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As we get to the end of the year, we can confidently say that 2015 was the year streaming TV became a real player. Between the watershed announcement of HBO Now (closely followed by Showtime, CBS Go, and a slew of others), and the introduction of credible skinny bundle packages from the likes of Dish and Comcast, any question that the TV industry is in a transitional phase has been essentially erased.
This is going to bring some interesting challenges in the years to come. All the research Conviva has conducted this year tells us the same thing: consumers are happy to shift their dollars from traditional Set Top Box (STB)-driven services to Internet-delivered ones; but in doing so they demand an experience that at the very least matches that of traditional TV.
Navigating the complex world of OTT streaming is, therefore, on everyone’s mind. Netflix set the Internet on fire this week by announcing its intent to custom-encode content based on its complexity. The short version is that they are re-evaluating the concept that a bigger file size means a better picture experience, and asking if they can’t get a virtually-indistinguishable picture while encoding less of the complexity (known as ‘noise’) of the video’. At the same time, there is a move afoot to re-evaluate Adaptive Bit Rate (ABR) technology. ABR is embedded in the player at the client end, and automatically adjusts the stream sizes it asks for – but it only knows about itself, and it only knows about itself now. Using centralized data to make more sophisticated decisions – offloading the decisions, essentially, from the client computer to a more powerful central system – could have a vast impact on the experience viewers actually receive.
All of this is exciting, but of course mainly represents the sound and fury, and not the in-the-weeds challenges every provider is managing on a daily basis. Even Netflix is not immune: eagle-eyed reporters from Business Insider just pointed out that you can’t actually get 1080p pictures on Chrome, Firefox or Opera, regardless of your bandwidth. That means that the picture will be fine on your laptop screen, but may disappoint when beamed to a 60-inch television. In the midst of all the great technological evolution, there are still some basic pieces that demand foundational attention.
That said, 2016 will be the year that a slew of services make the move to become, rather than the insurgents, the new power centers. HBO Now has already thrown down the gauntlet, with commentators estimating as many as 4 million subscribers paying their monthly dues. As the cord-cutters continue to make their shift, there will be a lot of discretionary dollars heading OTT-wards, and the top services will become powerhouses.
It will also be the year of actionable insights. In 2015 we saw a lot of providers wrestling with building data warehouses to track the past; in 2016 we’ll see them working on an Information Architecture that supports tracking and optimizing the past, present and future. Knowing why last week’s live sports broadcast broke is so last year: next year, we’ll be able to see it happening, work out in real-time what’s going on, and recover before the next point is scored. Meanwhile, we’ll know who’s watching, how they’re watching, and what they love, ushering in a new era of scheduling that delights viewers. If this year was a year of overwhelming volumes of content, 2016 will be the year that content is produced and scheduled based on the actual preferences of viewers, rather than the extrapolated statistics of a poll group.
Finally, 2016 will be the year that Experience becomes the watch word for the whole industry. Yes, Content is King, but Experience is Queen. Experience is the only real-time adjustable, optimizable element of OTT, and consumers care: one in three abandons in 30 seconds if the playback fails to meet their expectations. In 2016, the industry will fully commit to ensuring a Beyond-TV Experience – and this time next year we’ll be looking at an industry filled with rapidly-expanding, highly-profitable titans.
