The Need for Speed Series Part 1: In a Changing Media Landscape
We are living in the video era - the staggering statistics on video growth make that abundantly clear. According to Cisco’s Visual Networking Index: Forecast and Methodology 2016–2021, video will make up 82 percent of all consumer internet traffic by 2021, an increase from 73 percent in 2016. To put this in perspective, “it would take an individual more than five million years to watch the amount of video that will be crossing global IP networks each month in 2021.”
While viral cat videos and homemade YouTube tutorials will always be part of the mix, more and more of this mountain of video will consist of highly produced content created by the global media and entertainment industry. The explosive growth of Streaming Video on Demand (SVOD) services like Netflix, Amazon Video, and Hulu suggest as much.
This video era has also given rise to the “golden age of television,” thanks to the proliferation of high-quality scripted dramas available to the video consumer. Linear television is no longer the only place (or even the mainplace) where people watch this content, but the major broadcast and cable networks remain key drivers in its creation and distribution.
A Decade of Change
In 1996, Bill Gates famously wrote, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” The changes in the media industry over the past ten years have been truly transformational, but it's easy to lose sight of this fact when immersed in the industry day to day. It's eye-opening to take a look in the rearview mirror and review just how far the business has come in the past decade.
Ten years ago, original scripted shows were consumed primarily via traditional television (broadcast, cable, and satellite). This content reappeared in secondary distribution channels such as hotels, planes and packaged media (DVD's) in the home. But many of today’s popular video platforms were in their infancy (or didn't even exist). Hulu launched in 2007, while Netflix, still in its “red envelope” DVD rental phase, added a streaming option for a limited selection of titles. Google bought one-year-old YouTube in 2006. At that time, YouTube was already delivering an average of 100 million video views per day. But most of this content was user-generated or pirated. M&E content providers who uploaded videos to YouTube were simply trying to drive consumers to the primary distribution channels.
While Apple launched the first iPhone in 2007, the first commercial phones running Google’s Android did not appear until the following year. And mobile video as a taken-for-granted part of daily life was still years away. As for Amazon Prime? In 2007, it was still just a customer program for receiving free shipping of physical goods. Social media was no different. Even though Facebook launched in 2004, it wasn't available to the masses until 2006—the same year Twitter was born. And Instagram and Snapchat were only twinkles in the eyes of their founders.
Today’s transformed media landscape
Fast forward to today, and we see a very different media landscape.
We now live in a world where far more video is being created than ever before, and for many different types of devices. As a result, Over the Top (OTT) content providers like Netflix and Amazon have grown considerably. TV-connected devices (which allow people to watch streaming video), mobile video, and video on social media have also exploded.
Some numbers from recent studies illustrate these trends:
- Netflix alone was responsible for 35 percent of all traffic on North American fixed (i.e., non-mobile) networks last year, according to Sandvine’s 2016 Global Internet Phenomena Report. YouTube accounted for 17 percent and Amazon Video for 4 percent.
- The NPD Group’s Q2 2017 Application & Convergence report found that 53 million U.S homes now stream video to their televisions using TV-connected devices (defined as streaming media players, video game consoles, Blu-ray Disc Players, and “smart” TVs connected to the Internet).
- Parks Associates 2017 OTT Video & TV Everywhere: Partners, Alternatives, and Competition report found that 53 percent of U.S. broadband households subscribe to both a pay TV service and at least one OTT video service.
- According to Cisco, mobile today accounts for 7 percent of all global IP data traffic and is projected to grow to 17 percent by 2021. In North America, according to Sandvine, 40 percent of this mobile downstream traffic is video, with YouTube accounting for half of it.
- The NPD Group’s Q2 2017 Smartphone and Tablet Usage report, looking at smartphone usage on both fixed (i.e., Wi-Fi) and mobile networks in the U.S., found that streaming video consumption accounted for 78 percent of data consumption on smartphones. YouTube was identified as the dominant mobile video app, with Netflix a distant second.
- Ericsson’s TV and Media 2017 report found that 70 percent of consumers now watch TV and other video on their smartphones, making up one fifth of their total video viewing in terms of hours per week watched.
- Social media is a big part of this mobile traffic, with Facebook properties (including Instagram) alone now accounting for almost a quarter of all mobile traffic in North America, according to Sandvine.
Current State of Play
This new media landscape for distributing video has created huge challenges—as well as opportunities—for the media and entertainment industry.
Ten years ago, the big technological transformations affecting the television supply chain were primarily the move to end-to-end file-based workflows and the migration to HD. Today both transitions are largely complete—from acquisition all the way through distribution.
But new changes keep coming, including the move to even larger sized file formats. HD is in the process of being supplanted by 4K video, with 8K not far behind. NHK in Japan recently announced plans to launch the world’s first 8K channel next year. And a whole array of completely new video categories—360-degree video, VR, AR, MR, HDR, WCG—is entering the mainstream media industry.
Supporting new distribution platforms and adapting to new video formats are only part of the technological transformation story within M&E. For example, content producers and aggregators are increasingly looking to IP technology for data transport within their facilities. More broadly, the evolution of the cloud has had a massive impact on how media companies of all types operate today. Big data analytics and AI provide deeper insights into customers’ viewing habits. And data security has become an important aspect of almost all technology decisions.
All these technological changes, combined with the ever more globalized content supply chains, have radically altered how media companies approach content creation and distribution—specifically the infrastructure and processes needed to support them.
What will the landscape look like a decade from now? We can follow the trends and make predictions, but only time will tell.