S04E12: Game of Streams (Do…or do not)

"Do…or do not. There is no try.", spoken by Yoda to Luke Skywalker in the film Star Wars Episode V: The Empire Strikes Back. And the same seems to be applicable for the transition to streaming. The year 2020 has been filled with announcements from the big media companies around the world on how they shift focus towards streaming and attempt to outbid their competitors. Some companies started earlier, and others are now rushing to the table. Moving to the streaming business is far from easy, so either you do… or do not.

The December episode of this Game of Streams series is the episode where I look back at the year, or years, that passed and try to see what is coming in the next. Last year I predicted that business models would change, and we would for example see an uptake in transactional services. I also mentioned quality and that viewers will demand premium quality. As the year 2020 has become, I will not try to analyze the result of my predictions. Instead, we could conclude that the Premier Video on Demand was introduced, and the theater distribution window has changed for good.

Free Ad-supported Streaming TV

As discussed in an earlier episode, free ad-supported streaming TV services (also called FASTs) will grow globally in the coming years. With the increased cord-cutting these services will serve as a good alternative to the traditional linear television and complement the growing number of on-demand subscription services. They come pre-installed in your devices or TV-sets with a familiar and user-friendly interface and fill the need for the lean-back experience.

The technology needed to create the virtual channels in a cost-efficient way has been available for some time, and we are now seeing services utilize this. In the US these services grow faster than subscription funded services and 2021 will be the year when they expand to Europe on a bigger scale. 

In the same way, the ownership of the consumer through the device is very important. Roku, Amazon Fire TV, and Google TV gain market shares and we’ll soon see acquisitions of smart TV manufactures.

Consolidation, acquisitions, and cooperation

I have stated this numerous times, and I will continue to state that the streaming industry has too many tech vendors. For the majority of content owners, it is too complicated and expensive to build a best of breeds service out of standalone components. Put together bigger pieces and offer as a service, either through consolidation, acquisitions, or cooperation. This will be the way to survive for most of the vendors. For investors and VCs, it will be a challenge to bet on the right horse.

Consolidation and cooperation are applicable also for content owners and broadcasters. If they should stand a chance against the big global giants, they need to cooperate and by that get the benefits of scale. Aggregation of content as virtual channels, like the FAST’s mentioned above, could be one way for a distributor or broadcaster to offer a bigger catalog. And likewise, feeding your content as virtual channels into these services could be a great way for smaller content owners to gain reach.

With the launch of Paramount+, Discovery+, the global launch of HBO Max, and the increased offering of Disney+ adding Stars it will not be easier for the local services

To watch out for the coming months…

Keep an eye on Warner Media… during the year they have turned the ship and now have full steam ahead for global success with HBO Max. The latest acquisition of You.i TV was just another great move to build a great service with the potential to seriously fight with Netflix and Disney for the viewers. Knowing by experience, it will for sure be challenges to align the different technical platforms across the world. It will be interesting to follow during the coming year.

Who will acquire MGM? The studio behind agent 007 and a catalog of 4 000 movie titles and 17 000 hours of TV programming. Apple has been in talks earlier that didn’t lead to any deal. With a price-tag of more than 5.5 billion dollars, it’s not that many companies that can afford and justify such a deal.

Magnus Svensson is a Media Solution Specialist and partner at Eyevinn Technology. Eyevinn Technology is the leading independent consulting company specializing in video technology and media distribution. 

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