The United States DVD rental is divided into two categories: store rental and online rental, of which the network rental method occupies a higher market share. In order to compete with the satellite TV companies of the same industry, the American cable TV company has pushed video-on-demand (subject to charges) services and has erode the DVD rental market. However, the broadband access service not only impacted the DVD rental market, but also caused great impact on cable video on demand services.
Broadband access spawns numerous video sites
The U.S. broadband access business has spawned famous video sites such as YouTube, Hulu, Netflix, Apple iTunes, and Amazon Video. YouTube is a free-to-publish video site, and other video sites are using video-on-demand (VOD) after broadband access, which has grown as a charge market for movies and TV programs.
Netflix seeks to develop with the same video service as cable companies. Users also pay a flat monthly fee to enjoy unlimited Netflix streaming services. Cable TV companies provide users with multimedia services in multiple rooms, and Netflix users can have up to four terminals simultaneously enjoy video streaming services. As a result, Netflix charges less than cable TV, so subscribers grow rapidly. For example, at the end of the first quarter of 2013, Netflix had 29.2 million video on demand users in the United States. Compared to the number of users simply, it exceeded the number of users of Comcast and DirecTV at the time. For paying users, in the second quarter of 2014, the number of Netflix streaming service subscribers reached 35.09 million, and overseas users reached 12.9 million, for a total of 47.99 million. With the growth of Netflix, various problems have also arisen on its own. Cheaper tariffs are welcome, but the cost of programs offered by Netflix is ​​rising, creating contradictions. In order to improve efficiency, Netflix had separated the DVD rental business and streaming media business in the fall of 2011, but this was not welcomed by users, resulting in a drop of 800,000 users in the third quarter of 2011. Later, the company restored the DVD rental business and streaming media business to its original status. In order to retain and attract users, it also conducted an exploration of its own production program.
Looking back at early broadband access (around 2007~2010), Apple iTunes (Apple Online Store) and Amazon Video (Amazon Video) and DVD rental models competed online. The decrease in sales of DVDs and the way TV stations sought to enter the broadband access service area prompted the birth of Hulu.
Hulu's shareholders are Comcast/NBC Universal (about 32% stake), Fox Entertainment Group (Fox Entertainment Group, 31% stake), Disney-ABCTelevisionGroup (Disney-ABC TV Group holding 27%), ProvidenceEquityPartners (Providence shares 10 %)constitute. How to make distributors and program manufacturers become a community of interests is a challenging issue. Hulu, who has grown up with broadband access, has been exploring. CBS (CBS) provided programs for Hulu aimed at curbing the reduction of television viewers. Hulu management also tried to set up a joint venture company with broadband access service providers to jointly take risks and grow together.
There is a view that as long as you have enough users, you can make money. Specifically, free services are provided, and a large number of Internet users will be flooded into the network to gradually increase revenue. Facebook has a good return after having 1 billion users, which is a typical example. However, this business policy has caused Hulu investors to worry. Because the shareholders of the video site are also the shareholders of the major TV stations, if the free services are expanded, the video website business will also curb the revenue of these major TV stations' existing businesses, which is in a dilemma. Therefore, Hulu's shareholders often face opposition to management.
In 2011, shareholders even proposed to sell Hulu. In response, the United States has shown great interest from companies such as Yahoo, Google, Apple, Microsoft, Amazon, ATT, Verizon Communications, and Dish Network. Yahoo, Amazon, and DishNetwork have bid around US$2 billion to bid for Hulu. Google proposed that if it had exclusive use of video within two years, it could bid $4 billion. In the end, Hulu's shareholders decided that they would no longer sell, considering that the bidding company's purchase price was too low. After Hulu compared with the fast-growing YouTube and Netflix, although it has perfect management, it has lost the potential for growth, but Hulu has been trying to get out of the woods.
Broadband access has a huge impact on the traditional video market
At present, some cable and satellite TV users have cancelled their contracts with cable TV and satellite TV due to transfer to broadband access services. However, various surveys in 2013 showed that the number of television households that have been terminated with cable television and satellite television is still less than 1%, so it is not yet a major threat.
However, over time, OTT's impact on the traditional video market has grown. Turning to OTT service provider revenue, StrategyAnalytics market research company data show that the US OTT market in 2014 increased by 21% compared to the same period in 2013, and Amazon and Netflix are the main driving forces. Nearly half (48%) of US OTT revenue comes from Netflix and Amazon. The two companies will have revenues of US$ 10.7 billion in 2014.
YouTube, MLB.com, and Hulu are also good. Their profits for services will double by 2019, and will increase from $4.1 billion in 2013 to $8.8 billion. They are expected to surpass the DVD market in the next five years. For example, in the first quarter of 2014, HuluPlus had more than 6 million paid subscribers for streaming media services, and revenue in 2013 exceeded US$1 billion. The company partnered with Pizza Hut to start offering pizza service while watching videos. The company also started negotiations with operators to allow users to watch programs from cable TV set-top boxes.
The research company ConsumerIntelligenceResearchPartners (CIRP) announced on January 3, 2014 that the number of Amazon Prime members is approximately 16.7 million families and the annual membership fee is 79 US dollars. From a client perspective, the monthly OTT service fee for 2014 was US$29, which is an increase of 18% from 2013. This phenomenon will continue and will reach US$43 per month after five years. This development trend shows that the influence of OTT services is getting greater and greater and more and more popular. Cable TV and satellite TV companies are deeply concerned about this.
The second screen and social television erode the first screen market
In the past few years, social networking sites such as Facebook, Google+, and Twitter have become increasingly popular. The most eye-catching American Football Super Bowl Finals and film Oscars, and other events, many TV viewers have to go to social networking sites to watch, which means that people often use social networking sites, to enjoy entertainment and understand social events. Because mobile phones and tablets are often connected to social networking sites to watch videos when users watch TV, these mobile applications are called second screens. The second screen and social television have become important keywords frequently appearing in the U.S. video business and the online community.
In addition to Facebook and Twitter two social tools, other developers are also providing various second-screen applications. In this case, although MVPD occupies the position of the first screen of television, there are more and more video programs appearing on the broadband access service, and it has threatened the first screen.
For example, Netflix first launched the original "Lilyhammer" in January 2012, which immediately attracted 1 million viewers. With this as an opportunity, it has successively launched works such as House of Cards, FatManLittleBoy and BrianPosehn. These works were broadcast on prime time on Sunday and attracted a large number of viewers. Netflix et al. have eroded the first-screen market, and Netflix executives have claimed that “original production fees will increase to 15% in the next few years†to capture more market share.
It is reported that Netflix's 4KVOD service debuted in June 2014. The TV receiver corresponding to the 4KVOD service is UH8550/9000 of South Korea’s Samsung, followed by 4K TVs from companies such as Sony, Vizio and LG. In order to obtain the highest quality viewing experience, Netflix requires a minimum of 20Mbit/s broadband access at home, but the average bandwidth of American and U.K. average homes is currently 7~8Mbit/s, so it can meet Samsung's 4K TV service environment. There are not many users.
U.S. Broadband Access Service will intensify the original program and allow it to enter the “fourth TV†stage. This program allows users to not only watch traditional TV programs, but also allow users to watch programs “anytime, anywhereâ€. This is more convenient and flexible than watching television in a fixed room. It must be the direction of future development.
Traditional TV companies start the first screen to defend the battle
Traditional TV companies are strengthening the first-screen defense battle. Cable TV and satellite TV companies have stepped up efforts to provide mobile phone and tablet streaming services to defend the monopoly of the TV market.
As early as February 2010, TimeWarner (Time Warner) launched the broadband service "HBOGO" (three-in-one package service). Comcast launched a triple-play service that includes hundreds of TV channels, digital music, high-speed Internet access, and fixed phone packages. Their monthly fee is generally more than a hundred dollars.
Major TV companies such as Comcast, TimeWarnerCable, and DirecTV, in addition to providing video-on-demand on the homepage, expanded the company's free Wi-Fi hotspot service to provide streaming media services to set-top boxes and mobile devices with Wi-Fi-enabled homes. . Users can enjoy video-on-demand service when they access the free hotspot. However, many users do not have enough time to enjoy this service alone.
In addition, cable and satellite TV companies have stepped up the deployment of mobile devices as a counter to broadband access services, but such countermeasures are not always successful. As previously stated, users are very dissatisfied with the MVPD (multi-channel video program distributor)'s expensive package fees. The cost of programming has soared rapidly. For small MVPDs, OTT will bring greater risks.
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