Video on Demand Continues to Revolutionize TV, Movie Industries

By Steve Brachmann
March 28, 2015

Digital video and mobile media conceptOn-demand video services like Netflix and Hulu were niche businesses just a few years ago but in recent months it’s become clear that these platforms for streaming movies and television shows are a big part of the coming future of media entertainment. A recent Nielsen report indicated that 41 percent of American households have access to at least one subscription-based video on-demand (VOD) service. One out of every three homes in America has Netflix and one out of every ten has access to at least two video on-demand services.

Those who pay for these video on-demand subscriptions also watch more television than typical cable subscribers. The aforementioned Nielsen report found that homes with streaming video services watched an average of two hours and 45 minutes of programming each day, almost 50 minutes more than those who paid for a conventional cable or satellite service.

With all of this activity focused on streaming video, this industry has been turning into a much bigger business lately. Conventional television broadcasts generate about $65 billion in advertising revenue every year. But that investment could easily dwindle as more Americans switch to on-demand services. The number of households receiving broadcast signals without a typical television subscription increased year-over-year by about one million to 12.3 million American homes. The number of homes receiving only broadband Internet-based services more than doubled in the past year to 2.9 million homes.

It’s clear that a big shift in home media entertainment is underway. With this in mind we thought we’d take some time to look at the recent activities of many of the major players in this field to get a sense of where we might be heading in the world of Internet-based video on-demand streaming services. What we’re seeing is a wide open playing field which is increasing in scope, providing a great array of options and benefitting those consumers who value choice.

 

HBO, NBC Bring Major Production Houses to On-Demand Services

Since the rise of Netflix and the success of its content on-demand service, cable television content providers have been unveiling their own offerings for subscribers who want to access their favorite show content on their time. For example, HBO offers its subscribers access to the HBO Go service and those with a cable subscription that includes the FX Networks channels can watch The Simpsons and other shows through the FXNOW app. Subscribers can access these programs on an Internet-enabled smart TV or through a smartphone or tablet. However, accessing the app and viewing content typically requires a user to confirm that they have a typical TV service subscription through a cable or satellite provider. Unlike Netflix, users cannot pay a monthly fee to watch Game of Thrones and other HBO-specific content at their leisure.

That’s changing soon, however. HBO recently announced that it entered into a three-month exclusive partnership with Apple to extend its new HBO Now service to those who own an Apple device. For a $15/month subscription fee, an iPhone or iPad owner will be able to access great swaths of original HBO programming as well as movies which HBO has the rights to rebroadcast. The service, which will be available in April, will provide users access to a database of more than 2,000 shows. Presumably, the service will be available to much more than the iPhone after the three-month exclusivity period ends.

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“VIA QuadCore @ Computex 2011-Smart TV Video on Demand” by VIA Gallery is licensed under CC BY 2.0.

The performance of the soon-to-be-released HBO Now service should prove to be a major harbinger of the continued unbundling of cable TV packages. Unbundling refers to the fact that these streaming video services enable TV subscribers to pay for specific channels instead of having to purchase large cable TV packages full of content which they’ll never watch. There are industry insiders who are greatly interested in whether HBO Now gains users who don’t currently have a TV subscription or whether the app cannibalizes HBO’s typical cable audience.

HBO Now is likely just the start of what Apple has up its sleeve in terms of streaming video services. There’s been some buzz for a few years now about the possibility of a subscription-based Apple TV service but a recent Wall Street Journal article cited sources that confirmed that this online television service will become a reality in during the fall of 2015. Initial predictions on subscription prices ranged from $30 to $40 per month and basic bundles would provide 25 channels, including ABC, CBS and FOX.

For those readers who are seeing these higher-priced services and wondering whether Netflix and others might follow this trend, rest assured that there will be some on-demand entertainment services that help keep average prices pretty low for consumers. One example is the on-demand service currently in development by NBCUniversal, which some speculate could cost anywhere from $2.50 to $3.50 per month. The service would offer a lot of popular comedy content from the studio’s Saturday Night Live and The Tonight Show with Jimmy Fallon series and may also offer horror and family content as well.

 

YouTube and Twitter Make Moves, Other Unique On-Demand Services

Subscription services will even be coming to perhaps the Internet’s most popular and successful free on-demand video service. Comments that have recently come from YouTube indicate that website is contemplating an expansion of its current YouTube Music Key program. Music Key allows a subscriber to have unlimited ad-free access to about 30 million songs through Google Play Music; this service has a subscription price of $7.99 per month. YouTube’s VOD service would likely charge customers a similar price for ad-free viewing of original YouTube content.

Seemingly every company with a stake in Internet services are getting involved with streaming video services, even social media sites. Twitter recently announced the purchase of Periscope, a program still in its beta stage that lets users stream live video directly from a smartphone. This software could introduce an additional dimension to Twitter’s ability to cover protests or breaking news events all over the world. Live streaming a broadcast of video captured by an electronic device is also the subject of Meerkat, an app that lets users broadcast live video streams from their iPhone through the use of a Twitter account. Live video streams can be watched by many people, not just Twitter friends, and disappear as soon as the live video link is stopped. The program is proving to be popular among those who want to share even mundane aspects of their daily lives, such as their driving commute, with multitudes of others.

Streaming video services which have some very niche content offerings have also been picking up over the past few months. This March marks the launch of Pidkip, a VOD service specializing in presenting movies and television shows with a diverse ethnicity. Australian movies, Latin movies, nature documentaries and other content produced around the world will be available through this service for a $4.99 monthly subscription.

Poised to become one of the success story this year in the streaming video world is Sling TV, a VOD service developed by Dish Network and unveiled in February. For $19.99 per month, Sling TV offers 13 channels of live television, including ESPN and Food Network, to which subscribers can add expansion channel packs covering news, sports and more for an additional $5 per month each. A recent partnership with movie studio joint venture Epix will also enable the service to provide subscribers with access to more than 2,000 on-demand movies. Although Netflix is currently king of on-demand, it remains to be seen how this unbundling of niche channel programming will affect streaming video services. The one thing that is clear, however, is that we are quickly becoming a society with a greater degree of choice in the media that we consume.

The Author

Steve Brachmann

Steve Brachmann is a writer located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He has become a regular contributor to IPWatchdog.com, writing about technology, innovation and is the primary author of the Companies We Follow series. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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