New Kids on the Block
Data from Park Associates also shows that the top four video streaming devices, rounded off by MLB.TV, have remained unchanged from a year ago. According to the research firm’s senior research director Brett Sappington, this means that new and emerging services will find it difficult to break down barriers to entry and create a loyal subscriber base.
However, HBO Now currently features at the number five spot on this list, a progression which clearly indicates consumers’ preference for niche streaming options. A host of streaming services was announced around the end of 2016 and all through the current year. Most of these are targeted at fulfilling a very specific need set.
For instance, Filmstruck, which features the best of the hallowed Criterion Collection, showcases the best of critically acclaimed cinema. On the other hand, Acorn TV brings the best entertainment produced in the United Kingdom.
Yet another dimension has been added by traditional broadcasters, who have launched streaming services in order to effectively compete with the new format. DISH Network Corporation’s (DISH - Free Report) Sling TV has 1.7 million subscribers, according to Bloomberg and already features among the top 10 U.S. video streaming services. Meanwhile, AT&T Inc.’s (T - Free Report) DirecTV Now breached the 1 million subscriber barrier earlier this week.
Increasing Fragmentation, Rising Library Costs
Ultimately, the end of TV subscriptions is approaching at a much faster rate than earlier expected. This process has been hastened by the rising preference for personalized and niche services which focus on the needs of the individual viewer. In the process a highly fragmented space is likely to emerge, especially with the trend to create and develop exclusivity over original content.
Of course, this amount of original content will come at a price. Expenditure on original content is likely to jump substantially in 2018. For instance, Netflix is planning to spend almost $8 billion on producing its own content next year. This is a substantial jump from the $6 billion that it spent on content in 2017. Amazon isn’t too far behind, having spent $4.5 billion on content for its Prime Video services. Meanwhile, Hulu and HBO spent $2.5 billion each for the same purpose this year.
Brave New 2018
Next year is set to be an even more exciting one for the streaming space. On the one hand, The Walt Disney Company (DIS - Free Report) is set to launch its streaming service, featuring content from the Marvel and Star Wars stables. During its last earnings call, Disney CEO Bob Iger said the service would be priced “substantially below” Netflix, which is also likely to lose loads of premium content to this new service.
Further, social media giants, such as Facebook, Inc. (FB - Free Report) with its Watch service, and YouTube are going to become particularly active in the streaming game. Live TV streaming is another are which is opening up in a big way with Hulu, Sling and DirecTV Now leading the way.
Increasing competition, mounting content costs and fragmentation is likely to force industry occupants such as Netflix to become more traditional. For instance, Netflix is increasingly releasing episodes every week, much like old television broadcasting. This is a clear departure from the binge watching trend it created when it began releasing entire seasons at one go. The going is likely to be tough for industry insiders such as Netflix in 2018. And the only likely winner in such a situation would be the consumer.
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