Streaming Video Will Continue to Pressure Pay TV in 2016

Subscription video on demand (SVOD) systems like Netflix, Amazon Prime and Hulu now claim 56% of all pay-TV customers in the United States. That total could exceed 65% by the end of 2016.

Media research firm nScreenMedia recently listed its top five 2015 data points and what these portend for 2016. The rapid growth in SVOD subscribers is the first on the firm’s list, and although the data points are not ranked, this has got to be the most important for streaming video providers and for pay-TV companies as well.

For consumers, nScreenMedia’s conclusion related to this data point is good news:

TV providers will feel increasing pressure to go direct to consumer over the Internet to remain competitive. MVPDs [multichannel video programming distributors, e.g. Comcast] will begin to draw the services into the pay TV mix to keep customers on their set-top boxes and in their entertainment ecosystem.

At first that is likely be authenticated access to the pay-TV channels. As time goes on, though, either the channels themselves will offer a streaming version separately (e.g., HBOGo) or they will allow the pay-TV companies to do so.
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nScreenMedia also lists these four data points for 2015:

• The amount of video views on mobile devices now totals 45% of all video views. Consumers are demanding access to everything from everywhere, and video companies will have to meet that demand.
• TV viewing among 18- to 24-year-olds dropped 12% last year. Comcast’s Watchable and a coming curated content program from Cox called Flare MeTV are trying to attract young adults, but nScreenMedia sees these attempts ultimately failing as consumers choose native online providers rather than curated offerings.
• Netflix plans to be available in 197 countries by the end of 2016. Maybe, but rights holders are playing hard to get when it comes to global licenses.
• U.S. consumers spent $2.2 billion on digital home entertainment in the third quarter of 2015. nScreenMedia observes:

The good news is that home entertainment spending is remaining relatively flat, at around $9B a year. The bad news for content providers is the disk bonanza the industry has enjoyed for the last decade or more appears to be drawing to a close. As with Blu-ray before it, Ultra HD Blu-ray disks look unlikely to reverse the trend.

The SVOD train is accelerating out of the station, and pay-TV providers are going to have to run harder to catch it if they don’t want to be left behind. A tired trope, no doubt, but apt nonetheless.