I think this shows conclusively that since around 2008 consumer interest in media services based around local storage – Media Center and Tivo have waned whilst interest in web streaming service Netflix has sky-rocketed. Interestingly a chart of their stock prices over the same period looks pretty similar – see here.
These are pretty dramatic shifts, and whilst at this stage they reflect sentiment and interest rather than buying behaviour I think this is a pretty clear indication of where things are headed. Streaming is simply a better proposition for consumers:
- being able to subscribe to only the programmes or channels we want rather than huge bundles would save money for many of us
- our content truly travels with us – available anytime we are on the web
- search and discovery should be much better – browsing EPGs is an awful experience – good search and adding social would be a major step forward
So, as I’ve written many times before, we can expect more streaming and with that less cable subscriptions – i.e. what is often called over-the-top-TV. But with that will come changes in what we watch. YouTube has already brought huge changes, but more will come. I once heard Google’s Merissa Mayer say that when you change the medium of distribution for content the unit of consumption also shifts – e.g. in music from the album to the single. When you think about it, the lack of innovation in the basic format of TV has been limited for decades so we are probably overdue a change. This is a quote from Asymco’s Horace Dediu (courtesy of Techcrunch):
What I mean is that there is no innovation in what a program is–the job it’s hired to do. The way it and its distribution fits into a person’s life. TV programs have not changed for half a century. They feature the same genres, the same duration, the same business model, the same series, format and scheduling and the same value chains as when “I Love Lucy” premiered in 1951. They assume people watch TV during the same time each day (while doing nothing else.) They also assume people are equally influenced by brand advertising and that audiences are largely homogeneous.
The brave new world won’t arrive quickly though. Hollywood and the cable companies are pushing back hard and they will be successful at stemming the tide for longer than their music and book industry equivalents. Movies and TV series’ are generally much more expensive to produce than books or music and the role of traditional TV companies in financing production won’t be replaced anytime soon. Moreover the cable companies will leverage their existing market share to slow the rise of internet based media companies – witness Starz recent decision to walk away from Netflix.
Over time the change will come though, driven by:
- greater audiences on the web undermining the bargaining power of traditional TV companies
- content producers looking to make more money or get cheaper offerings to consumers by cutting out expensive distribution channels
- (I suspect) a revolution in content production with more varied duration and niche targeted offerings designed for web delivery
Content delivered via the web should offer the prospect for greater advertising revenues as well, driven by much, much, better targeting and the ability to interact directly with ads.