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Streaming Video Sizzles: A Look at the Current Marketplace
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Posted On September 15, 2015
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The consumer marketplace for streaming video is exploding, with traditional streaming services drawing competition from new entrants into the arena. The physical market for video on DVD continues to drop, with rental services such as Blockbuster, LLC all but extinct due to lack of business. Redbox point-of-sale rentals and other options remain, but they are dwarfed by the shift to video on demand (VOD). VOD sales and subscription services are soaring thanks to cable companies and web services such as Netflix, Amazon, Apple, and Hulu. In fact, 2014 was the first year in which Americans spent more on streaming VOD than on physical media. While the consumer marketplace continues to skyrocket, the educational and library markets are finding the move to streaming video more problematic.

Netflix began to offer subscription-based video in 1999, providing film rentals in DVD format via mail. In just 10 years, the company boasted more than 10 million subscribers and 100,000-plus titles. It introduced a complementary streaming video service in 2007 using the internet as the delivery system. Within a year, Netflix opened its unlimited instant service to all existing DVD customers at no additional cost. Other vendors have since followed suit with similar programs and plans.

Trends to Watch

Given the increasing use of streaming video, we can expect a lot of industry posturing and new services to arise—as well as other potential issues on the horizon. The following developments are just a few to keep an eye on:

  • Alibaba Group now offers TBO (Tmall Box Office), a Netflix-type subscription streaming service, in China. Alibaba is a major international player, and China is a market to whet any corporation’s appetite. With its cost of only $57 per year, it will be interesting to watch how this huge new market responds.
  • A newly formed industry forum, the Streaming Video Alliance (SVA), had its first general member meeting in May. Its mission is “to foster deeper ecosystem collaboration, create an open architecture and promote best practices that will allow online video to flourish.” The SVA is a good sign for future progress on technical and other issues that have plagued the DVD marketplace with all of the regional formats and other barriers to universal access over the years.
  • Google will release a new compression codec (VP10) that will sharpen video images and use less data than the current VP9 format.
  • Facebook now allows streaming video by celebrity clients—joining Periscope and Meerkat Streams in mobile live-streaming—although it promises to open this up to the rest of its users in the near future.
  • Tech Times reports that as a solution to declining broadcast ratings, networks are seeking to add more commercials to pay for the financial shortfall.
  • Variety reports that Apple is looking at producing original streaming content as a way to take on Netflix and others in this sector. Both Microsoft and Amazon have chosen this route in the past, both realizing that the path is long, bumpy, and has no promise of success at the end. However, Apple certainly has the money to move forward with this idea.
  • Amazon now allows $99 Prime members to download some shows and movies from the streaming service to watch offline on the Amazon Video app for iOS or Android devices. So far Hulu, Netflix, and other services haven’t followed suit, but they may if this venture proves successful. Amazon is also making Prime available in Japan in fall 2015.
  • There are rumors that Verizon will announce its TV-streaming service soon; the company has been known to be working on some type of streaming product since its failed joint venture with Redbox.
  • State governments are looking at taxing schemes for streaming video to offset lost taxes from DVD sales.

The Home Market

According to a comScore data report, 192.9 million Americans watched online videos on desktop computers in May 2015. Throughout 2013, 93% of marketers used video for their online marketing efforts. In July 2015, comScore released a report that clearly showed that in the U.K., U.S., and Canada, video viewers are becoming equally comfortable using desktops, smartphones, or tablets for viewing (see the image in the upper-right corner of this article for more information). The NPD Group’s Connected Intelligence service predicts that by 2017, 40% of U.S. homes will have some type of streaming media player.

eMarketer notes that YouTube—which uses ads to subsidize its free videos—currently holds nearly 20% of the total U.S. digital video ad market. This Google property’s market share is expected to remain constant over the coming year. According to Digiday, “There’s a reason YouTube will attract more than $1 billion in video ad dollars this year: The site has a greater effect on consumers’ purchasing decisions than Facebook, Twitter, or Google+, according to a September report on social media advertising from AOL Platforms. After tracking 500 million clicks and 15 million conversions during early 2014 using Convertro’s attribution technology, the report authors determined that YouTube is the strongest of the social networks at introducing new products” both at the introductory and closing sales stages. eMarketer’s report predicts, “Video’s share of digital display ads in the US will gain significant ground throughout our forecast period, increasing from 21.6% of all digital display advertising last year to 30.1% by 2018. Meanwhile, rich media—which can include video and interactive elements—will also gain share of the digital display market, taking away dollars from banners and other static ad formats.”

Videos and filmed entertainment are becoming more and more global. Recent data from PwC finds that the gap between China and the U.S. in box office revenues is closing: “China’s box office revenue will thus move from US$4.31bn in 2014 to US$8.86bn in 2019 as its cinema-building boom continues and rising disposable incomes make the cinema more affordable.”

PwC also reports that the market for DVDs continues to dwindle: “Global total physical home video revenue will decline from US$30.78bn in 2014 to US$22.81bn in 2019 at a -5.8% CAGR [compound annual growth rate]. With 52 of 54 territories recording a decline, the factors contributing to this—including the reduction in ‘bricks and mortar’ video stores and the rise of electronic alternatives—only look set to strengthen.”

At this point, consumer appetites for video—creating their own, viewing Facebook uploads or other shared sources, and formal films and media—seem insatiable. Bringing the technology into enterprise and library settings will continue to be a key goal for organizations in the future.

The Corporate Marketplace Develops

In the corporate sector, streaming video has become important for staff training, for multisite broadcasting of internal reports and communication, and for providing sales support and ongoing connections to client bases. According to MicroMarket Monitor’s latest report, the “North America enterprise video market was valued at $4.44 billion in 2014 and is estimated to reach $12.01 billion by 2019 at a CAGR of 22.0%.” The report’s description credits a variety of factors: “The globalization of companies has amplified the need for [an] effective communication system across all regions and verticals. The enterprises have been witnessing a growing need for video interfaces in communication purposes, due to its ability to improve productivity and outreach. The enterprise video brings flexibility in remote working conditions and reduces the overall capital expenditure. Increasing adoption of cloud technologies and BYOD [bring your own device] culture are the key driving forces for enterprise video market and other driving forces are Increase in virtual workers, Travel cost saving, and need to enhance productivity.”


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Nancy K. Herther is American studies, anthropology, Asian American studies, and sociology librarian at the University of Minnesota Libraries, Twin Cities campus.

Email Nancy K. Herther

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