Create the future
S05E12: Game of Streams (Create the future)
Our Media Solution Specialist, Magnus Svensson, is sharing his reflections on the online streaming industry in this post. This is part of a monthly series so make sure to follow us here if you do not want to miss an episode.
When I reach episode 12 of each season of Game of Streams, I usually reflect on the year that has passed and make some predictions for the coming. But as the American stand-up comedian Kevin Hart said, “The only time you should look back in life is to see how far you have come,” my reflection of last year conclude that the TV industry have come a long way in the transition to online streaming but still some way to go.
I will instead focus this episode looking forward to where I see the market is heading and where the industry needs to focus.
Online streaming, as traditional TV, is a number game and economy of scale. Subscriber growth is still more important than making a profit and the market expects record numbers in each earning report. The WarnerMedia merge with Discovery has been granted unconditional antitrust clearance by the European Commission, one major step closer to creating Warner Bros. Discovery, a premier entertainment company.
And during 2022, the Comcast and ViacomCBS joint streaming venture Sky ShowTime will launch in selected European countries. The platform will host 10,000+ hours of content including titles from Showtime, Nickelodeon, Paramount Pictures, Paramount+ Originals, Sky Studios, Universal Pictures, and Peacock.
So, what is next? The market is still waiting for Apple to make their next move. Apple have slowly established themselves as one of the contenders to become one of the major television landing pages and content aggregators. I believe that the next step for Apple would be to acquire Lionsgate to further strengthen their content portfolio and secure their capability to produce new originals.
The real streaming wars
As I have written about in a previous episode, the device that is used to watch television will sit with the control of the playing field. It is the operating system that dictates the rules. This is the real streaming wars, and the most probable outcome will be two giants. The same two giants as for the mobile phones, Google with Google TV using Android TV and Apple with Apple TV using tvOS.
Because of this war and dominance of a few vendors I predict that LG will abandon WebOS and include Google TV with their future TV sets. It has become harder for any vendor outside of the giants to be able to host all the popular apps, a must to sell the device. If you miss one of the popular apps, the consumer will turn somewhere else. So, for LG it would be easier to include Google TV than keeping up with the development of their own operating system and maintaining backwards compatibility.
Another likely scenario in the real streaming war would be that Microsoft, that might want to be part of the game, acquire Roku during 2022. If not, Google could be a candidate to acquire Roku to further strengthen their position.
Sports needs to step up
Sports drives engagement, subscribership, and viewership. But for how long will the traditional sports rights, presentation and format continue to have that leverage? It is time to evolve sports streaming to meet the audience where they are.
As live sports together with news is what keeps the lights on for many of the traditional television networks, the media rights and carriage deals keep growing in value. And yet many sports rights end up with streaming services and behind high subscription fees. But despite the money for media rights, is this really the best way forward for sports?
The combination of the increasing options for entertainment online with traditional way of distributing sports, now behind costly subscriptions, will in the end kill the engagement for the sports. The sports and the rights owners must cooperate and make the sports attractive and engaging for all fans, making the sport accessible in different formats to suit a broader audience. Long-form, short-form, highlights, through distribution partners, through social media and other options. Meet the audience where they are, in the way they want to enjoy the sport.
Virtual channels, the curated lean-back experience
Seven West Media created a virtual channel prior to the launch of “Big Brother” season two, offering to viewers of season one content. Available for 11 days leading up to the second season debut, the “Big Brother” channel accounted for 41 percent of streaming minutes on Seven West Media’s digital-only channels. They also saw a 95 percent increase in VOD viewing for the content. They also created a channel for Farmer Wants a Wife with comparable results.
Virtual channels and the curated lean-back experience will continue to increase and complement the on demand viewing that has been the dominating model for the streaming services. It is not about either or, it is about creating a service that can provide content in many ways. Virtual channels are a cost-efficient way to serve already prepared content in a playlist. This is also a good content discovery tool and a way to attract cord-cutters, or cord-nevers, into the service. Serve content the way the consumers want.
To watch out for the coming months…
Sustainable streaming will become the theme of 2022. Making things more efficient will not only reduce energy consumption, it will save money and, in most cases, also improve quality. So, there is no reason not to strive for a more sustainable way for the streaming industry. You cannot afford not to be energy efficient.
Magnus Svensson is a Media Solution Specialist and partner at Eyevinn Technology. Eyevinn Technology is the leading independent consulting company specializing in video technology and media distribution.