i3 | November 15, 2018

Streaming: It's All About Connections

Gary Arlen
Streaming video

As streaming video accelerates its juggernaut into homes worldwide, its role in the media economy continues to shift. Although mobile and dedicated over-the-top receivers will continue to play a significant role in fulfilling viewers’ appetites for streamed programs, the growing adoption of smart TV sets is very important. One reason is the increased demand for reliable quality of the signal. 

A recent report by real-time streaming platform Phenix, The Streaming Wars, found that more than half of viewers abandon a poor-quality stream in 90 seconds or less. The report found about 27 percent of streaming customers “don’t think ‘live’ is worth paying for” if there is consistently poor quality.

Another analysis by Limelight Networks concluded frequent buffering interruptions make viewers abandon a program. It found two-thirds of viewers will stop watching a video after two rebuffers — crucial in programming such as live sportscasts. Limelight’s State of Online Video report found that 60 percent of global consumers are more likely to watch live sports online if they are guaranteed not to experience viewing delays. 

It’s About Content and Competition

The big-buck commitments of Netflix and Amazon to produce original programming will keep viewers tuned into the subscription video-on-demand (SVOD) channels. Netflix has commissioned more than 250 new programs, says Ampere Analysis; doubling the 229 original shows now on the company’s servers. Amazon Prime Video has about 105 original titles and is expected to create an equal number of new shows and series, Ampere says. 

Audience and program segmentation is also important. Netflix’s new shows — largely comedy and science fiction — are aimed at young audiences, while 29 percent of Amazon’s new titles will be drama series that appeal to older viewers. Ampere also found that YouTube, Apple and Facebook are boosting their original show distribution. The three stalwarts have a total of 65 shows in their pipelines. “All the major players are expanding the number of original commissions in the face of an increasingly competitive market," says Ampere analyst Richard Cooper.

But streaming video faces several hurdles, notably audience fragmentation. Concerns include capabilities, such as second-screen access, that distract viewers and make it more diffi cult to break through the clutter. Two-thirds of the adtech respondents in a Viant study say ad clutter is now a major barrier. 

Data Deluge on Streaming Media

One factor stands out: steaming media is immensely popular. The Limelight study found in the U.S., young binge viewers watch nearly three hours of programs (two hours 56 minutes) during a session; well above the global average of two hours seven minutes). In contrast, online viewers above 60 years old watch just one hour seven minutes at a time, Limelight says.

As technical challenges are resolved, and programming proliferates, price may become a more dominant factor in streaming. More than half of streaming customers say price increases would be the major reason to cancel an SVOD service — slightly more than the percentage of cable customers who will cancel based on price increases. Today most SVOD customers also are (for now) cable TV subscribers. The Limelight study found that cable customers are supplementing, not replacing, traditional TV with online video. Cable subscribers pay for an average of 1.2 streaming services, while non-cable subscribers buy just 0.7 services. 

And that’s why quality diff erentiators are now so important. The Phenix study — with its bias toward live programming concluded that nearly one-fifth of customers who use a streaming service “would be likely to switch platforms if there were an alternative with a better ‘live’ option.”

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