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5 key trends in the digital media industry
Friday, June 1, 2018

The global streaming video industry is in the middle of a growth spurt currently as new OTT services launch and traditional content owners and distributors weigh their entry into a market that’s nowhere near its long-term peak in terms of subscribers and revenue.

In 2012, there were about 46 million OTT subscribers worldwide, that’s estimated to have increased to 401 million last year. Researcher IHS Markit said it expects that number to reach 650 million in just three years.

Revenues are expected to follow. Convergence Research Group says it expects revenues from OTT platforms in the U.S. alone to hit $16.6 billion this year, up from $11.9 billion a year ago. Its 2020 U.S. forecast: $27.6 billion. Globally, according to Juniper Research, revenues are expected to exceed $120 billion by 2022, with more than a quarter of the world’s households subscribing to an SVOD service.

The massive growth in the market is creating a ripple effect of trends, largely in the content world.

Trend 1: Content takes flight

We’re seeing explosive growth in the development of original content, an expensive and long-term response to consumer demand. Netflix, Amazon Prime and Hulu alone are expected to triple their combines content investments by 2022, with Netflix already committed to an $8 billion spend in 2018, Amazon a $4.5 billion spend and Hulu planning to spend $2.5 billion. Yet the “Big Three,” along with Comcast’s NBCUniversal, HBO, Disney, TimeWarner, Sky, Facebook and Apple make up just a small portion of the content spend expected in the next five years by the hundreds of other content creators globally.

In Ooyala’s Q4 2017 Video Index, a selection of our top customers more than doubled their content supplies over 12 months, with long-form content supplies increasing 159%, medium-form content supplies increasing 87% and short-form content supplies growing 112%.

If there’s one standout trend in 2018, ramping up the content supply chain is likely a big player.

Trend 2: An unlimited universe of ‘channels’

The growing numbers of properties for viewers to watch and discover all of that new content has been a boon to consumers and a competitive challenge for OTT providers.

Researcher Parks Associates reports that the number of SVOD providers in the U.S. has more than doubled to 214 in 2018, from just 85 in 2014.  

In addition to startup OTT players, an increasing number of traditional pay-TV players have made the jump online, with more waiting in the wings. The next three years should see a tidal wave of channels – and content – come online.

Pay-TV companies have rolled out virtual MVPDs, like Dish’s SlingTV and AT&T’s DirecTV Now, iconic online brands like Google have launched YouTube TV, content producers HBO, Showtime and Starz, along with broadcasters like CBS all have jumped online.

More will follow, creating a bird’s nest of viewing opportunities that will spawn new aggregators and new platforms designs to easily guide viewers to the content they want.

Trend 3: Audience Fragmentation

An outgrowth of the proliferation of channels is a fragmented audience that has an array of services to choose from as well as an array of devices.

Content is available not just on televisions, but on connected TVs, PCs, tablets and smartphones (not to mention projectors and personal viewing devices like VR and AR headgear). Where pay-TV providers once could brag of household penetration numbers approaching 90%, cord cutting and an increasing number of cord nevers have dropped that to 79% with some researchers projecting 67% by 2023. And, while some of those ex-subscribers may be caught up by a virtual MVPD, those additions won’t make up for the defections that have changed the pay-TV world.

OTT services, over-the-air broadcasters and a new breed of mobile service providers all will further fragment the audience.

Trend 4: Changing formats, standards and technologies

The digital media industry doesn’t stand still.

Technologies like virtual reality, augmented reality, artificial intelligence, HDR, 4K and 8K all are arriving as the “me next” technologies that content deployment companies want to use to help engage audiences.

The industry also is looking to multi-content platform delivery solutions, media asset management, IP infrastructure, file-based workflows, cloud computing, cybersecurity, big data analytics, metadata and programmatic advertising as a way to maximize the amount of content they can deploy quickly and with maximum ROI.

But, the desire to invest in new formats and technologies doesn’t always equate to the ability to do so. The escalating cost of content, for example, weak advertising sales and uncertainty over what will be the next big thing (or what might be a 3-D debacle) are combining to curtail spending in some cases.

In short, the budgets media companies have available for spending on technology are tight.

Trend 5: Working to tame the supply chain

Content supply chains are complex, siloed, inefficient with potential for mismanagement of data and lost revenue opportunities.

For next-gen content creators taming that supply chain will be crucial.

Using a MAM that can span all environments and touch all assets and metadata repositories and having the ability to orchestrate workflows and to connect with all the systems that store or transform assets and asset metadata will cut down on content duplication as well as make production processes more efficient – especially if your able to automate a significant numbers of tasks.

A system that has the ability to easily plug in new components - and so- technologies will help to ensure those new standards and formats – like VR or AI – are not an eternity away.

Finally, using data – which is produced at every stage of the content supply chain and should be collected and stored along the way – can improve the lifecycle of your content and ensure you are not only producing content more efficiently but that you are producing more of the right content.

Jim O'Neill

An award-winning industry expert and futurist who specializes in the convergence of traditional TV and the Internet. My focus includes pay TV, Cloud TV, OTT, multiplatform media delivery, the ecosystem that surrounds it and consumer trends. A frequent speaker at CES, NAB, Digital Hollywood, Park’s Associates Connections events, Streaming Media and Digital Entertainment World, among others. I'm the Editor of Videomind, which in the past year has won awards from Editor & Publisher and Digiday. I'm also the Principal Analyst at Ooyala. I'm based in Michigan. I formerly was an analyst at Parks Associates and editor of FierceOnlineVideo and FierceIPTV. 

You can follow on Twitter @JimONeillMedia and on Linkedin