This is a great time of year if you’re an analyst… it’s time for industry predictions!
So, for someone who follows the industry — like me — there are lots of questions to answer about just what the heck is going on. And, of course, predictions for the coming year need to be made. The problem is that, usually, forecasts and predictions are made by looking back at what happened during the past year. That’s seldom an accurate guide. I mean, just think about the pay-TV industry when cord-cutting started to accelerate. Looking back really wasn’t very helpful, right?
So, I’ve gathered my notes from all the meetings and conferences I’ve attended in 2019, the research we’ve done for the Global Video Index (download the latest Index here) and, of course, my best resource, the Magic 8 Ball.
A quick look back at 2019 predictions
First, here’s a look back at my predictions for 2019. (A DING!, obviously, is a win. A DOINK!, the same as when a kicked football hits the uprights… a loss):
The Justice Department swings and misses in its “re-effort” to disrupt the AT&T/Time Warner deal. DING! Done deal. AT&T now has a Super Max, er, HBO Max, that it’ll be trying to figure out a strategy for the rest of this year and beyond. A pricier subscription than Netflix? Please.
Nexstar succeeds where Sinclair failed and gets the nod to acquire a bevy of Tribune Media stations. DING! A strategy that proves if at first, you don’t succeed, change partners.
Hulu do-si-dos and changes partners. DING! Disney makes a huge content move to add control of Hulu to its empire.
Amazon breaks up the Google/Facebook digital advertising duopoly. DOINK(ish)!
Google and little brother Facebook controlled 58% of U.S. digital ad spend in 2018. Amazon? Just 4%.
My prediction called for double digits by the end of this year. eMarketer says 8.8.%.
Artificial Intelligence grows up. Huh? REPLAY IS LOOKING AT THIS. Honestly, it's too hard to call… because AI’s adoption is too hard to measure. BUT, AI certainly upped its game in the media industry, playing a larger part in content recommendation, ad and content personalization, and even playing a bigger role in production and editing of content.
The “polycloud” becomes a thing. PUSH. REPLAY BOOTH. Another one of those artful-dodge predictions on my part. How do you measure something like that? Actually, you can Google it. Last year there were 22,451 results for “polycloud.” This year, 28,100. I can’t tell you for sure that 2019 was the year that media began looking to use multiple cloud services concurrently, but it has become a more common term.
Still, with the increasing importance of AI, being willing to use multiple cloud services is simply realizing that Microsoft, for example, may be better than Amazon at some things and that Google has its own special offerings in, say, machine learning. All three offer similar core services, but each has its own special talents.
OTT services are not even close to the saturation point. DING! The news media loves to talk about SVOD saturation or how OTT choices have become exhausting. Consumers continue to sign up. But, pundits in this industry have this bizarre predilection to compare OTT services to traditional TV. That’s patently wrong.
OTT is not traditional TV!
Nor are we playing in a Texas Hold ‘Em contest, where the winner takes all and everyone else retires to their dens to watch the single-channel (Netflix?) that has become the center of the Internet TV universe.
Another one of my (sneak) predictions for 2020 and beyond? There will be a handful of Big SVOD Services like there are a handful of Big TV Networks. They will have the biggest share of viewers, make the most money, take home the most awards and get the biggest headlines. But, there will always be a market that supports niche players (even some services that have outgrown niche status). They will have subscribers, make money and produce dynamite content.
Disney D2C OTT launch lands with a yawn. MAJOR DOINK!
I can’t even begin to defend this. I was wrong to the tune of 10 million sign-ups on Day One.
But, does Disney+ have legs? Can iT thrive? Rumors now have Disney+ at 24 million. That is pretty thrive-y. But is the catalog deep enough to maintain that? Um, yes (another one of those firm mini-2020 predictions), simply because Disney will launch madly in 2020 and, like Netflix, have global access that supports it for a long time.
Sports – big and small – find a welcoming home online. DING!
No brainer, like betting on Ohio State to win the Big Ten. And we’re just seeing the tip of the iceberg. We saw more MLB, EPL soccer, NBA, NFL, IPL cricket etc. streaming than ever before. And, it’s just the beginning as pay-TV’s last pillar begins to erode more rapidly.
My 2020 Vision
Let’s just jump into 2020 predictions, shall we? (Ed. Note: Like Nostradamus, Jim is prone to vague statements… we’ll do our best to help him focus.)
Quibi, the multi-billion dollar short-form video baby headed up by Jeffrey Katzenberg and scheduled to launch April 6… Mobile-only, targeting younger viewers, and with a bevy of influencers and big-name content experts already on board. A shoo-in, right? Nope. Short-form content is great. But we’ve seen — in the quarterly Video Index — a higher percentage of short-form video starts on computers than on mobile devices. That’s especially true as more longer-form premium content becomes available on high-res smartphones. There’s also the question of how, exactly, does Quibi justify its expected $5/mo. subscription price for short-form content? And, how does it anticipate consumers engaging long-term? Magic 8 Ball says: Outlook not so good.
Let’s get a bevy of Netflix prediction:
Netflix continues to increase its content spend (estimated to exceed $15 billion, which is higher than the GDP of about 80 countries in 2019), as it continues to increase its subscriber rolls. Despite growing revenues, will Netflix raise prices in 2020? Magic 8 Ball says: Count on it.
One quick fix, of course, and one of the most popular topics of content at industry events is the potential increase in revenues Netflix would have if it introduced advertising in some way. So, with that in mind, will Netflix add advertising to its service (Alternative: Will it add an ad-supported tier?): Magic 8 Ball says: Very Doubtful.
Disney+. Apple TV+. HBO Max. Peacock. Those are just a few of the new services that have appeared, or that are about to appear, on the streaming screen. What impact will they have? How big a piece of the market will they take? Is (insert service name here) a Netflix killer? Is there a Netflix killer on the horizon?: Magic 8 Ball says: My reply is “No.”
Will Netflix get involved in broadcasting sports/bid on sports rights/introduce live news shows? Magic 8 Ball says: Don’t count on it.
(Bonus answer) What Netflix will do is produce more international content, move more aggressively into international markets and leverage its new “mobile-only” service in emerging markets.
Moving on from Netflix…
2020 will be a banner year for sports online. That’s not a prediction, it’s simply an observation.
The 2020 Tokyo Summer Olympics are the biggest global event coming down the pike and it’s obvious that it will be streamed to a massive extent around the globe. Amazon this quarter launched a short slate of games from the English Premier League that it paid a boatload of cash for. How that plays out will have a big impact on whether the e-tailer manages to score a big deal with that other football league, the NFL. But, let’s assume it goes well enough… will Amazon Prime Video win a major streaming rights deal for the NFL? Magic 8 Ball says: It is certain.
Some quick and easy ones I don’t need the 8 Ball for…
Consumers will reach a saturation point with OTT services. Nope.
See 2019 predictions above.
Consumers will look to an evolved pay-TV industry (ha!) to help them simplify channel aggregation… in other words, consumers will go back to the bundle (in some form) for convenience. Um, snowball’s chance in hell.
Let me explain why I think this is one of the three major fallacies about the media industries that just won’t die.
Will cord cutting slow down? Not likely. The U.S. will lose about 10% of its subscribers in 2020. But that’s OK, because pay-TV operators don’t want to be pay-TV operators anymore anyway. They want to be “connectivity companies,” (seriously, almost all of them said that during earnings calls this year). The margin on Internet services is significantly more than that for pay-TV… and the future is significantly brighter.
One more quick prediction about a soon-to-be-born streaming service…
NBCUniversal rolls out Peacock to yawns and the same lack of consumer adoption of TV Everywhere (which was one of the fastest-ever technology rollouts for pay-TV and one of the slowest technology adoptions). Peacock will have to pull off a major league Phoenix-rising-from-the-ashes if it hopes to make a dent in the market. Its go-to-market strategy is flawed.
Some final thoughts
Connected TVs will make it easier for brands to target — and finally reach — consumers.
But it won’t be with conventional ads. As I’ve been saying for the past several years, the new video audience that is Millennials — and even more so the Gen Edge viewers who are following — won’t sit through the same fatty ads that have clogged TV arteries for decades. Brands will develop new, interactive ads aimed at interactive connected TVs, more intelligent — and featured — product placement that scores well with viewers and puts the content back where it should be… at the top of the heap. Let’s face it, even with the Super Bowl, where the media has made shooting stars of commercials, content, the game is what it’s all about.
Consolidation & M&A: AT&T and Time Warner along with Viacom and CBS were the headlines that defined the major M&E M&A during the past 24 months, and we won’t see anything else that big in 2020. But, the time is ripe for consolidation among some smaller content producers.
And, there are the FAANG companies that still may have a taste for new meat in the next 12 months, especially on the international front.
No list of predictions for 2020 (or 2021, 2022, 2023 etc.) would be complete without a nod to next-gen wireless. 5G has the potential to drive major evolution in the streaming industry, but it will begin slowly this year and accelerate for the next five as more smartphones come to market and the networks builds out. 5G will make AR commonplace and give VR the potential to make an impact on content consumption, especially sports.
Jim O’Neill is Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn