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The State of Streaming Media and Entertainment 2011

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“In all of this growth, it is worth noting that people are really tuning in to live streaming,” Piech notes. “Sites like Livestream.com and Justin.tv have really caught the public’s imagination.”

Streaming Media and Entertainment Trends

Live streaming is just one of the trends driving content provision online. But it is also a hallmark of what might be called the biggest trend of all: fragmentation. “There are so many different options and niches being supported today, that the online streaming market is fragmenting down to an infinitesimal level,” says Mcilroy. “There is something out there for virtually everyone. This really cuts into the desire of old-style broadcasters to hold mass audiences with their repurposed off-air content. Yes, the viewers are there, but now that there’s lots more to choose from, many are watching web-only content that the TV networks have no stake in.”

“I think the broadcast TV industry is about to experience what happened to the newspaper industry when the web took hold,” says Fred Singer. He is CEO of Grab Networks, which helps clients manage and make money from streaming video. “In other words, streaming media is changing the game. People not only can watch what they want when they want to, but they are also tending toward 2–3 minute ‘video snacks’ rather than old-style bundles of TV segments interspersed with advertising.”

“Broadcasters simply can’t ignore this kind of online content,” he adds. “Like radio when TV came out, they are going to have to rethink their business and content models if they want to stay relevant and profitable.”

On the flip side, StreamingMedia.com EVP Dan Rayburn warns streaming media providers against indulging in fantasies about broadcast television’s demise. “It’s not going to happen,” Rayburn says. “Historically, new media doesn’t destroy old media; it just complements it. When TV took hold, radio didn’t disappear. Instead, it moved away from its diet of comedies and dramas and switched to music and talk. In turn, radio didn’t destroy newspapers, nor will streaming media destroy broadcast television.” 

It will be a challenge for broadcast TV programmers to come up with content that can’t be found on the web. This is where 3D television, married to major sporting events and other spectacles, might give broadcasters an edge over their online competition.

The good news as far as broadcasters are concerned? Right now, it does not appear that streaming media is eating into the broadcast TV audience, says Piech. “Our research shows that while online viewing hours are going up, broadcast TV hours are staying stable,” he explains. This means that people aren’t switching one for the other. Instead, they’re just devoting more hours to screen time.”

Streaming Media and Entertainment Challenges

Despite its growth, streaming media is still in its infancy as a commercial business. Many challenges remain for streaming media content providers, on both sides of the business equation.

On the content side—the product that consumers will pay for—current levels of penetration make it difficult for providers to make a living. “The studios generally get 60%–70% of the revenues from Netflix, Hulu, and other such companies,” says Rayburn. “When your penetration rate is only around 1 million–2 million subscribers—not all of whom are necessarily watching a lot of content—it is hard to make enough money.” 

On the distribution side—getting the product to paying customers—the current proliferation of proprietary streaming media boxes and the reluctance of some carriers to support bandwidth-hungry streaming video is causing headaches for content providers as well. “Last year, I had four or five streaming media boxes that I was testing,” Rayburn observes. “This year, I have about 20. All of them do different things, and none of them give me complete access to everything that’s online, which is what I believe consumers want.”

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