The State of Media & Entertainment Video 2015
The rapid growth of OTT services and the slow decline of cable seen in the last year portends a breakout 2015, but don't expect massive 4K or TV Everywhere adoption anytime soon
In 2014, media and entertainment streamed to our screens in 1080p. It didn’t matter where we were or what device we were using. Whether we were at home with a big screen TV or sitting in an airport lounge, we could tap into our subscriptions from any location and lose ourselves in our favorite content.
Notice I said 1080p and not 4K. For that, check back in a year or two (or three). 4K was big news for all of 2014, but widespread adoption is still a long ways off. We learned that we’d need a 15Mbps connection to stream 4K, but most of us don’t have a 4K screen to play it on. Also, there isn’t a whole lot of 4K video out there. YouTube offers some 4K video, and Netflix was out last April with House of Cards, but for the most part 4K was a wait-and-see story in 2014.
A small but well-financed streaming service called Aereo was all over the news in 2014. Backed by Barry Diller, among others, Aereo used small personal antennae to capture over-the-air broadcast signals, then streamed them online to subscribers or saved them to a cloud DVR. While the company likely didn’t attract many subscribers, it did attract powerful enemies. The major broadcasters came out in force to shut Aereo down, fearing that if it was allowed, then cable and satellite companies would stop paying their retransmission fees. In June, the Supreme Court sided with the broadcasters, leaving Aereo few options.
The set-top box market was still maturing in 2014, with no clear winner emerging. Roku is the dominant player, but it had plenty of strong competition. Apple TV was the second-most popular device for most of the year, but in the end it was displaced by the upstart Chromecast. Amazon released two devices: the Amazon Fire TV and the Amazon Fire TV Stick. Many consumers chose stick devices over set-top boxes, appreciating their compact design. Stick devices don’t have the processing power of larger boxes, but the difference is negligible. Surprisingly, connected TVs didn’t feel like important players in 2014, at least for actual streaming. No connected TV streaming interface has taken hold with the public. Roku made a play for that market, announcing in August that it was partnering with Hisense and TCL on Roku-branded TVs.
Roku remained the dominant player in the set-top box and streaming stick market in 2014, followed by Google Chromecast and Apple TV.
We watched a lot of video on mobile devices in 2014. While mobile still commands a minority of views, the percentage is growing quickly. Studies told us that we like smartphones for quick clips, but tablets for long-form content. Tablets have become extra televisions in many households; we like the convenience of being able to kick back on the couch or relax in bed with our favorite (streamed) programs.
So what were we watching in 2014? Probably not TV Everywhere content. Even though TV Everywhere has been around for 5 years, it’s still in the growth stage. When cable or satellite subscribers see the live and on-demand streaming content they can get from their provider, they’re still underwhelmed. And that’s only if they take the time to authenticate their accounts, a requirement that stymies many. But don’t count TV Everywhere out. While ironing out access is a behind-the-scenes complication, broadcasters remain committed to bringing more content to authenticated viewers. In December, NBC announced a live linear stream for authenticated viewers, something ABC had announced more than a year earlier.
Some broadcasters decided to do an end-run around TV Everywhere in 2014 and sell their content to consumers directly. HBO made news in October when it announced it would offer its premium movies and original programming to online subscribers without a pay TV account. That announcement was soon followed by similar moves from CBS and Univision. We’ll have to wait and see in 2015 if these offerings find an audience. While Netflix is able to get millions of subscribers for its library, time will show if Netflix is the exception or the rule.
HBO made perhaps the biggest OTT news of 2014 when it announced that it would be offering a stand-alone version of its popular HBO GO app, no cable or satellite subscription required.
Speaking of Netflix, it had an amazing 2014, spreading across Europe and even announcing plans for an Australia and New Zealand launch in March 2015. The company continued to release original productions, such as new seasons of Orange Is the New Black and House of Cards, which lets it entertain subscribers and win awards while relying less on movie studio content. In December, it released Marco Polo, the second-most expensive TV series ever, after Game of Thrones. It was widely anticipated, but it was also immediately trashed by critics. Though that hasn’t damaged Netflix’s credibility, the show certainly hasn’t generated the buzz that other Netflix originals has.
Netflix will certainly find competition in 2015 from online-only channel bundles. We anticipated them in 2014, but we also worried they won’t live up to our expectations. All we want is a streaming alternative to cable, one that includes all our favorite channels, for about $30 per month. Is that too much to ask? Probably, if the 2015 launch of Dish’s Sling TV is any indication; the basic bundle only includes 15 channels.
Those in the streaming world spent 2014 cheering the slow decline of cable and satellite subscriptions, as well as the rise of online streaming. Sure, the cable and satellite companies aren’t in trouble yet. Losing a few hundred thousand subs isn’t a major complication for them, but it could well be a sign of things to come. We heard a lot about “cord-nevers” in 2014, young adults who grew up streaming video and didn’t see the point of getting big cable bills now. Will changing viewing habits spell the death of traditional TV?
Broadcast is moving to an IP-first, software-defined video infrastructure, and in the process reducing costs and creating new editorial opportunities.
All eyes are on Netflix, but it's facing more competition than ever. The OTT space is booming as new niche offerings appear on a weekly basis.
Now that the skinny bundle is finally here, what's next? Look for more bundles, more niche OTT offerings, and lots more VR in the year ahead (but—sadly—no a la carte plans).