Media Vision 2020 in review part 2: Market disruptors transform viewing habitsJanuary 13, 2020
Last week we addressed the growth of video-enabled devices and the rapid increase in OTT uptake. In the second part of our three-part blog series looking back at Ericsson’s Media Vision 2020, MediaKind’s Meir Lehrer, Vice President, Portfolio Development, Arnaud Caron, Director, Portfolio Transformation, and Erik Ramberg, Vice President, Head of Global Business Development, look back at the predictions made about the emergence of new market entrants and the rise of on-demand content…
Media Vision 2020 Prediction: “New entrants bring new investment.”
“The acceleration of broadband capacity and penetration, along with ever more connected devices potentially enables a powerful device or social ecosystem to become a premium TV aggregator.”
Meir Lehrer says: “The lines in consumers’ minds between live linear programming, VOD, Catch-up TV and (Cloud) DVR are blurred. Gen-Xers, Millennials and others have made the paradigm shift whereby they don’t see video in terms of which system or user interface is making it available. They want what they want, where they want it, and when they want it.
“So operators must respond by looking at all of their incoming content, whether linear or file-based, whether CBR or ABR, as generic assets and must ensure their infrastructure (and their programmer licensing agreements) can support the robust transformation of all content types to meet the viewing demands of their customers.
“An infrastructure that’s smart enough to enable all of this content, metadata and storage management will be essential. This may drive some operators out of the DIY (Do It Yourself, in-house development) model that became prevalent over the past five years, and back into the market to look for off-the-shelf solutions.”
Erik Ramberg says: “In order to remain relevant to their customers, emerging OTT VOD services such as Disney+, HBO Max, Peacock, and Apple TV+ will focus their offerings to meet the entertainment desires of specific consumer segments. The challenge for these new players is how to remain on the list of “must have” subscriptions in an increasingly crowded marketplace.
Over the course of 2020 we will see a surge of consumer adoption as they rush to try out the abundance of new services; this is not a sustainable situation since very few consumers can afford to pay for every service every month. Even for those that can, the costs will escalate quickly and navigating the silos will get laborious.
Eventually this situation will lead to a far higher churn rate than we’re used to seeing on SVOD services. Consumers will increasingly binge watch, consuming all the content they want in a library within months of their initial enrolment – and then move on knowing that they can enrol again the following year when enough of the content refreshes. The services will then react to the high churn and use promotions to entice consumers back to their service; setting up a discounting spiral. There’s just not enough room for all of the players to be financially healthy and eventually they’ll be a shakeout.”
Media Vision 2020 Prediction: “On-demand has risen to parity with live/linear.”
“IP will have accelerated the ongoing shift of consumers to embrace the convenience of on-demand access to content to 50 percent of their consumption.”
Erik Ramberg says: “As we can see, there are more permutations for service delivery models than at any point in history. What is clear is that many hybrid mix and matches, ad-supported, subscription pay-TV, SVOD, FTA, satellite, cable, gaming, UGC and maybe, one day, VR – are likely to see at least exploratory launches over the next few years. But as we predicted in 2014, linear, broadcast TV is no longer the undisputed king of the media empire. Consumers want to be entertained! Whether that’s on-demand, catchup, AVOD, SVOD, or gaming – which within younger demographics has overtaken TV – consumers no longer care about the how, but more about the what, where and cost.” Read more in Erik’s recent blog post.
Arnaud Caron says: “According to Ericsson’s November 2019 Mobility Report, video traffic in mobile networks is forecast to grow by around 30 percent annually through to 2025, to account for three-quarters of mobile data traffic. This is being driven by the increase of embedded video in many online applications, VOD streaming services and the evolution towards higher screen resolutions on smart devices. Of course, one of really exciting areas for our industry will be 5G, which Ericsson predicts will carry nearly half of the world’s mobile data traffic by 2025.
“There are two sides to consider in terms of 5G. There is the consumption side of course, and the opportunity acquire more video, in better quality, everywhere. That’s certainly of interest, as you can increase the quality and the overall access to the content. But for me, the most exciting area of 5G is how it benefits the production area of the industry. Everything that can be delivered on-the-go in terms of production benefits from the 5G upstream bandwidth.
“The cloud enables this video to be redistributed to end users. In that sense, 5G is a critical enabler delivering connectivity to the cloud across a wide range of production environments. 5G will deliver upstream performance that will help transform the quality of video that consumers see on screen. And this is really important for live, outdoor events. By having a lightweight method of processing content to the cloud, you can enable effective production that is easy to manage through network and cloud connectivity, with the opportunity to deliver services quicker than ever before. Thus, maximizing the return on content investment more rapidly.”
Read the final part of our three-part series on Thursday to learn about our predictions for the growth of on-demand content and increases in media market revenues!