It has been a busy year in online video. Many stories captured our attention during 2017, and here are our top ten and why they mattered.
Number 10: Early video moves by Facebook and Apple (1:30)
Apple committed $1 billion to content creation and made several new hires to help it build out its content library. Facebook hired a new head of content, launched a new video focused app called Watch, and Mark Zuckerberg committed to spending $1 billion for premium content.
Number 9: Wireless carriers leverage premium video (4:15)
This year wireless carriers started leveraging premium video to help boost subscribers and reduce churn. Here are some of the things the top three carriers did this year
- ATT made DirecTV Now so cheap on its wireless network most subscribers are taking it.
- Verizon continued to broadcast NFL games to mobile devices and renewed the deal with NFL for five more years
- T-Mobile continues its Binge On data cap free streaming programming and is offering free Netflix. It also purchased a traditional pay TV provider, Layer3 TV.
Wireless operators appear to be moving toward triple play services, though they value the video portion far less than wireline operators.
Number 8: Virtual MVPDs (7:20)
Virtual MVPDs began to attract a real audience in 2017. Estimates put the total number of subscribers to all services between 4 and 5 million. Top services are Sling TV (2+ million), DirecTV Now (1 million), and PlayStation Vue.
Though the services may not be very profitable, it is not stopping them from advertising aggressively to recruit customers. Expect more of the same in 2018.
Number 7: ATT and Time Warner Inc. deal (10:00)
At the beginning of the year, the deal looked like a slam-dunk. However, the Justice Department under Makan Delrahim has decided to challenge the deal claiming it would harm consumers. AT&T is challenging the Justice Department, and the case heads to the courts on March 19th, 2018.
Neither Will not I think the deal is a particularly strong. However, we also don’t see the Justice Department challenge as a strong one either.
Number 6: Transition of TV advertising to programmatic (12:40)
TV networks are rushing to data-enable their advertising and channels to compete more effectively with Google and Facebook. eMarketer is expecting programmatic advertising spending of about $2 billion, or 3% of overall TV ad spending in 2018. Programmatic digital video, on the other hand, should see ad spending of $11 billion in 2018.
Number 5: Decline of TV viewing among the young (15:40)
Traditional TV viewing among the young is falling fast.
- Live+DVR viewing among 18-24-year-olds was 12hr 43 mins per week in Q2 2017, down 16% YoY, a third since 2014
- 12-17-year-olds watch 11 hrs 47 mins per week, down 18% YoY and 38% since 2014
- 18-24 users of SMPs watching for an hour a day
Number 4: Continued strong performance from Netflix (17:30)
109 million total 53 million US, 56 million, 116 by year-end. Could reach $10 billion in revenue this year. The company continues to make the right partnerships, license and create good content, and attract lots of subscribers.
Number 3: Emergence of connected TV (20:20)
The connected television became an important platform in 2017. Penetration of enabled smart TVs increased from 24% in Q2 2016 to 31% in Q2 2017. Streaming media penetration increased from 27% to 33% in the same period.
Roku had a successful IPO with the stock debuting at $20 and reaching $56 by the end of the year. Active Roku boxes are delivering 2 hrs 30 mins of streamed content per day.
Android TV also had a successful year with CE manufacturers rolling out products based on the set-top box operating system. Some operators are beginning to deploy it too.
Number 2: Amazon continues as a major disruptor of television (20:40)
The company continues to invest heavily in content. Its Fire TV devices are selling well. Its video app is the number 1 app on Apple TV. Almost every SVOD is available through Amazon Channels. Amazon is also allowing people to subscribe to linear TV, including Discovery and Eurosport in the UK and Germany. They have had some challenges, including the loss of Amazon Studios’ head Roy Price. However, they look set for another good year in 2018.
Number 1: Disney’s pivot to online (28:30)
After dithering about online delivery for far too long, Disney in finally taking the plunge. It will launch direct-to-consumer (DTC) services in 2018 (ESPN) and 2019 (Disney-branded.) Its acquisition of Fox assets will help the move online. Though the company started late, its great content and intention to delivery the Disney-branded 2019 service at a price below Netflix guarantee many homes will take the service when it appears in 2019.