The State of OTT 2022
"Discovery is to WarnerMedia what Fox was to Disney," comments Sarah Henschel, streaming analyst for Omdia, in a WIRED article. "Aggregation and consolidation are just going to be the fastest ways to be the biggest. I think we'll probably get to a top three to five companies and that's where the economics of these streaming services are going to settle."
The chessboard includes Comcast/NBCUniversal and ViacomCBS/Paramount Pictures, both of which have strong content assets, but not the scale to compete with the top five. The companies are uniting in Europe in 2022 with new streamer SkyShowtime, and a domestic pact is seen as a natural fit.
Going big also means gaining intellectual property with which to retain subscriber loyalty and spin off films, episodic TV, games, and metaverse-related interactions. Disney is the master, with its huge array of Marvel, Star Wars, and Pixar titles scheduled over the next few years. There's a land grab for intellectual property in particular that already resonates with the public—hence Amazon's $8.45 billion purchase of MGM, which includes the James Bond franchise and a hint by Amazon that it will create TV shows from the studio's catalog.
Amazon is already doing this with a mega-budget series based on The Lord of the Rings. AppleTV+ has chimed in with an adaptation of the sci-fi classic Foundation; Netflix has hopes for the dramatic series 1899; and HBO Max will launch the Game of Thrones prequel House of the Dragon in 2022.
WIRED suggests, "Controlling Hollywood stopped being just about who had the biggest opening weekend at the box office or a massive hit during prime time; a turf war over intellectual property became a land-grab effort to see who could bulk up their streaming service with the best library of content."
An emerging challenge for video entertainment streamers is a growing competition for consumers' free time—especially younger viewers. Video gaming is a prime target and may be one reason why Netflix is launching a games unit in 2022, with a Stranger Things spinoff as one of its first releases.
"OTT companies are increasingly recognizing games as their new competitor," finds Parks Associates. "Long term, gaming will either prove to be a challenge—or an opportunity—to players in this space."
It's as fundamental a challenge as reinventing the way we consume long-form video as a passive, lean-back experience. Streaming video in its current state doesn't satisfy the desire of consumers to socially interact, which is one reason why Millennials and Gen Z are spending increasingly more time on other types of digital and mobile entertainment.
Certainly, streamers of all stripes are expending huge amounts of effort on highly sophisticated engagement campaigns to reach consumers on social media. Eight streaming services—Netflix, Amazon Prime Video, Disney+, Hulu, HBO Max, Paramount+, Peacock, and CW Seed—captured more than 227 million followers across Facebook, Instagram, TikTok, Twitter, and YouTube in 2021, according to a Conviva study. Facebook is second to Instagram in overall engagement, with TikTok set to outpace Meta's network in 2022.
"While streaming platforms' pages are the cornerstone of a streaming publisher's social strategy, it's the individual show pages that can truly build the brand affinity craved by publishers," says Keith Zubchevich, Conviva's president and CEO. "Streaming show accounts on social have become intimate forums where fans feel they can truly connect with the show's cast in ways that would normally be reserved for close friends."
Deloitte Insights suggests in its annual Digital Media Trends survey that streamers need to go further to secure their long-term survival. The report says that "younger generations have grown up connecting through digital networks, engaging with digital and interactive entertainment, and relating to the world through a social lens. Gaming is meeting these expectations with unique, immersive experiences that can put players in the starring role. For streaming video providers, understanding social gaming and creating strong relationships with gamers may be critical to future growth."
Streaming video will likely continue to be a dominant force, Deloitte Insights emphasizes. However, any social elements are deferred to the second screen, mobile—which, for many, is really the first screen. "It may or may not make sense for SVOD to offer social and interactivity directly in their services, but they will likely face greater competition in courting younger generations and keeping them as lifelong subscribers if they don't integrate a social element in some way," notes the report.
Bridge the Broadband Divide
It became apparent during the pandemic how reliant we all are on the internet, so it's alarming just how great the digital divide is. This was starkly illustrated in June 2021 when the U.S. Department of Commerce's National Telecommunications and Information Administration (NTIA) released a digital map revealing that in many parts of the country, broadband speeds fell below the Federal Communication Commission's (FCC) benchmark of 25Mbps download, 3Mbps upload.
"Given that the FCC's benchmark is pretty low, … this is pretty terrible," comments Matt Wille for Input. "No, that's an understatement—it's a total failure. The many, many red areas on the map just have no access to high-speed internet at all."
For example, in a working-class Latino area in east Oakland, Calif., more than a quarter of people do not have internet access, even though commercial providers exist, NBC News finds. That's compared to a "wealthier and whiter neighborhood" nearby, where only 6% of people lack access to broadband internet.
S&P Global Market Intelligence estimates that more than 18 million occupied U.S. households did not subscribe to broadband as of mid-2021. With this in mind, some $20.4 billion of the federal budget is being spent on deploying broadband to close the divide over the next decade. S&P Global Market Intelligence projects $112 billion in U.S. broadband revenues in 2022, up 25.2% over 2019 levels, when the idea of broadband connectivity as an economic lifeline had not yet been put into practice.
[Editor's note: This article first appeared in the 2022 Streaming Media Industry Sourcebook.]
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