The hockey stick

S04E02: Game of Streams (The hockey stick)

Our Media Solution Specialist, Magnus Svensson, is sharing his reflections from the online streaming industry in this post. This is part of a monthly series so make sure to follow us here if you don’t want to miss an episode.

We have for a long time talked about cord-cutting or cord-shifting and that subscriber would leave their traditional pay-tv subscriptions. But the pace has been slower than expected the last years. Have we now seen the start of the so-called hockey stick?

Only in the fourth quarter of 2019, traditional pay-tv distributors in the U.S. lost around 1.5 million subs, according to estimates from analyst firm MoffettNathanson. For the whole year 2019, the traditional pay-tv providers in the U.S. dropped 6 million subscribers at a record rate of 6.8%.

We don’t see the same pace in the Nordic region, yet. We still see the effect of the big broadband extensions that have been happening, where the broadband providers bundled IPTV subscriptions with the new optic fiber broadband connections. Also, the alternatives when it comes to vMVPD offerings are still limited.

Take the next step

At the same time, we see the decline in pay-tv, we watch more video content than ever before. If the households now leave their traditional pay-tv subscriptions, where do they all go? Most likely they subscribe to one or several of the global streaming services. If sports are of interest, one or several streaming services that serve the sports are added to the stack.

Looking at the data from MoffettNathanson, with OTT TV gains included, the rate of loss was 3.8% in Q4 2019, compared to 0.9% in the year-ago period. Even if it’s a bit harder to get reliable subscriber data on vMVPDs, it’s clear that OTT subscriptions are not replacing traditional pay-tv subscribers completely.

However, I believe that most people would subscribe to a streamed alternative to their previous pay-tv subscription. But then this alternative would need to offer something more than just a similar experience delivered over the public internet.

The streaming technology comes with possibilities that so far, the industry only scratches the surface. By having the knowledge of the subscribers, you could by fairly simple means create a personal experience for each of your subscribers. You could argue around the difference between a linear channel and a playlist. The biggest advantage of streaming is the endless possibilities for playlists (or call them virtual linear channels) without a huge cost increase.

Endless possibilities

By stitching already transcoded videos into playlists you create an alternative way to entertain your subscriber base with the same catalog. You could also mix in live events to keep the “water cooler television” for specific events or releases.

The options to mix the content in the playlist are endless. In the simplest form, it could be based on an editorial or curated playlist. It could be automated based on metadata to create theme channels (cooking, documentary, …).

As the next step, you could add different levels of personalization into the mix. You could have your own linear channels based on different criteria. The playlists could also be enhanced with rating possibilities, e.g. “more like this”, or simple ways to find more information about the content you just watched.

On top of playlists, you could make the complete viewing experience more attractive and personalized with customized posters, hero banners, recommendations. You could have possibilities to select audio based on your language, interest (your favorite commentator) or need (e.g. dialogue enhancement). You could make simple solutions for continue watching, marking favorites and finding new content.

It’s all about reducing time to content and providing a more attractive way to present your offering.

To watch out for the coming months…

The local broadcasters and distributors continue to fight between themselves within Sweden. The arguments are turned back and forth in the interest of the negotiating party. Most of the issues circle around the OTT rights and if distributors should have the possibility to distribute the broadcaster content within their own OTT services.

But it’s not within the local market they will find their enemies… the biggest threat still comes from the west and the big streaming services. The more the local actors fight within their little sandbox, the more the global services will gain subscribers. The Swedish households are soon fed up trying to understand where and how to see their local show, and just give up. People still like local content, but to what price?

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.

Follow me on Twitter (@svensson00) and LinkedIn for regular updates and news.