Six years ago, if you wanted to watch a movie on your living room TV, you had a few options: You could surf TV channels, order pay-per-view, or pop in a DVD.
Then everything changed. Netflix, the DVD rental company, started a streaming service where you could access an immense library of HD movies and instantly watch them on your TV screen. The elegant design, ease of use, and ubiquity of its application (embedded in DVD players and TVs) motivated consumers to grab their hardware manuals and get connected. The Netflix app did more than build up the company’s subscriber base – it taught a generation of consumers how to access programming outside the confines of their closed television programming service.
Today, approximately 30% of US TV households have connected televisions. Globally, the number is estimated to be 12.5%. And major growth is projected, with an estimated 42% of the US connected by 2016. The rollout of new game consoles (such as Microsoft’s Xbox One and Sony’s PS4) with their slick new operating systems, will make it even easier for consumers to access Over The Top (OTT) content from more sources than ever before. In the UK, Virgin Media became the first pay TV provider to offer access to Netflix through their own set top box.
This marks a fundamental shift in the way consumers ‘tune in’ to television. From the 1950s to the 1970s, TV sets had separate dials separating the powerful VHF stations (2-13) from the static-laden UHF stations. Cable came along and leveled the playing field – channel reception became equal and channels that never originated as terrestrial signals sprouted up. A channel number simply became a number on the remote, as new networks resided side by-side the established ones. Suddenly, the consumer had more choice, and their viewing decisions were driven by program interests, not signal strength.
Just as cable TV produced new genres and programming niches, so will the OTT revolution. New programming services now live in an onscreen menu adjacent to their well-established rivals. Netflix, Hulu, Amazon, YouTube, and Crackle have emerged as the most popular providers of OTT content, but other channels will soon follow. They will cater to the specific tastes of the audience, and many have already established themselves online as YouTube channels or digital networks. Programmers such as Awesomeness TV, Machinima, PopSugar, and Vice are likely to become the major media brands of tomorrow.
Unlike cable, where starting a network can cost hundreds of millions of dollars (ask Oprah), the cost of starting a digital channel is miniscule in comparison. The door is open to anyone who can create or curate an interesting programming service. For marketers, the implications are many. The slow but steady shift in overall TV/video viewing habits demands consideration of how to mirror our audience’s ‘best available screen’ attitude to where, when and on what device they watch content.
But perhaps more interesting are the opportunities in this landscape for brands that are continuing to expand their own content creation, curation and partnerships. As more of that content is of extremely high quality and focused on adding genuine value to viewers, the greater the opportunity is for marketers to seize and gain space on-screen alongside these emerging programmers. After all, there’s an audience for every niche and this evolving TV landscape facilitates ever more companies and individuals to serve those.
This piece is an adaptation from MEC’s annual global report, “Review Preview.” You can read the full report here.