Digital Media: Current and Future

My previous article on digital media ("Media Convergence: The Big Miss”) spoke to how the broadcast providers missed the boat on Media Convergence. This article will proceed to the next level, with a discussion of the current state of the digital media market, and where I see digital media and media convergence going into the future.

If I were to summarize where the market is now, I would say it is “so many choices, so little time”. There is literally too much content available to easily digest or consume. The end user/consumer is becoming more selective as a result. 

Platform companies have become or are transitioning to become content providers (in addition to being distributors). Netflix, Hulu, and Amazon are all prime examples of this. They are doing this to differentiate their offerings (you can’t watch “Handmaids Tale” on Netflix, or “Game of Thrones” on Hulu). But the result of this is to complicate the decision making of the consumer. 

The adoption of smart TV’s and Set Top boxes continues to climb. Media consumers are more focused on content on demand, and less interested in live television signal. Even with sporting events, consumers prefer consumption on their own timelines. Smart TV’s and Set Top boxes, in addition to DVR’s, best suit this need.

Cable and satellite subscriptions are declining, and will likely continue to decline into the future. I was an early cord cutter in 2010. Back then, my consumption options for streaming were limited. Contrast that with 2019, where i have options like Hulu Live or Sling TV. I see these streaming options only improving in the future.

So, if we accept this as where are now, one might ask where are we going? While much of what is to happen remains uncertain, there are some things which are more likely to occur than not. Along these lines, new leading indicators can be analyzed to gain insight into these trends. 

Key Metrics:

There are a few key metrics that we should keep our eyes on to determine what’s next:

•  Mobile Broadband adoption (Globally) - the broadband growth in the US was measured largely based on wired networks to homes. In the future, broadband measures via mobile will be more significant, as broadband in Asia and Africa will grow via mobile devices. Mobile technology will allow these regions to “leapfrog” ahead, instead of awaiting costly infrastructure upgrades. As mobile broadband expands globally, so shall media convergence in these regions. They will grow demand, and corresponding revenues, for current and new digital multimedia content.
• Netflix Subscriber counts: This is a good measure of how far streaming platforms are penetrating the globe into new markets. The Netflix subscriber count has seen a meteoric rise over the last several years. In the last couple of years, the most volatile growth for Netflix subscriptions has been growth outside the US. Netflix (unlike Hulu and other services) works well in the overseas market. Because of this, Netflix growth is a good leading indicator of adoption rates of streaming globally.
• Cord Cutting rates: The growth of streaming Multimedia services has come at the expense of traditional cable subscriptions. Increased rates of cord cutting is a leading indicator for increased adoption of new media platforms. Along these lines (but much tougher to obtain) is data on the Net Promoter Score (NPS) for cable providers. The greater the dissatisfaction rate amongst the existing subscriber base, the more likely consumers are to pursue alternatives.

There are likely other leading metrics that can be observed; these are the key ones I could think of in light of current market conditions. There is a potential for new metrics to be derived through basic analytics of set top box and smart TV usage. This data will ultimately replace the current Nielsen rating system to better understand consumer viewing habits. The upside is it will be more accurate information, and better reflect actual viewing and streaming behaviors.

New Product Offerings:

As the media market space continues to evolve, there will be new media packages offered to end consumers. Two potential ones I could think of would be custom news packages and custom streaming packages. Both of these types if offerings help to solve problems created by the current plethora of streaming providers.

Custom digital news content packages are mixed news offerings that will take media convergence to the next level. Today, if a consumer wants to view subscriber content from the Washington Post, the New York Times, Time Magazine, and CNN, they would need to have four separate subscriptions, four logins, and four billing events. This is an inefficient way to obtain the desired content. A better way is for a combined, aggregated offering that contains the content in all forms (print, video, podcast, etc) that the end user would want based on their desired delivery methods. Costs to end consumers may actually decrease based on focus targeted advertising that will essentially subsidize these focused news services. 

Custom streaming packages would potentially follow along the same logic as the news packages, but for non news content. These packages could include a myriad of streaming services; at the center of it is the content. So, instead of having a Hulu, Netflix, and Amazon Prime subscription, consumers would subscribe to an aggregated services package, which enables access to multiple sources of content with a single subscription.

Future Disruptors:

Finally, as we look to the future, we should bear in mind the effects of disruptors. New technologies and new companies can provide game changing technologies that completely alter the media landscape. In a few short years, Blockbuster was brought to its knees by a relatively new player on the stage, Netflix. This type of disruption is more likely to happen in the future, as the media and technology lines continue to converge.