Industry Trends – Streaming Media Providers Aim to Take Over Broadcast TV Industry

According to a recent report from eMarketer, “the average time spent with digital media per day will surpass TV viewing for the first time this year.” Streaming media providers, Netflix, YouTube, and Hulu are casting aside established business models in favor of bold new plans for redesigning consumer content delivery methods.

Netflix Logo
Netflix is clearly the ultimate success story of this trio of content providers. Nearly 1/3 of all the entire internet bandwidth utilized during the peak hours of 6pm to midnight is consumed by Netflix users streaming video. If you add all bandwidth used by people viewing web pages, plus all the bandwidth used by YouTube and Hulu combined…you will only then equal what Netflix streams every day.

Chart Courtesy of Business Insider

Netflix has made a major push towards providing original and exclusive content in 2013 with four times the amount of original content than 2012. Netflix also signed a multi-year deal this month with Weinstein Co. to provide movies before they hit pay TV channels…which puts them in competition with channels like HBO and Showtime. Bob and Harvey Weinstein are the original 1979 founders of Miramax Films.

YouTube Logo
If there ever was a website that represented the infinite diversity of the internet it’s YouTube. Google-owned YouTube has been a household name for some time now and even non-computer users know what it is. But YouTube isn’t just talking animals and Epic Fail videos anymore. In 2011 they implemented a long-term plan to reshape their original content market share. And with 1 billion unique visitors every month, they have an excellent viewer base to work with if they can find a formula that works.

YouTube has been funding original content channels in $1 – $5 million range. An example of some of the outstanding content you can find, gaming channel MachinimaPrimereleased an extremely well produced feature, “Forward Unto Dawn” that was based on the characters from the popular Xbox 360 game, “Halo 4”. They provided weekly 20-min webisode releases for 5 weeks…that kept you coming back for more. A year later, you can now view the entire feature on Netflix. This is not a guy with a camcorder shooting home movies. These are full-blown, multi-million dollar productions with proper post-production budgets. There is a YouTube Original Channel for all types of viewers, whether your interest is automotive, cooking, music, or news, there’s the content diversity you could expect to find when you hit the GUIDE button on your TV remote.

Hulu Logo
Hulu is the perfect example of a great idea implemented poorly. The business has been plagued by poor leadership and unfavorable licensing conditions for its content providers. But setting that aside, Hulu is noteworthy because it’s the streaming media service that most resembles normal TV. Their “day after” model allows you to watch a major network episodic show on Hulu the day after it’s shown on cable TV. Netflix viewers usually have to wait a year until the whole season of the show is sold to them.

Hulu has 1/10 of the subscribers as Netflix (3 million), but they still continue to show steady growth. Despite shaky profitability ground, owners 21st Century Fox, Disney, and NBCUniversal infused $750 million into the floundering service. Hopefully, they will solidify the service to make it more appealing for both viewers and content providers.

Wrapping It Up…

Our industry is presently in a transformational stage as media distribution undergoes a fundamental technological shift. The DVD format is dying along with Blu-ray because of their “hardcopy” nature, movie theater ticket sales are in a steady state of decline, and home media viewers are increasingly opting to forgo traditional cable and satellite services in favor of a “streaming only” solution. Yet, Americans as a whole are spending more time viewing media than ever before.

Content creators also have to consider how a video is shot and edited to optimize video for smaller mobile devices. When the HD revolution took hold with larger more beautiful screens, the trend shifted towards wide beautiful panoramic shots to maximize the capabilities of the modern TV. Now with an increasing number of people utilizing laptops, tablets, and phones to watch content, faster cuts are needed to keep a viewer’s attention on a distraction prone mobile device, and more close up shots are recommended to properly utilize the screen real estate of small devices.

While advertisers are having a field day with the numerous mediums to push their content, content creators are struggling during this transitional phase to find a way to make money while the industry shifts its viewing and content delivery trends. No matter how you slice it, online streaming media is here to stay and only gaining in mainstream popularity.