Editor’s Note: This is the first of a three-part series on understanding the streaming video consumer. Be sure to bookmark FreshMR so you don’t miss an issue!
It wasn’t long ago when consumers had three choices for video consumption: free TV (using antennas), paid cable TV, and, if going with cable, whether to add a movie channel like HBO. There was little competition, little innovation and very few choices. What a difference a few years makes!
Those simple days are almost unrecognizable in today’s chaotic, cluttered video world. Sure, consumers can still view local broadcasts over-the-air, but the insatiable appetite for content has dramatically increased our options. Having so many options can be overwhelming to customers but also confusing to the telecommunications and entertainment companies that provide and deliver content.
The Evolution of Video
Many look at today’s cluttered video landscape and marvel at the revolution that has upended this ecosystem. In reality, there has not been a revolution at all. Rather, there has been a steady evolution occurring for more than a decade. Winston Churchill once said, “The farther backward you can look, the farther forward you are likely to see.”
Video consumption is currently at an inflexion point and understanding how this evolution has occurred will allow both traditional and non-traditional video providers to better prepare for the future.
Looking at the infographic, the video evolution accelerated in earnest in 2005 when YouTube launched, bringing streaming video mainstream by blurring the lines between creators and consumers. The following year, Google purchased YouTube for $1.65B. YouTube’s massive success was fueled in 2007 by the launch of the iPhone. The iPhone—and the ensuing smartphone revolution—brought streaming video to everyone’s pocket and, more importantly, elevated the expectation that customers want to stream video whenever and wherever they are.
From 2007-2011, there was a surge in streaming redistribution of previously released content – both movies and TV. Understanding these trends, Netflix shifted its business model from DVD delivery to streaming movie distribution. And, while Netflix dominated the streaming movie space, Hulu launched as a collaboration of several entertainment companies to provide a platform for streaming distribution of on-demand television shows. Likewise, traditional pay TV providers began building their own “TV Everywhere” apps to allow for limited streaming of content to their pay TV subscribers.
Thus far, most streaming video was limited to on-demand redistribution of previously created content and limited streaming of “TV Everywhere” content from already-purchased cable TV subscriptions. Yet, in 2012 that changed with two critical milestones: live streaming of the Super Bowl and the London Olympics. That same year, Aereo was the first to stream local over-the-air network broadcasts to their subscribers. They tried to skirt copyright laws by “renting” tiny antennas to their subscribers and then streaming the content from these antennas. Ultimately, the US Supreme Court ruled that the Aereo model was illegal, but it did little to stop the growing appetite for live streaming video.
2014 brought with it a new breed of inexpensive streaming video devices that essentially turns any television into a smart TV. The low price point and convenience of simply plugging a stick into an HDMI port made these devices instant hits with consumers. They also set the stage for a new breed of streaming video services that go beyond simply offering on-demand video but instead providing video that more closely resembles traditional pay TV by bundling live streaming of well-known TV stations along with the on-demand content consumers had become accustomed to. These “linear” streaming services have been offered by major brands in the entertainment business including AT&T, Sony, Dish Network, Time Warner, Google and, later this year, Hulu.
The rapid shift of video consumption to mobile devices has led to an upheaval not only in user experience but has even shifted the entire mobile industry to adjust to this phenomenon with the launch of unlimited data plans and various video consumption approaches (zero-rating, lower video quality compression, etc.).
Linear Streaming Services Are Poised to Takeoff
Linear streaming services are disrupting traditional pay TV and streaming video business models and, from the looks of it, this disruption is only going to accelerate over the next 12-36 months. Providers are struggling to make deals with content providers, build innovative streaming infrastructures and develop proprietary content. They are managing technological limitations and customer experience headaches while trying to figure out lucrative and sustainable pricing and financial models. To make it even more challenging, it seems that a new player is appearing every day with some new, innovative approach that changes the ground rules and shifts customer expectations.
So, what are video providers to do?
For starters, there is a need to realize that while the environment is changing quickly, the fundamentals of how to run a successful business remain constant. Providers must avoid responding with knee-jerk reactions. The reality is brands expose themselves to unforgiving consumers when they release poorly planned products and/or features into the market.
Now is the time to double-down on quality research. Companies need to go back to basics and objectively determine what consumers want and what they don’t care about. They need to identify how these new services can seamlessly integrate with more traditional offerings. And, most importantly, they need to figure out how much value consumers ascribe to these video services. The bottom line is this: the more things change, the more they stay the same. Conducting time-tested and cutting-edge, quality market research can drive never before seen insights into the minds of each of these varied and overlapping video consumption groups. In such a rapidly changing world, the best advice is to remember the disciplined business practices that have driven the successes that have led to all of this new opportunity.
We invite you to participate in a syndicated research study that gives each participating brand a competitive advantage by thoroughly understanding the needs and motivations of today’s video consumer. Learn more.