to strict local regulations that demand a certain amount of French content coupled with demand for local language content from viewers.

However, by 2022 it is predicted that OTT revenues will climb to be half of pay-TV’s revenues. At the end of 2016 OTT revenue came in at $37 billion but in five years’ time, it is expected to balloon to $83.4 billion. When added to pay TV’s revenues this will bring the TV and video market’s total to $283 billion.

For those looking to create OTT content, there are a couple things you should be aware of. The biggest challenges that OTT content faces are monetization, acquiring new and loyal viewers and discoverability of the content. The competition for viewers can be quite fierce and with an oversaturated market it is hard to stand out in the crowd and rise above the rest.

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