The video industry is continuing to grow. With increased availability of high-speed Internet, rapidly declining distribution costs, the business case to launch video services makes sense for more and more companies every year. New devices with more capabilities are being launched at a blistering speed, while at the same time behaviours evolve so consumers become truly multiscreen users. I’m really pleased that Accedo’s vision has become reality!
So, looking at 2018 specifically, what are the trends we see in the industry?
- We enter the era of “multi-service” consumers
If video services were truly competitive, we would by now either see a slow-down of Netflix’s growth or a decline in competitive video services. That’s not the case, but instead Netflix continues to grow while most other video services also grow. In fact, we don’t see any signs of slowing growth in a macro perspective, which essentially means that an increasing amount of consumers are “multi-service” consumers, having 2, 3 or even more subscription video services. It is my view that consumer satisfaction of the OTT video services are so much higher than for traditional Pay TV services, that consumers should be willing to spend more money, not less, on their future video consumption. Now, this multi-service consumption brings plenty of new challenges into the picture, but that’s a topic for another blog…
- The return of the STB
The death of the STB has been discussed for many years. The market, in dollar value, started to decline a couple of years ago, and will likely continue a slow downward trajectory as production costs fall. If you look at market reports from 3-4 years ago the descent was quite rapid with an anticipated move to other devices.
Well, it turns out that with the declining unit costs for STB, lower cost technology system options to power those boxes, and with the emergence of new powerful client technologies like Android TV, operators are seeing STBs which are fully controlled by them as a key competitive edge against the independent video service providers in their markets. It is proven that consumers with operator-powered STBs are less likely to churn, which essentially pays for the STB solution in itself. With continued decline in costs and improvement in quality for 4K TV screens, consumers demand attractive living room video devices, aka STBs.
- The emergence of all in one VR headsets
I’m quite bullish about the long term VR prospects for video applications. However, I firmly believe that there won’t be a mass market before we have capable, high quality devices which can truly bring an added video experience for consumers. The current problem is that the low-end devices with snap on mobile phones don’t provide good enough quality and the high end devices which are powered by game consoles and PCs are too cumbersome for a mass market. Now, it’s widely expected that all the major tech vendors will launch stand-alone headsets. These headsets are expected to be priced between $100-250, which should be attractive for a big enough market. Once this new category is out in the market, the main challenge will be to secure great content to drive sales. I expect that the manufacturers will partner with key video services providers to launch attractive VR offerings, with a sub set of content, which could work in a VR context.
Meet us at CES.