Do you remember that in the old days, you had to drive or run to a store to buy/borrow a new CD/DVD? You opened that sleek plastic case and plugged your new CD/DVD into the CD/DVD player? You are laying back in your massive sofa and pushing those buttons.
Yea.. the 90s was sweet.
Fast forward to 2007, when Netflix started delivering DVDs directly to the consumers’ doorsteps. By keeping up with the emerging technologies and staying ahead of the curve, Netflix has grown from DVD delivery to the industry leader for instant streaming videos.
Just what exactly are we dealing with?
To provide better context, when we’re dealing with online streaming we’re experiencing a shift in paradigm. No longer are consumers concerned with ownership. Rather, they’re concerned with access.
The same paradigm applies when speaking of the shift in how people are consuming their videos. Video consumption is a more personal and less communal activity.
I’m sure you’ve heard the term “binge watch” before.
The power is in the hands of the viewer. They can come home and watch an entire season in one sitting (binge watching at it’s finest), or they can watch one episode every evening.
Now that the viewer can watch at their own pace, the entertainment industry is becoming fragmented as a result. Personalization plays a role here too. Streaming providers like Netflix and Hulu are becoming so good at predicting content the viewer will like, that no one show is insanely popular.
Take American Idol for example.
In 2006, American Idol was a must watch. The premier of the 2006 season brought in a record 35 million viewers. We haven’t seen numbers like this since.
Now let’s look at Breaking Bad.
The show finale of Breaking Bad aired in September of 2013 on AMC. That brought in 10.3 million viewers. It’s nothing like American Idol’s 35 mil, but it is an impressive number for today’s ratings. This shows the magnitude of how things have changed.
Streaming vs. Cable
It’s not to say one is better than the other. Each form of delivery has served the industry well for the time in which it thrived (or is thriving).
We do know that a lot of broadcasters are moving towards streaming. They are embracing the technology, but Netflix was truly the company to remain ahead of the curve. Big name broadcasters launching or current have their own streaming model are Nickelodeon, HBO, PBS, Amazon, The CW, Fox, ABC, NBC and ShowTime.
It’s truly an exciting time for the entertainment industry. Thanks to a study by PricewaterhouseCoopers, the streaming industry is going to exceed box office revenue by 2017 making streaming the biggest contributor to the film entertainment industry.
With the colossal rise in streaming media, naturally, DVD rentals and sales have drastically dropped by $3 billion dollars from 2008-2013. The same study reports DVDs will continue to drop by another $4 billion from 2013-2018, estimating total sales and rentals $8.4 billion in 2018.
Great news for the box office though! PwC reports an annual increase of roughly $1 billion each year in box office sales.
So what does this mean for the entertainment industry?
The drop in DVD sales does not come as a surprise to anyone. Turning to streaming as opposed to DVDs just makes sense. It’s convenient, personalized and even cheaper for someone to stream rather than buy or rent a DVD every time they wish to watch it.
Rest assured that television networks are doing just fine.Subscriber fees are projected to grow by 7% at Fox News, 2% at CNN and 3% at MSNBC. These cable networks are learning how to adapt to the changing times and keep up with their competition. While most of the networks advertising revenue is remaining stagnant at the moment, cable still has a place in our society.
No matter if you’re working with DVDs, the box office or cable networks, the biggest takeaway here is that the power is in the hands of the consumers, and consumers want convenience, personalization and affordable stuff.
To meet the needs of the consumers, streaming services and cable networks alike need to constantly be on the forefront of technology and embrace it where its due.