By Marc Boudria
Over the top (OTT) content – distributing content without a network operator, and streaming video on demand (SVOD) – are quickly changing the landscape of viewable content. By the end of 2014, 54 million people subscribed to OTT services like Netflix, Hulu, and mlb.com. SVOD revenues are predicted to be $5.1 billion in 2015, and is estimated to grow 116% to reach $8.8 billion by 2019. Traditional media companies and new entries have to navigate the new landscape to keep viewers and go after this big revenue. There are six companies going after this market in innovative ways.
Netflix changed how we watch. Founded in 1997, Netflix started as a website with a traditional pay-per-rental model. In 1999, they introduced a monthly subscription model, and dropped the pay-per-rental in 2000. Netflix disrupted the dvd rental market. In 2000, Blockbuster turned down a $50 million acquisition offer from Netflix. In 2010, Blockbuster filed for bankruptcy. In 2007 Netflix shipped its billionth dvd, and started to shift the market with a focus on its streaming service. While dvd sales fell from 2006 to 2011, Netflix continued to grow. Today, they have 37 million subscribers. They have stayed ahead of the SVOD content game by creating their exclusive and popular programs like Orange is the New Black, House of Cards, and The Square, which was the first ever Academy Award nominated Netflix original production. Netflix is a mainstay in SVOD due to their leadership and ability to stay ahead of the curve.
What does every road-tripping parent need? Disney Movies Anywhere. Google and Disney partnered up to make it a whole lot easier to access and grow their Disney movie library. Now you can add any Disney, Pixar or Marvel Universe movies to your account alongside your previous iTunes purchases or digital redemption with a purchased dvd. To top it off, this feature will be available on both Android and iOS. The app navigation makes it easy to find your next purchase with categories like “puppy love” and “Disney princesses”. Disney also features exclusive content, such as short clips of a Disney TV star talking about upcoming movies or a shorts from Frozen. Disney is improving OTT with what The Verge called “the best cross-platform movie experience we’ve seen so far.”
The source for critically-acclaimed programming and fan favorites – The Sopranos, Sex and the City, The Wire, Six Feet Under, True Blood, True Detective – HBO is the reason most of us are willing to pay for premium cable. However, the cost ($15 – $20 per month) and the requirement to buy a cable package you might not truly want has kept others waiting for HBO programs to be released to DVD or to SVOD partner Amazon Prime. In response, HBO is launching their OTT product, HBO Go. HBO Go is a standalone service that will not require an existing television subscription and targets the cord cutters who primarily use SVOD for programming. It will be interesting to see the next move of the cable operators as well as what will happen with HBO’s partnership with Amazon Prime.
In 2006, Sony bought the standalone online video site Grouper for $65 million then renamed and refocused it into Crackle, a free ad-supported channel. This multi-platform network features Sony’s vast library of full-length movies and shows. They are also starting to layer their own original content, like Jerry Seinfeld’s “Comedians in Cars Getting Coffee” to create a unique product. Crackle targets younger males specifically and has a flexibility of format and release. Clumps of a certain series are released for binge watchers and formats vary from a two-minute video snack to full-length movies. Crackle enjoyed surprise success with the release of Seinfeld’s Comedians in Cars Getting Coffee – a series featuring Seinfeld and another comedian driving in a classic car, getting coffee, and talking. The show just won a Streamy as best non-fiction show and was nominated for a 2013 Emmy for best short-form non-fiction program. Mortal Kombat: Legacy 2 is another Crackle series that won a Streamy and its shows Sequestered, Cleaners and Extraction. Crackle is known for having tight production crews and tight budgets and with its flexible formats and release options is positioned to compete anytime and anywhere in television.
In response to OTT and SVOD, CBS built their All Access product. President and CEO of CBS Interactive, Jim Lanzone, said, “People wanted more from us – they wanted it in more places, and they wanted it sooner – and they were willing to pay for it. So we built it for that audience.” CBS banked on a super fan theory in which their viewers would want unlimited access to 6500 episodes. They opened access to their library of classics like MacGyver, Star Trek, Cheers, and Twin Peaks. The super fan theory rang true. Subscribers are watching twice as much CBS programming as the average viewer. CBS also has 400 milllion monthly unique users across its web properties, making it the number one content company on the Internet.
In November 2014, ESPN announced plans for an OTT service for NBA basketball. Fans will be able to watch live games online without having a subscription to ESPN (owned by Disney) through a cable operator. ESPN subscription streaming is a first of its kind in a market where major sports such as the NFL, NHL, MLB and NBA have strict and lucrative broadcast agreements with major network distributors. Sports account for 37% of all television viewing, and 43% of cable subscribers said the key reason they would not drop their cable is “because they can’t live without sports.” Superbowl XLIX 2015 had the largest audience in TV history with an average audience of 114.4 million viewers. The web stream viewership of the Superbowl was 1.3 million. It will be interesting to see how sports broadcasting will play out and who will come out on top.
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