i3 | August 05, 2019

On-Demand Entertainment Gains Momentum

Rick Kowalski

As if Netflix’s price increase and Sinclair Broadcast Group’s launch of STIRR didn’t rock the streaming video landscape enough recently, an avalanche of over-the-top (OTT) developments augur more new ways to look at the industry. From NBCUniversal’s commitment to a direct-to-consumer service that treads carefully between its existing cable and broadcast revenue sources, to Facebook “Watch” and Viacom’s planned purchase of PlutoTV, legacy media operators and digital stalwarts are diving deep into OTT ventures that will expand viewing alternatives and generate new competitive confrontations.

Since many of the emerging ventures include local news and sports features, streaming video will chip away at the bedrock of TV as we’ve known it for more than 70 years. This streaming video deluge will put more focus on the role of connected TVs as well as wireless/portable devices including advanced handsets and tablets. Many of the new entrants are experimenting with advanced viewing capabilities, including 4K Ultra HD transmissions.

Netflix has revealed plans to charge $1 or $2 more per month for its service. Some analysts greeted the price increase as a prelude (worth nearly $800 million annually) to Netflix’s investment in more original programming. Skeptics said the price rise could lead to a subscriber decline of eight percent or more, thus restraining the program production fund. Yet others contend that Netflix is the standard-setter in the subscription video-on-demand (SVOD) category, so the price boost will embolden other providers to up their fees, thus recalibrating the value of the industry.

The Competitive Scenario

Providers and consumers now have more options, including keeping track of studio libraries that may migrate to different platforms. For example, Disney+ (which will include programming from the massive Disney library plus movies from subsidiaries Pixar, Marvel, LucasFilm and Fox) may pull the company’s content from other platforms when it debuts later this year. Similarly, Viacom may limit the availability of programs from subsidiaries such as Paramount Pictures and MTV/Nickelodeon on rival services after it completes its planned $340 million purchase of PlutoTV, an standard ad-supported VOD system that streams more than 100 channels.

Viacom President and CEO Bob Bakish said, “As the video marketplace continues to segment, we see an opportunity to support the ecosystem in creating products at a broad range of price points, including free.”

Sinclair Broadcasting’s plans for STIRR may be tied into the large TV station owner’s plans for the emerging ATSC 3.0 technology, which will enable targeted delivery of digital channels via the evolving IP broadcast standard. Viewers also can access local news from Sinclair’s 191 TV stations nationwide. STIRR’s rollout begins with 20 networks, with plans for 50 channels by the end of the year.

Video Streaming Boom

An FX Networks report shows made-for-streaming scripted shows are the largest category within original TV productions. The 160 original scripted series made for streaming channels last year represented a 27 percent jump from the previous year. It exceeded the 146 new series produced for broadcast channels and 144 new series created for basic cable channels.

For its part, Comcast-owned NBCUniversal is trying to minimize any negative impact from its expanding streaming services upon its existing cable TV operations and the newly acquired Sky global satellite audience. It is expected that existing pay TV subscribers can access the ad-supported service for free, while non-pay TV customers can purchase subscriptions to the service.

NBCU CEO Steve Burke said the new streaming channels are coming as “people are watching premium content more than ever.” He added, “They want more flexibility and value. Advertising continues to be a major part of the entertainment ecosystem and we believe that a streaming service, with limited and personalized ads, will provide a great consumer experience.”

July/August 2019 Issue Cover

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