Position Paper Planning Report
Kristina Martin
BUS510B; Innovation and Technology
California Baptist University
August 9, 2016
Online streaming has become a norm in the entertainment industry. Netflix, YouTube, Hulu Plus, and Amazon Video are just some of the examples of how consumers can view online content without downloading the video first. These are disruptive innovations. It has taken the world by storm and completely transformed the way viewers watch TV. Many consumers are ditching their cable/satellite TV providers in favor of subscriptions to Netflix, Hulu Plus, and Amazon Video. Between 2010 and 2013, about 5 million people ended their cable and broadband subscriptions (Edwards, 2013). In contrast with that, in 2014, media streaming players were added in more than 6 million US homes (NPD Group, 2014).
The way consumers watch TV is rapidly changing from traditional cable and satellite television to a strictly online streaming platform. Many consumers shy away from subscribing to platforms like Netflix or Hulu Plus because it is unknown and they assume that it would be more expensive. However, a cost-benefit analysis done shows that a hybrid approach, using both basic cable/Internet and subscriptions to Netflix, Hulu Plus, and Amazon Video, is immensely cheaper than just a cable/Internet/home phone bundle (Jones, 2016). The following table gives a comparison of a hybrid option versus cable only:
Plan A Plan B
Item
Cost (per month)
Item
Cost (per month)
Standard TV (20+ channels) with 15 mbps Internet
$44.99
Deluxe Cable (200+ channels) with 30 mbps Internet and home phone
$129.99
Netflix
$7.99
ESPN
Included
Hulu Plus
$7.99
HBO
Included
Amazon
$8.25
Total
$69.22
Total
$129.99
(Jones, 2016)
This hybrid option is great for consumers that cannot quite fully cut the cord and get rid of cable yet they would still save on average $60 a month. If the consumer is willing to ditch cable altogether then they can save on average $100 a month. An additional cost that one might incur when switching from cable to online streaming is investing in a device that increases the viewer’s streaming experience like Apple TV, Google Chromecast, Roku TV, Amazon Fire TV, or buying a Smart TV.
Internet streaming provides the user with greater flexibility. Signing up is very easy and canceling is even easier since there are no termination fees. The viewing experience is different than standard television. Services like Netflix and Hulu allow viewers to subscribe to shows or add them to a watch list in order to be notified when new episodes are added while also displaying the favorite shows on the home screen. Netflix allows different viewer profiles for different family members and will give suggestions based on previously watched content. All of these online streaming platforms are getting into creating their own content that a viewer will not have access to unless they have a subscription. Some advantages of having cable is the option to channel surf and stumble upon a new show where that is not an option with online streaming. Cable also has countless sports channels that show games in real time that streaming does not have. Some cable providers offer access to mobile apps and some content streaming for their viewers (Jones, 2016)
Some forces that online streaming must compete with are the Olympics, the World Cup, and local political advertising (Thielman, 2014). These events all help television to stay relevant since they are not available on streaming platforms. Once the general public is aware of the different ways to access this information, either through apps or social media, it may be the demise of television. Eventually live streaming will possibly become a substitute for online streaming services. It has already become popular in the social media community with Facebook Live videos and apps like Periscope, Meerkat, and Stream. An indirect competitor of Cable TV and online streaming platforms is the increasing popularity of outdoor activities. More and more people are ditching TV in favor of outdoor events, hikes, and physical activity which is causing subscriber numbers to drop (Investopedia, 2016). Even though it is not legal, video piracy and torrenting is a competitor for the entertainment industry as a whole.
Some current technology trends that are seen in the online video streaming market are diverse channels, a smaller quality gap, increased mobile focus, and original content. Each streaming subscription service is very diverse in the type of shows and movies that they offer in order to have something to suit each individual viewer. The sound and picture quality that Netflix, Hulu, and Amazon offer now has increased significantly with 1080p HD viewing. In the future there will no doubt be 4K streaming abilities. The demand for mobile streaming has always been around but has exploded recently with a decline in purchases of TVs and desktop computers in favor of large mobile phones and tablets. Consumers are looking to be able to watch the same shows on tablets and phones that they can on their TVs. Most recently we have seen a rapid increase in popularity for Netflix’s original shows, such as: Orange is the New Black, House of Cards, Jessica Jones, Daredevil, Stranger Things, and many more. These original shows that are only available on Netflix have become more popular than most primetime television shows. Hulu and Amazon have caught on to the demand for original content and have begun providing their own content on their respective platforms. (Walton, 2016) These streaming platforms have also increased the personalization in the viewing experience. Viewers can subscribe to shows and make them favorites in order to get a tailored dashboard.
Interactive video and second screen experiences have started to blossom but they should takeoff in the future to increase the viewer experience. This will allow the consumers to take quizzes, interact with other viewers, tweet, and find out more about the show while enjoying the latest episode of their favorite show (Bourque, 2015). These streaming platforms allow a viewer’s favorite show to be given a second-chance if the TV network chooses to stop producing the show. For example, Fox Network cancelled The Mindy Project and so Hulu Plus bought the right in order to keep producing new episodes of the show and it is now only available on Hulu Plus.
There is talk about Apple offering a web-only TV package, in the future, that will offer roughly 25 channels and cost between $30 and $40 a month (Pomerantz, 2015). In the next few years, there should be a subscription bundle that offers discounts, should consumers buy into multiple platforms. Now that there are countless different streaming platforms that all offer different content, there is a possibility that a one-price deal for everything will become very attractive to viewers. Right now the content is very fragmented, with countless streaming apps and services. Eventually, the users will want one place for all available content, in a personalized order of importance (Bourque, 2015). Unfortunately, this will not be something that happens in the near future and it also will not be cheap solution. So, looking at where this technology is leading, the way to get ahead in this industry would be to find a way to lump all of these subscription streaming services into one easy-to-find location, for one price and have it be viewer personalized.
References
Analyzing Netflix's Threat of Substitutes | Investopedia. (2016). Retrieved August 09, 2016, from http://www.investopedia.com/university/netflix-porters-5-forces-analysis/analyzing-netflixs-threat-substitutes.asp
Bourque, Andre (n.d.). Top 10 Streaming Video Trends You Can Expect in 2015. Retrieved August 09, 2016, from http://www.huffingtonpost.com/andre-bourque/top-10-streaming-video-tr_b_6215246.html
Edwards, Jim (2013) TV Is Dying, And Here Are The Stats That Prove It. [Online] Available from: http://www.businessinsider.com/cord-cutters-and-the-death-of-tv- 2013-11 [Accessed: 9 August 2016].
Jones, Stacy (2016) Cost of Cable TV vs. Internet Streaming. [Online] Available from: http://www.bankrate.com/finance/smart-spending/cable-tv-vs-internet-streaming-the-costs-2.aspx [Accessed: 9 August 2016].
NPD Group (2014) Six Million More U.S. Homes Added Streaming Media Players over Past Year. [Online] Available from: https://www.npd.com/wps/portal/npd/us/news/press-releases/six-million-more-us- homes-added-streaming-media-players-over-past-year/ [Accessed: 9 August 2016].
Pomerantz, Dorothy (2015) Will An Apple Web TV Service Be The Tipping Point For Cord Cutting. [Online] Available from: http://www.forbes.com/sites/dorothypomerantz/2015/03/17/will-an-apple-web-tv- service-be-the-cord-cutting-tipping-point/ [Accessed: 9 August 2016].
Thielman, Sam (2014) Digital Media Is Now Bigger Than National TV Advertising, Will Surpass Total TV by 2018. [Online] Available from: http://www.adweek.com/news/television/digital-media-now-bigger-national-tv- advertising-will-surpass-total-tv-2018-158360 [Accessed: 9 August 2016].
Walton, Andy. The Future of Streaming Technology. (n.d.). Retrieved August 09, 2016, from http://smallbusiness.chron.com/future-streaming-technology-63690.html