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The digital media landscape is undergoing a tectonic shift. Cable and broadcast growth is declining, while over-the-top (OTT) gains steam. The way we consume media is changing dramatically, with traditional content delivery models being blown to bits. Here are predictions for digital media in 2016:
2016 will be the year of second-generation OTT providers, as heavy hitters like Apple, Facebook, Google and possibly even Microsoft get into the game.
Amazon will rise from a second-string player in the OTT market to a serious contender. It is making significant strides with original content. We’ll see a real battle for the top positions in the market, which could put pressure on current leader Netflix.
Further, as more competitors enter the market, it could be hard for some incumbents to keep up. For instance, HBO may have pricing challenges with its HBO Go service as it compares to Netflix and others. Unless you’re a huge fan of a specific HBO show, the price may be steep.
The major film and TV studios are still trying to starve Netflix of content, but they could be making a mistake that will come back to haunt them. Netflix generates a lot of cash and there are two things it can spend its money on: global expansion and content.
When a TV and film studio, say CBS, withholds content from Netflix, such as new episodes of its TV shows, Netflix’s only real choice is to go out and create new content of its own. In fact, Netflix recently said it plans to create many new shows and movies in-house.
It could soon reach a point where Netflix is creating as many new shows as the major networks. Imagine that Netflix has the top five shows in America next year. Suddenly, the balance of power shifts. Netflix could also invest investing more in its existing movie creation efforts, becoming a full-fledged movie studio in 2016, as the traditional film studios continue to withhold prime content.
There has been a long-simmering discussion over cord-cutting and how real the phenomenon actually is. Comcast says it’s not happening. But this year cord-cutting will become painfully obvious as OTT providers and streaming devices make serious strides.
Cord-cutting could really start to accelerate as soon as this month. Out of more than 21,000 people surveyed online by consulting firm cg42, 18% said they’re considering buying a device that allows them to stream OTT content on their TV. Of that 18%, almost half said their Apple TV/Roku/Chromecast/Amazon Fire TV purchase would replace their pay-TV subscription.
The basic business model of cable, by which consumers purchase a large package of channels, most of which they never watch, is going the way of the Flintstones. In fact, 81.6% of consumers say they would prefer to pick and choose their own channels, according to the Digitalsmiths 2015 Video Trends Report.
HBO and Showtime are already offering their content via standalone subscription, and Sony announced that it will soon offer consumers the ability to select individual channels for its PlayStation Vue TV subscription service. Though cable providers have been reluctant to unbundle, they will have to bend to the will of consumers in 2016 and offer a la carte packages.
To paraphrase Jerry Seinfeld, people don’t want to see what’s on TV, they want to see what else is on. Consumers want better discovery. Today there are hundreds of channels available, as well as streaming options.
So how do you find the shows you want to watch? The ultimate goal should be to connect consumers to the programming and movies that are most relevant to them at any given moment and on any device. Solving this issue will be an important focus going forward.
As consumers, we now subscribe to a lot of monthly services: phone, music, software. This is the year that paying monthly subscription fees will start to proliferate. For consumers, making small monthly payments is now more palatable than paying a big up-front fee.
Change in media is relentless and ruthless. Some companies will keep up, some will not. But on the bright side, we will all be better entertained.