Get Ready for the Old, New Way of Viewing

Content Insider #616 – Always On

By Miles Weston

“It’s
the same story told over and over, forever. All any artist can offer the world
is how they see those twelve notes. That’s it. He loved how you see them.” – Bobby, “A Star
is Born,” Warner Bros., 2018

There
are a lot of parallels to Sam Elliott’s (Bobby in A Star is Born) and Netflix’s success.

O.K.,
Hastings isn’t long and lanky with a really cool stach like Sam; doesn’t have
his deep, iconic Western twang; and even worse, Netflix didn’t land the Oscar-nominated
show for their lineup, although you know they wish they had it now. 

No,
they both make doing what they do so well/so easy that folks seem to say, “Sheess
if they can do it so can I.”

Elliott
has been perfecting his craft for over 40 years and you can bet he stumbled
along the way, but you didn’t notice, and it doesn’t matter because he’s…Sam
Elliott.

Netflix
has been doing its shtick for about 20 years and they almost look like they can
do no wrong investing $8B last year and an estimated $13B this year; plus having
137+ M subscribers in 190 countries.

Growth Potential – With more than 4B people around the globe having
access to the internet and the world of streaming content, Netflix has a lot of
growth opportunity which hasn’t been overlooked by service providers.  Legal and illegal Netflix viewing is natural
for people today and there is a world of video stories waiting to be
enjoyed. 

Today,
everyone thinks of them both as “instant” successes.

The
problem is Elliott, along with Hastings and his team, make their side of the
M&E industry look too easy. That causes problems for a lot of the folks who
want to get in the spotlight.

Last
year, T-Mobile’s John Legere proclaimed to the world that they were going to
launch an OTT TV service that was going to upend the TV industry and take on
cable/satellite TV firms. They would go toe-to-toe with AT&T, FAANGS (Facebook,
Apple, Amazon, Netflix, Google, Snapchat), BAT (Baidu, Alibaba, TenCent), China’s
streaming giant iQiyi  and you name them.

It
turns out, it ain’t that easy; so they’ll put it off until “later.”

After
Verizon dropped $5B to buy AOL and Yahoo, their new CEO, Hans Vestberg, shut the
project down.

The
big difference in the approaches was that Netflix was creating a new viewing
experience; and, in fact, they are even willing to do deals with the cable
companies to sell/deliver their service.

Hey,
money is money.

In
addition to good/great content, Netflix makes it easy for folks to access their
service.  The contract covers everyone in
the household streaming to any screen, anywhere. 

You Know You Do – Whether on YouTube, Facebook Watch or their favorite
free/subscription video service, people increasingly stream content.  The numbers are even greater in countries
where the smartphone is the one screen individuals have for everything. 

The
problem is some people like to share, so some folks share their credentials
with friends while others think the content is even more enjoyable if they “borrow”
someone’s account info (Amazon, Hulu, HBO, others have the same problem).

Researchers
at Cartesians estimate that credential sharing is about 56 percent of the total
viewership, so Netflix actually has 200M+ viewers. 

Piracy
has long plagued the content industry. The MPAA (Motion Picture Association of
America) estimates piracy costs the global content industry a whopping $6.1B annually.

The
issue of stopping or minimizing lost revenue is something every streaming
service is working on – individually and as an industry. That’s because it also
means higher costs, licensing agreement issues and opportunities for customer
data security breaches.

While
our son swears pay (appointment) TV is totally dead/passé and most streaming
services would like you to think that as well; it is much like Mark Twain’s
quote, “the reports of my death are
greatly exaggerated.”

Mixture – Kids like to say that the TV is dead but we’re going
to have to quit thinking of it in terms of a time when you sit in the living
room to watch your favorite show at your favorite time.  As with what camera do you use to take video,
the answer to what you watch is which screen you’re in front of at the
time. 

A
while back, T-Mobile’s Lagere was confident he could mortally wound appointment
TV because, “Cable industry is plagued by
poor customer service and excessive fees.”

And
the phone guy is better?

Yes,
price is a factor but Lagere and the rest of the wireless folks know Forrester
is right and know how to hit the viewer’s hot buttons:

42
percent say TV is too expensive30
percent say online is better27
percent want their content anytime27
percent say online quality is better27
percent want specific programs

So
where do cable bundles sorta’, kinda’ have an edge?

Sports!

Realtime Sports – Sporting events continue to have a strong grip on
people to block out time and ensure they are in front of the set when the
activity is going on.  Trust us, you do
not want to try and switch channels on our set when our wife is watching the
Golden State Warriors…nope! 

TV
sports is the one island of strength for an industry that is being pressured to
change to survive.

Deloitte
Global projects:

TV
sports viewing by 18-34-year-olds will decline, but only by 5 percent60
percent of adult men who watch TV will regularly watch sports on TV, 40 percent
of the womenMen
will watch an average of 11 hours of sports per week30
percent will be classed as superfans watching 21 hours per week, 20 percent
will be super-superfans watching 35 hrs. +

Of
course, events such as the World’s Cup, World Series, Super Bowl, Stanley Cup
and the NBA Championship draw even the more casual viewers to the set.

And
for those who bet on sports, there is added incentive to watch the event…live.

It’s
little wonder that Disney’s Igor views ESPN as a crown jewel in the firm’s
portfolio.

Cable
guys (and gals) don’t want to simply become dumb connectivity pipes and telco
operators are aggressively looking at any, all, every option to move up the
food chain.

Cable
folks will become a lot more flexible with their offerings including slim and personalized
bundles as well as adding mobile services and an expanding range of smart home
solutions.

With
the advent of 5G, consumers will quickly experience an embarrassment of viewing
choices.

Viewing Growth – IP-based video traffic will grow steadily for the foreseeable
future as more people turn to streaming their content to any and all
screens.  Couple that with 4K HDR streams
and 5G services will become vital.  Cisco
estimates that 80 percent of the bandwidth will be consumed by streaming
video. 

The
infrastructure and capex investments required for 5G will be large (immense
even) and will require a lot more time than the telcos will openly admit. 

The
first products (which we’re already seeing) are 5G modems/hotspots which will
allow people to connect phones, computers, tablets and other devices to the
internet. 

When the 5G network is turned on in your area
and when
5G handsets are available, early adopters will retire their hotspots to show
off their devices with blistering-fast performance.

When?  Soon.

Next Gen – Wireless services are moving as fast as they can to
upgrade their infrastructure and get 5G smartphones in stock so they can begin
offering more expensive service plans. The challenge is we are just on the
front edge of the 1st generation systems/solutions and complete rollout/installation
requires big budgets – time and money. 

While
true 5G networks and devices may not be widely available for a while, there
will be big push of 4.5G (4G LTE) devices and solutions.  Other than cost, most consumers will be satisfied
with their near-5G solution as long as operators deliver 500Mbps wireless performance
until the real thing comes along. 

And
it will because 5G will deliver a hundredfold increase in traffic capacity and
network efficiency.

It
will be needed!

Video Growth – There are times we wonder how any work is being done
when we see projections from infrastructure suppliers and market analysts that
say much of our wireless bandwidth will be consumed by streaming video. 

We
can expect to see wireless folks make a strong push into the home broadband
service arena and cellular connections will jump from 400 million to 1.5
billion devices by 2021, according to Ericsson.

All
of these devices need faster and faster speeds to operate more deeply and more
powerfully for people, their cars, their homes and their lives.

The
move will also enhance and enrich video content viewing with unique ID level
(devices, not cookies) enabling ultra-personalized video storytelling
delivery.  Of course, these same tools will
also give rise to much better and more enjoyable advertising that is specific
to you rather than just a shot across the bow.

While
smartphone and wireless folks are quick to tell you the screen in your hand
will rapidly replace the large screens in the home, they were still the biggest
draw for online and instore traffic this past holiday season.

And
the demand will continue.

Bigger, Brighter Screens – With the introduction of Next-Gen TV delivery as well
as a growing inventory of 4K HDR content, consumers are finally upgrading their
home entertainment screens with newer, bigger, brighter screens. 

Next-Gen
TV standards, which includes ATSC (Advanced Television Systems Committee) 3.0, have
been adopted by SMPTE (Society of Motion Picture and Television Engineers), SID
(Society of Information Display), CTA (Consumer Technology Association) and
other international standards groups. 

At
the same time, Samsung, LG, Vizio and all major set manufacturers introduced
internet-connected smart TVs that take advantage of the standard which mates
broadcast and the internet to give you eyepopping entertainment your way…by
appointment or by your schedule. 

The
content landscape will continue to change – rapidly – this year as Disney rolls
out it’s combined Disney, Marvel, Star Wars, Fox content, which they took back
from Netflix.

Comcast will have a major content budget of an estimated $21B to acquire or
develop a new range of home and away video services. 

Comcast is also acquiring London satellite broadcaster Sky, for a combined
content budget of $21 billion

In
addition to the usual streaming service providers (AVOD, SVOD, TVOD), we can
expect to see a more professional line-up of free content from YouTube, Facebook
and other social media services that will live alongside their friends/family
content. 

How
economic and how creative they will be remains to be seen.

The
depth, breadth and quality of the content will depend on the creativity of
filmmakers and the willingness of content distributors and services to take
chances. 

As
Sam (Bobby) reminded us, “Jack talked
about how music is essentially twelve notes between any octave. Twelve notes
and the octave repeats.”

After
that, it’s all talent!