Streaming video blasted beyond the tipping point in 2018 and will command even more attention this year, but challenges lie ahead in the struggle for viewers’ eyeballs and pocketbooks.
The year 2018 was packed with some fascinating moves. The trifecta of technological advancement, improved connectivity, and video maturity has made streaming more accessible than ever. Steered by original content, the OTT industry witnessed some rivalry among video streaming platforms, business acquisitions by bigger players, promising growth in subscription numbers and the emergence of regional players challenging the industry elites. 2019 will be experiencing some sparks coming into action which were announced or discussed last year. This list includes the launch of video streaming services by Disney, Warner Media, AT&T, and Amazon’s video game streaming platform, among others.
India’s hyper-competitive market for OTT content has attracted global as well as local players to capture the rapidly-growing video and online content streaming market. The number of players competing in India’s OTT market has dramatically increased, growing nearly 4x in the last 6 years from nine players in 2012 to 32 players in 2018. However, despite the surge in the market, retention of consumers remains a challenge for all the major players. Nearly half of the consumers uninstall online streaming apps within a week of using it for the first time making it difficult for all the video-streaming platforms to compete for the race of top three. It is not just the number of new entrants in the OTT market, the original content streamed by OTT players is also evolving at a rapid rate. Since a key way to woo the Indian consumer is to generate new original content, most of the players including Netflix, Amazon Prime, Hotstar, and Voot are betting big on various types of original content.
Despite the American giants, Amazon and Netflix entering the country, Hotstar still easily holds the top spot in the Indian VoD and video streaming market. Hotstar is expanding by partnering with national telecom service provider BSNL. Hotstar invested around USD 300 million in the OTT market. Both Netflix and Amazon Prime Video infused USD 70 to 80 million in their respective video streaming platforms. Netflix hit five million subscribers by the end of 2017. Amazon video fared similarly, bringing in 11 million Indian users in 2017. In contrast, local streaming service Hotstar had 75 million active monthly subscribers in India in 2017. Navigating India’s market has proven challenging for video-streaming giants Netflix and Amazon Video. And a big part of the adversity is the complex nature of the country’s linguistic landscape.
Netflix is choosing to focus resources on developing its Hindi and English offerings, producing original Netflix series. In contrast Hotstar provides programming in Malayalam, Tamil, Telugu, and Kannada, in addition to Hindi and English.
While cable TV may be more affordable than Netflix, television is losing ground in other crucial ways. Television has lost many young digital viewers to online streaming services that offer better coverage of sporting events. A record number of Indians streamed the 2018 World Cup on their phones. Nearly 70 million watched the cup on SonyLiv, just one of three Indian broadcasters with rights and the only broadcaster that has published viewership numbers. If Netflix is to catch up the company may need to stream sports matches. Netflix has already partnered with Conde Nast entertainment to create a series about the Mumbai Indians, an IPL team. The expansion of cheap internet
has made India a particularly attractive new market, especially over China, which does not yet allow western streaming services.
Live streaming is taking off in 2019
While it has been around for some time, live streaming is taking off in 2019. With adoption rates exploding, use cases proliferating, and video quality continuing to increase, the streaming industry’s influence on everyday life is at its zenith. The video is projected to account for 82 percent of internet traffic by 2022, a growing share of which will take the form of live streaming. Streaming to Facebook, Instagram, Periscope, and similar platforms lies at the heart of any social-first content marketing strategy. Video consumption on social media began as a rather passive experience, with one-way broadcasts and limited interactivity to blame. Today, Facebook Live supports two-way interactions with reduced latency, as well as video chats through Facebook Messenger. Other social media platforms putting their stamp on streaming include HQ Trivia and Confetti, where players can compete in live game-show environments for prizes.
But streaming has moved beyond just social applications. Building an engaged community requires authentic interaction at every touchpoint. In 2018, new streaming entrants continued to add programming to bolster audiences. Live streaming services expanded its lineup of local stations available to subscribers, also began broadcasting of some sports in upgraded quality 4K video. To compete, new streaming pay-TV providers felt they had to add more and more channels. Their bundles have gotten fatter, which is antithetical to the original value proposition of a skinny bundle.
OTT adoption grows
Each year, more and more viewers do away with traditional satellite and cable services. So what is it going to really take for audiences to transition entirely to OTT services? Analysts have long held sports broadcasts as the saving grace for traditional television. But streaming services now deliver these programs directly to viewers’ living rooms over an internet connection. Today’s sports fans consume content in a variety of ways supplementary to television broadcasts. These include highlight reels, training camp live streams, and game recaps. A final consideration previously in favor of satellite and cable sports broadcasting is the inherent latency of HTTP adaptive streaming formats. While OTT content has been delivered with far more latency than legacy TV in the past, new alternatives with ultra-low latency, WebRTC, and SRT offer near-real-time delivery from screen to screen.
Mobile defines the future of streaming
Mobile defines the future of streaming and will continue to dominate in 2019. PCs are forecast to account for only 19 percent of internet traffic by 2022; whereas smartphones will account for a whopping 44 percent. For this reason, vertical and square video formats will all but eradicate the traditional landscape format on social media. Initially, a more ergonomic way to record videos, the vertical format quickly began to outperform those shot in landscape years back. Soon after, the Instagram-style square video edged out the vertical format. While landscape videos will still have a place in the world of broadcasting, vertical and square formats will also begin to pop up outside of social media. It is yet to be seen which format (vertical or square) will reign supreme in 2019. Many social media platforms have enhanced the way vertical formats are experienced in order to optimize user interactivity. Advancements in augmented and virtual reality could also impact this. One conclusion, however, is undeniable: mobile will dictate the future of video.
AR, VR, AI, and ML
The combined market size of augmented and virtual reality will reach around USD 215 billion by 2021. Facebook rolled out virtual reality live streaming in July 2017, and then 3D-180 video in June 2018. As engagement with these formats continues to increase, marketers will be the first to adapt. There are more than 1760 VR startups working for different industries which include advertising, education, tourism, and many others. Adoption has yet been slow, however, because it requires the right camera and hardware. 2019 is expecting to experience an additional revolution, the VR headsets might not require the support of external devices anymore. So, both of these technologies will make their remarkable moves in this year, and later on as well. The immersive era of virtual reality is 100 percent underway. And in 2019, developers and manufacturers will pave the way as they further hone this technology.
The amount of streaming data in the world grows exponentially each day. More data means more targeted content; but without a way to catalog the streams in real time, targeting is not possible. Enter Machine Learning (ML) and Artificial Intelligence (AI). These technologies will continue to improve automation and indexing. For example, one platform translates visual and audio information from the streams into metadata that users can then filter. Rather than being done manually, this learning-based video indexing platform analyzes live video content automatically. In 2019, there will be more sophisticated forms of real-time stream indexing. Beyond that, real-time audio recognition will be used to prevent copyright infringement. Many developers have their sights set on doing so with the help of ML, something that titans of user-generated content (UGC) like YouTube still struggle to address. The OTT industry has already got a glimpse of the power of AI through the recommendation engine. Recommendation engines are by far the most evident and talked about the use case of AI in OTT platforms. It is especially helpful for platforms which have been functioning on a subscription-based model as it is instrumental in content discovery and segmentation based out of user persona. Recommendation engines are going to be smarter and better with their recommendations in 2019, thereby increasing users’ lifespan on any website they are browsing on. Be it OTT or e-commerce sites.
Streaming UHD videos in low latency
With greater appreciation of OTT industry comes greater demand for high-quality videos. Thus viewers are resistant to compromise 4K streaming with service interruption. This calls for availing the most competent CDN to assure low latency to your viewers. According to several studies, even a smaller lapse in videos can cause a loss in viewers’ number. Improved video delivery will top the list of deliverables for leading streaming service providers and especially the ones who are starting off.
The growing importance of streaming in the music industry
In 2019, video music broadcasting is back. Streaming now accounts for 75 percent of the music industry’s revenue. In addition to user-generated content, subscription services like Spotify and customized radio services like Pandora generate much of this revenue. The role of video streaming in the music industry is expected to continue to climb as today’s consumers demand immersive audio-visual experiences.
Ad-supported offline viewing can be a reality
The increased number of OTT users will automatically attract advertisers to take advantage of the platform and market their products or services. Thus, 2019 is going to witness substantial growth in digital advertising. 49 percent of Gen Z and 48 percent of the millennials spend much of their time on online streaming. Advertisers have now a smoother and smarter way to cater to their target audience. Streaming platforms with AVoD revenue model are in a win-win situation here as they can make their service completely ad-free by charging more or can simply reduce the price, increase user base, and keep on earning revenue from digital advertisers. Also, advertisers may soon come with an option to embed ads in the content itself. This is again a win-win situation for both advertisers and video streaming service owners as latter can charge higher from their users for completely ad-free viewing. There will soon be a dynamic ad insertion technique that will let one stitch advertisements with video content at CMS level rather than a client’s browser.
More content streaming services
Netflix dominated the television industry in 2018 as the streaming service grew to more than 137 million subscribers worldwide. However, several new direct-to-consumer streaming service offerings are in the works from major media companies. Both Disney and AT&T have unveiled plans to launch their own offerings early in 2019. It will be interesting to watch how the landscape will transform. Before the Disney Play announcement, Disney and Netflix had a great partnership, with the former giving Netflix’s viewers access to all of Disney’s Marvel and Star Wars movies. The emergence of a Disney-owned platform means that this relationship is likely to drastically change.
Streaming video blasted beyond any tipping point in 2018 and will command even more attention this year, but challenges lie ahead in the fight for viewers’ eyeballs and pocketbooks. There is no question consumers love watching, and binging, TV and movies via subscription streaming services. Consumers’ embrace of Netflix and other services continued to rise in 2018. And many homes are watching more than one service. The shunning, shaving, and cutting of the traditional pay-TV cord and the ascendance of content via broadband – admittedly another cord that comes into the home, is supported in a survey released by Deloitte. The average subscriber in the survey paid for three services, Deloitte found. However, as streaming video spreads, the trend lines have blurred. That is because not all the homes that have access to Netflix and other streaming services are paying for them. There is a lot of sharing going on.
2019 will bring more streaming options and continued disruption across the media and entertainment landscape. The need for content to compete with Netflix and other streaming video services has already led to AT&T’s USD 85 billion acquisition of Time Warner. Disney’s expanded streaming subscription play will impact other streaming video providers that previously licensed Disney-owned content, content that will be redeployed exclusively on the new Disney OTT media services offerings.This could become an even more important industry-wide theme as media and entertainment companies look to own the customer relationship directly.
But traditional media companies such as Disney will face challenges as they attempt to go direct to consumers. That is because they are afraid streaming efforts will disrupt their theatrical, DVD/home video, and broadcast/cable network revenue streams. Every piece of the video ecosystem has been over-earning for decades, which makes it obvious why nobody really wants change to happen.
As services added more programming and features, most also hiked prices. Consumers can expect additional price increases as the live streaming services adapt to what subscribers want and will pay for. Other services may turn to advertising, even though the internet rebelled recently when Netflix did a limited test of what it called promotional videos. While the streaming providers step lightly into advertising, there will be more advertising from (them) in the future. At some point, prices either have to continue to increase or advertising and other promotional efforts be implemented to be profitable.