Online video streaming industry is heating up

By Maureen Aylward

Netflix is quickly becoming the largest video subscription service and its competition is racing to catch up. Netflix’s growth over the last year is a sign that something is happening in the online video streaming business. We asked our Zintro experts to comment on what’s happening in the industry, how it might be changing, and what new thing might be coming our way in online video services.

Jay O’Conner, CEO of World Colours Network Television and an expert in social media brandcasting and monetizing streaming video, says that Netflix and its nearest competitors will face challenges from a new breed of independent producers who are savvy enough to understand transmedia brandcasting and the relationship between social networked consumers and advertisers. Transmedia brandcasting involves optimizing brand narratives through multi-format, multimedia, and multi-device content and web services for mobile, print, packaging, signage, and satellite TV. “The company that can provide the technology, content, and mechanism to create a relationship from the audience to the advertiser to the brand will be the key player,” says O’Connor. “Companies like Netflix need to figure this out before Facebook and Google TV get there.  Otherwise, Netflix runs the risk of experiencing the same thing that Blockbuster did.”

To stay competitive Netflix, YouTube’s online service with Sony Pictures, and Amazon’s On-Demand all need be looking at multi-format options. Within five years, online video providers will be gateways for independent producers to release more content, which is what Facebook Social Cinema and GoogleTV are moving toward, O’Connor says.

Christophor Rick, an expert writer specializing in technology, new media and consumer electronics, a social media consultant, and CEO of Gamers Daily News, says that each of the cable operators is starting to work on their own customer-only streaming services; DiSH and DirecTV are going that way too. “It’s going to be a rapidly expanding market,” he says. But there are issues and concerns. “Netflix has 20,000 titles, but a lot of studios are shying away from them, afraid that they will turn into the Apple/iTunes of video and start dictating low prices, undercutting the potential profits of the studios,” says Rick.

However, Rick points out that Netflix has a plan in place that it is beginning to implement: removing the broadcasters and studios from the equation and simply buying content directly. “Netflix has licensed one show (House of Cards), which they could turn around and sell first-air rights to one of the broadcasters if the creators allow it,” he says.

This is how Netflix will survive, by cutting out the middle man and taking their place. Instead of buying rights to stream content from broadcasters, Netflix will buy it from the creators or buy all the rights and shop them around to broadcasters. “While it puts Netflix in direct competition with those they’re trying to license content from, it lets the industry know they’ve got cash to burn on new programs and are in the market to buy,” says Rick. “There is nothing stopping them from making a strategic alliance with a broadcaster, going after new content together, thereby creating a one-two punch of traditional and streaming rights.”

What do you think? If you have a question or comment about the online video industry, we would like to hear it. Click here. Would you be interested in signing up to be a Zintro expert and generate free leads for your business? Click here.

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  9. Just a few words of caution regarding is blog that seems to be inducing conclusions on the impacts of “Social Video” on content consumption…it seems that social networks are actually starting to a lose bit of their hold over the hearts and minds of consumers in general, which also includes entertainment. Quoted directly from a recent Mashable Connect article:

    “The typical Facebook user doesn’t even know 20% of their friends, and the authority of peers has notably declined 4% since 2009. As a result, consumers are increasingly placing their trust in the wisdom of experts, rather than the crowd.

    Social TV also doesn’t always operate the way we expect it to. According to new research presented by Christy Tanner from TVGuide.com, the most social shows on TV aren’t necessarily those with the highest Nielsen ratings.

    Top 10 Most Social Shows of the 2010-2011 TV Season:
    1. NCIS
    2. American Idol
    3. Criminal Minds
    4. Glee
    5. House
    6. Fringe
    7. Bones
    8. Castle
    9. Smallville
    10. Law & Order: Special Victims Unit

    Although some of these shows, like NCIS and American Idol, are also extremely popular in the Nielsen ratings, most shows buck the trend. Programs like Glee, which have huge social media followings and a great web presence, barely rank in Nielsen’s Top 40.”

    @Christophor, I don’t agree with your statement: “Netflix has 20,000 titles, but a lot of studios are shying away from them, afraid that they will turn into the Apple/iTunes of video and start dictating low prices, undercutting the potential profits of the studios,”…First of all, Netflix is an SVoD offer where a film’s actual pricing point is not relevant and impossible to calculate or compare with traditional market pricing. If you look at and TVoD service that distributes the same content, the pricing points never go below a certain level as contractually dictated by the Majors. Second, Studios are actually embracing services such as iTunes simply due to the massive sales volumes they generate, making overall revenues much more interesting than those coming from struggling IPTV & Cable TVoD services, which are pegged to Min Rev Guarantees that they never or barely reach. Third, SVoD services such as Netflix are gold mines for the Studios as they are the best source of guaranteed and constant revenues for their long tail library titles – These are the titles that make the Studios the most margin (since all production & marketing costs have been recouped). There is an increasing trend towards newer “Current” content on such services, but bear in mind that this content comes at a price and believe me that Netflix is paying out of its teeth for access to such content. Just to give you an example, CBS has made massive revenues in Minimum Guarantees from their recent Netflix deal, which does not even include any Current episodes: http://www.broadcastingcable.com/article/464296-CBS_Signs_Netflix_Streaming_Deal.php

    Additionally, iTunes & Amazon are already the best platforms for independent producers to distribute and sell their content (perhaps facebook & youtube in the future)…the only problem, simply stated, is that with so much crap for a consumer to sift through this content won’t get very far unless properly marketed and promoted. I don’t believe that this can rely on social media (as proved by the stats in the Mashable article above), in fact, social media can even back-fire for content. Professional, strategic, and well articulated content marketing (including solid curators) is and will continue to be the key to content’s success in the market place. There are exceptions, of course, but these are really not the norm. We should not forget that social media is a monster and getting your strategy right is very difficult and time consuming…there are no experts out there on the subject (despite all those who call themselves experts, so there are bound to be more screw-ups then successes at this stage.

  10. Thanks for the chance to talk about that since I write a lot about it at ReelSEO where we cover online video in all its forms.

    Christophor

    P.S. You made a slight mistake in my first name, don’t worry almost everyone does 🙂

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