There has been exponential growth in video streaming for television, cable and movies over the last few years. Evidence of this is the fact that 62% of US consumers use SVOD. 52% of those consumers use Netflix and the numbers are growing. Earlier this year, Youtube stated that viewers watch over 1 billion hours of video daily. Overall, TV viewing is trending away from traditional content consumption methods to online video platforms. Past history reveals that a set of small technology advances can lead to bigger shifts that change an entire industry. As was seen with the transition from DVD to Blu-ray, MP3 player to iPod, and cell phone to smart phone, we are experiencing a major shift to online video. Let’s take a look at some of the technology improvements that have made this trend possible.
Carriers stopped offering unlimited plans about 6 years ago but in recent months they have brought these plans back. More customers moving to unlimited plans means more traffic. Service providers are adding new hardware equipment to gain more capacity to transport more data through their existing networks. The big mobile phone carriers are driving more consumption of online videos through improved network speeds and affordable plans. The capacity issues that plagued the carrier companies 6 years ago have been resolved. Verizon’s strategy for 2017 is to boost 4G coverage, density and capacity and expand fiber. In addition, they and others have plans to rollout 5G in 2017. Mobile video traffic is expected to grow by 50% to become two-thirds of mobile traffic by 2021. Improved network speeds, higher resolutions, and improved technology will make online video easier to deliver.
Accessibility to higher audio and video quality is crucial to retaining streaming subscribers. The lack of content has kept 4K Ultra High Definition (UHD) and High Dynamic Range (HDR) from being more widely available. We see higher resolution 4K content plans from Amazon, Netflix, Youtube, Ultraflix and others. Many are also providing VR and augmented reality services for gaming, travel, nature, drones and other areas. The devices required to create such content must be able to handle high definition, UHD and HDR standards fairly well. 4K content subscribers must be able to playback this higher quality content without hiccups or interruptions. Better resolution displays were rolled out to the market from all major television, smart device and camera manufacturer this year. They will provide a realistic and engaging television experience that consumers crave. The viewer experience will be enriched by the latest technology and over time is directly related to customer retention on streaming services.
Several improvements in standardization of video technology have also made the increase in online video possible. Standardized methods to compress higher bandwidth content have made it possible to transport HD, 4K and eventually 8K over new and existing internet infrastructure. Encoding and chip manufacturers are implementing the standard into their technologies for use within these workflows. 4K is being streamed today by Youtube using the VP9 compression standard. Others like Globo.com are planning to make HEVC their standard of choice for streaming UHD to their audiences. For 8K streaming to become a reality for viewers their must be wider adoption of technologies like 5G, FTTH connections and 8K screens. There are plans to provide 8K broadcast coverage for the 2020 Olympics in Tokyo. This will be a catalyst for adoption of 8K in the Japanese market.
Streaming platforms offer niche content channels and new opportunities to monetize through targeted advertising. Companies like Google are using AI to provide a more personalized viewing experience. There are smarter decisions that can be made in online video platforms to offer a curated viewing experience. Content and technology partnerships offer alternative avenues to buy and sell content rights. Apps can provide more data about viewers and that allows platforms to monetize more efficiently. As Facebook has demonstrated, live content streaming is more engaging and easily monetized.
There are several technology trends that have driven the growth of online viewing. Carriers offered more traffic to their customers. Consumers can now pick a service provider with good quality, reliability, and bandwidth availability. There is plenty of choice and affordability in the market. Subscribers have options outside of traditional television and cable like Crunchyroll, who have over 1M subscribers, and growing. Niche content from providers like Cinedigm have options such as the Dove Channel, Docurama, and ConTV. Taking advantage of higher resolutions from your SVOD provider, on your smart phone, smart TV and other devices increases adoption of higher resolutions. Formats like 4K and eventually 8K will become ubiquitous and commonplace. They will also offer the best lasting experience for you whether it is your favorite television series, movie, or family videos. In this industry, one must either evolve or die. As seen in recent years, cable companies have lost thousands of subscribers as cord-cutters increase. As a reaction to the decline, many have made new investments, created OTT offerings, and built studios to compete in the streaming market. Is it prudent to follow the market or create a new market altogether as streaming has done? How can you use this knowledge to ensure that you are ready for the next shift?