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2020 – A milestone year for many across the streaming landscape

The streaming media industry is now entering a new era, as major launches and acquisitions carve out a global landscape for 2020 and beyond. US Direct-to-Consumer launches in the spring – NBCUniversal’s Peacock and Warner Media’s HBO Max – will join recent newcomers AppleTV+ and Disney+, along with industry veterans Netflix, Amazon and Hulu, to bring even more choice to consumers. Peacock will initially only be available to Xfinity customers, before a full launch in July. Warner Media’s HBO Max will also roll out into Latin America later in the year, followed by some European countries in 2021, bringing a wealth of new content.

Across the wider streaming market there is a real land grab sweeping across this landscape by the various media players, examples of these collaborations, mergers and acquisitions include Universal and Xumo, the purchase of Pluto TV by ViacomCBS, Fox is now rumoured to be buying Tubi, however this is not the bit sold to Disney, this still belongs to Murdock. NBCUniversal is in talks to buy Vudu, which also offers AVod. Rakuten is launching AVOD, on top of Amazon’s IMBDTV. We saw Sony selling its majority stake of streaming service Crackle. Warner Media’s Crunchyroll is also available on Roku channels. Meanwhile in the UK, BritBox, the BBC and the ITV joint venture continues to extend its reach, with its UK launch in late 2019 joining the party behind the USA and Canada. Then there’s DAZN, providing a sports subscription streaming service across Austria, Germany, Switzerland, Japan, Canada the USA, Italy, Spain and Brazil, with more country launches likely in the future and the list will just continue.

A Renaissance for Content Producers

In the USA alone, Futuresource forecasts show that consumer spend on SVoD (Subscription Video on Demand) will rise to more than $20 billion in 2020, exceeding transactional home video and box office combined. Moving forward, SVoD will see a 16% average annual increase over the next five years. Conversely, Pay-TV is in slow decline in the USA, yielding to downward pressure from a combination of competition from SVoD, Pay-TV operators focusing on broadband access, and a lower-than-expected uptake of Pay-TV lite/MVPD services.

Amid this SVoD upsurge, content producers are enjoying a renaissance, with an abundance of premium content being created for an ever-expanding raft of services across a wide range of genres. For studios and broadcasters alike, this provides the opportunity to go direct-to-consumer with a targeted offering. However, it’s a big departure from established business models and the high rewards are not without their risks. How many services is too many? Will consumers become more susceptible to churn? Could the widespread availability of free trials create a culture of service hopping? Despite all the opportunity, churn management will come to the fore, as content producers evaluate their long-range strategies, with super aggregation a priority for leading platforms and tech companies.

Maturing Markets and Continued Fragmentation

In this new world of content choice, service stacking could become commonplace for consumers, with households regularly churning in and out of services, as they become increasingly media savvy and weigh up the cumulative costs of taking multiple services. As an example, around one-third of current and previous Netflix subscribers in the USA and key European markets cancelled their service and restarted last year, over half of them doing it more than once.

As viewing behaviour matures in many countries across the globe, consumption is fragmenting across SVoD, AVoD (Advertising Funded Video on Demand) platforms, such as YouTube, BVoD (Broadcaster Video on Demand) platforms, such as BBC iPlayer and transactional digital video, as it continues to make steady in-roads. How these new services will fit in with the wider viewing mix of free traditional TV, Pay-TV, transactional video and newer AVoD services, such as Pluto TV, has yet to play out.

Power Shifting and Finding that Right Balance

These new services each have their individual strengths and will be appealing to many, yet central to their long-term successes will not only be adding new subscribers but retaining existing customers as well. UX (user experience) design will play a leading role in customer retention. Alongside breadth of content, great UX provides a seamless customer journey through the content, aiding engagement, search, navigation and discovery. UX walks a challenging path between placing the brand front and centre and fading into the background to let the content come into focus and do the talking. This combination of powerful content and clear content visibility will prove more important than ever in 2020. As a result, super aggregators and content providers that operate at scale will become more relevant, yet they will still require platforms with strong customer bases to help drive and maintain subscriber numbers. Although the time is right for direct-to-consumer, it can never thrive on its own and will always require a backbone of hardware, platform, brand tie-ins and positioning to reach out with impact and enable a strong and sustainable customer experience. 

PTZ cameras on the rise after a challenging 2018

After short-term setbacks in 2018, the professional pan–tilt–zoom camera (PTZ) market is returning to growth this year. That’s according to a new market report from Futuresource Consulting.

“2018 was a challenging year for the pro PTZ camera market, with a 2% fall in shipments and value dropping by 4%,” says Adam Cox, Senior Analyst – Imaging & Pro Video at Futuresource Consulting. “The sector has been a victim of its own success, as the bulk of the decline was due to unprecedented growth in 2017, compounded by a lack of technology drivers and an installed base of products that have yet to reach end of life.”

Last year, every region felt the aftereffects of 2017’s success, yet the USA did post some slight growth. China remained flat, while Europe, APAC (excluding China) and the rest of the world all suffered declines.

“There’s still a lot of potential in the market,” says Cox. “The need for people to acquire cost-effective, good quality video with limited skills and experience continues to rise. New addressable end user markets are opening up; more businesses are exploring ways to communicate with video; existing users are now looking to replace aging products, and prices are decreasing. All the pieces are in place and 2019 will deliver some strong growth once all the numbers are in.”

Feedback from vendors suggests that Higher Education, particularly in China and North America, continues to be the most significant driver of growth in the market. Wherever there’s a countrywide focus on technology in education, PTZ cameras remain a key area for investment. However, the strength of the PTZ market stems from its diversity, with broadcast, corporate and government all playing a part. From a technology perspective, IP will also become a more significant driver of the market as it gains wider acceptance in AV and pro video markets.

The professional PTZ camera market report is part of Futuresource Consulting’s pro video and broadcast report portfolio. This includes reports covering broadcast control, production switchers, multiviewers and routers as well as system and box cameras. All reports follow the same methodology, allowing global category comparisons to be made.

Based on direct feedback from vendors, component suppliers and channel partners, the 52-page professional PTZ camera market report provides quantification of global sales volume and value, five-year sales forecasts by region (by volume and value), and a technology and competitive review to identify and interpret key market developments and trends.

Is it too soon to be talking about 8K?

The broadcast team at Futuresource Consulting share some industry commentary following their visit to IBC 2018.

By Chris Evans, Broadcast & Professional Video Equipment.

The ongoing drive for ever-higher resolutions has been a familiar story in the world of video acquisition for many years. But, after IBC 2018, talking about the practical application of 8K is no longer taboo.

Japan’s state broadcaster, NHK, has long been the driving force behind 8K. Manufacturers have been committed to developing an ecosystem of products that can support the 8K broadcast standard, ‘Super Hi-Vision’, in time for the Tokyo 2020 Olympics. However, with many other broadcasters still occupied with upgrading their portfolio of HD channels and the limited availability of 4K content, meaningful use of 8K technology in the wider industry can seem distant.

Shortly before IBC, 8K held a notable presence at IFA 2018 in Berlin, as Samsung, Sharp, LG, TCL and Toshiba all dedicated space at the convention to showcase 8K consumer displays. Samsung and LG incorporated spectacular reveals of their 8K TV sets into their press conferences, whilst Sharp emphasised their development of an 8K ecosystem, which includes both their display and the 8C-B60A camcorder, which has already begun shipping in Japan and China. The continued focus on higher-resolutions by TV manufacturers at the show indicates that it won’t be long until they begin their attempts to drive 8K into the home, as they did with 4K.

Though adoption of 4K in broadcasting has been slower than was first anticipated, 4K acquisition has been accessible for several years. 2017 was a particularly significant year for 4K adoption in the camcorder market, as it truly became mainstream. Cost effective 1” sensor camcorders brought 4K to the lower-end of the market, as sub $5,000 fixed lens camcorders have fuelled a 9 per cent point annual increase in the worldwide market share of 4K capable camcorders sold by Sony, Panasonic, Canon and JVC, to account for a total of 32 per cent of worldwide camcorder volumes.

The accessibility of 4K acquisition has allowed workflows to mature and, with this, has come a greater awareness of the benefits of over sampling (acquiring video footage at a higher resolution than is necessary for the final output). It has been proven and accepted that recording video at a higher resolution and down-sampling the footage for final delivery will result in an improvement in video quality. The flexibility of having a larger canvas of pixels to work with also enables more creative options in post-production, from digital zooms and cropping in and recomposing shots to improving the accuracy of digital stabilisation and VFX tasks.

The use of 8K in live broadcasting may be very limited for the foreseeable future on a global basis, but the benefits of 8K acquisition are already apparent due to the proven use-cases of oversampling. There is an obvious use for 8K acquisition at prestige events and in select cinematic instances to begin preparing a library of 8K content, but 8K is not just about futureproofing. The same learnings made from using 4K acquisition to create HD content can be applied with 8K, but to an even greater degree – especially in the case of using 8K for HD formats. Capturing 7680 x 4320 pixels to create a 1920 x 1080 image may sound like complete overkill, but it’s precisely that factor of 8K being 16 times bigger than HD that makes oversampling 8K footage a more perceptible step-up than 4K. 8K cameras will not immediately replace 4K or even HD cameras, but their enhanced capabilities for oversampling allow them to be used in a completely new way.

At IBC 2018, Panasonic demonstrated a new camera that will be available next year that uses 8K acquisition as a tool to facilitate more efficient HD capture. Panasonic are calling this technique in use, “region of interest” or ROI. ROI allows up to four independent HD crops to be taken from a single 8K source camera (for instance, creating wide, mid and close shots simultaneously of a scene). In a practical application, this can reduce the number of cameras needed on a production, as multiple shots can be captured by a single camera operator. Sony’s UHC-8300 8K studio camera also enables a similar kind of flexibility, as it can simultaneously output 8K, 4K and HD signals. This facilitates more flexible workflows – for example, live feeds in 4K and HD could be sent to a video switcher for use in live coverage, whilst the 8K signal is taken directly to a recorder for archival purposes.

As the adoption of the 4K UHD formats grows, there will be a greater need for 8K where instances of oversampling for 4K content is necessary. The reason that 8K will gain ground in acquisition in the immediate future is due to the new possibilities that it creates in production. 8K cameras will begin to see growth primarily through their use in mixed resolution production environments, deployed among an array of HD and/or 4K cameras.

IBC marked a significant step forward in the eventual adoption of 8K. Though its use as a broadcast format will remain niche, the potential it has to enable new techniques in acquisition are abundant. With NHK set to start broadcasting their 8K content in December this year, the acceptance of 8K is already well under way.

Expert commentary on Comcast’s acquisition of Sky

As Sky advised its shareholders on Monday to accept a $40 billion takeover bid from Comcast, Futuresource Consulting explores the opportunities and potential outcomes of the acquisition.


Closing in on a Comcast Global Play

Rival bidder, Twenty-First Century Fox, already owns 39 per cent of Sky. As a result, for the Comcast deal to be successful, it needs 82 per cent of the other Sky shareholders to vote in its favour. Should that happen, Comcast will expand its footprint into Europe, developing its international reach and benefiting from economies of scale.

“Sky is one of the world’s best-in-class Pay-TV operators,” says David Sidebottom, principal analyst, Futuresource Consulting. “Its interests span the entertainment spectrum from content production to distribution, with the goal of providing ever evolving customer experiences.”

Say Hello to 23 million Customers

Sky’s presence in the UK, Ireland, Germany, Austria and Italy will allow Comcast to tap into more than 23 million retail customers and enjoy some of Europe’s highest Pay-TV ARPUs, averaging £45 in the UK. These ARPUs are possible due to Sky’s continued investment in premium content across sports, movies and entertainment, a strategy that will be strengthened by NBC Universal’s potent content division.

Late last year Sky also launched an OTT service in Spain, and this deal may provide further impetus to expand deeper into Europe, which could mean a raft of further acquisitions.

“What makes this acquisition so special is the innovative approach to technology that the companies share,” says Sidebottom. “They are no strangers to the leading edge, investing in high-end boxes and delivery platforms on a mass-market scale, perhaps more so than many of their competitors.”

The Importance of Sky’s Netflix deal

Whilst the potential deal will strengthen Comcast and Sky’s propositions in an increasingly competitive video subscription environment, there is clearly complementary usage between traditional Pay-TV players and streaming subscription services. “Sky has also recently been given the go ahead to embed Netflix directly into its platform, allowing Sky customers to navigate a host of content, including Netflix originals, directly from the Sky EPG. This keeps viewers contained within the Sky platform, rather than having them leave the Sky domain to access Netflix through a third-party platform, ultimately helping to reduce churn.”

A recent Futuresource consumer research study, Living With Digital, revealed that over 50 per cent of Sky Q subscribers already use Netflix in the UK. Combine this with Sky’s increasing investment in original content, which would benefit from Comcast’s international distribution capabilities, and all the pieces begin to slide into place.

Challenges for the Future

There are challenges on the horizon, with viewing and subscription habits among younger age groups evolving as consumer choice increases. Many millennials are wary of tying themselves into contracts, while other video platforms such as YouTube and eSports provide ample competition for younger eyeballs. Sky and Comcast have to consider how they will address those potential customers moving forward. Sky also continues to explore ways of growing its subscriber base beyond traditional satellite TV, with plans to launch a Sky over IP service to reach more households, without the need for a satellite dish.

“This deal will need to address a saturated Pay-TV market and indifferent attitudes to Pay-TV use in the under 30s,” says Sidebottom. “It’s not that younger generations don’t want to pay, it’s more that psychologically they don’t want to be tied into a contract. Sky’s Now TV service provides an alternative, allowing binge watching and catering for the new freedom-loving breed of consumer.”

Beyond Pay-TV and into the Smart Home

Comcast and Sky have both continued to invest and diversify their operations, ensuring future growth beyond Pay-TV, offering multiplay, embracing broadband and mobile, while pushing forward into new technological territories. Amazon has invested heavily into its smart home strategy in recent years, but Comcast and Sky are well positioned to become the gateway to the smart home, bringing potential new services and increased ARPU.

“As we wait for shareholder approval of the Comcast acquisition, the question remains what Fox will do with its 39 per cent share of Sky,” says Sidebottom. “When Disney completes on its purchase of Fox, it will own 60 per cent of Hulu, with Comcast holding a 30 per cent share. Could there be an opportunity for a deal which delivers Comcast further control of Sky and locks Hulu deeper into the Disney family?”

If the deal were to go ahead, it would further enhance Sky’s reputation in the battle for the living room, and beyond.

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