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The State of Media and Entertainment Video 2017
Social streaming is on the rise, the BBC diversifies its output, and leading subscription services Amazon and Netflix grow in international markets.
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“We started working pretty closely with our 360° team on Live 360°, and I think that there’s going to be a big investment there,” Vadim Lavrusik, former product manager of Facebook Live, said earlier in the year.

“It’s going to take time for that to come to fruition. But you think about Facebook’s advantage. It’s the ability to move faster than some of the traditional media companies. They could figure out and jump into the live VR space before a lot of these traditional folks figure it out.”

Live 360° video is already finding a significant audience via YouTube, but Facebook is making discoverability much easier. It would be difficult to bet against it becoming a significant platform over the next year.

BBC Diversifies

The bellwether of streaming TV services in the U.K., the BBC iPlayer, performed solidly this year with viewership slightly down year-on-year but boosted by live sport over the summer. This trend perhaps points to total audience views reaching their theoretical peak. The gender split in viewership has now evened out, but there is still a lower-than-expected audience of those aged 55+—around 20 percent of the audience of the iPlayer is 55+, compared with 36 percent who watch broadcast television.

The cross pollination between Facebook, Twitter, YouTube, Instagram, and traditional broadcast television has been gradually evolving, but the move of BBC Three from a broadcast channel to an online-only platform has driven significant innovation over the last 12 months.

As of September, the BBC Three drama Thirteen was the most-requested show on BBC iPlayer in 2016, with 3 million requests. Up to that point in 2016, BBC Three had created seven of the top 20 most requested programs on iPlayer in 2016. This is a quick evolution for an online-only channel; at launch in March, BBC Three made up just 4 percent of BBC iPlayer requests. But by September, it accounted for over 10 percent in some weeks, while having fewer actual programs on the iPlayer prior to March.

BBC Three has innovated on other platforms too. When it moved online, BBC Three invested £6 million of its programming budget into short-form video, written articles, animation, and native content for Facebook, Snapchat, YouTube, and Twitter. This has led to some significant increases in engagement within those channels.

BBC iPlayer viewership was slightly down in 2016, but it remains the bellwether of streaming TV services in the U.K. 

BBC Three’s YouTube subscribers have doubled, and view times have increased threefold. Facebook on-demand video content also shows significant appeal with pieces such as “Things People With Down’s Syndrome Are Tired of Hearing” delivering 109,000 likes, 12 million views, 195,000 shares, and 6,500 comments in under a week. In terms of its core audience, the BBC Three Facebook page has 20 percent more likes than any of its broadcast rivals aimed at the same audience demographic.

It will be interesting to see how the BBC takes the next steps and exploits Facebook Live and Periscope for this audience in 2017.

Amazon and Netflix

Outside of the iPlayer, Netflix and Amazon Prime Video are significant other players in the on-demand media space.

Netflix had managed to grow its total subscriber base to 83.3 million by the end of Q3 2016. This year, the numbers have been significantly boosted by Netflix’s rollout in 130 additional countries in Q1 2016. This rollout, announced at CES in January 2016, came as a surprise to the market, but it has helped the company deliver an increase in revenue of 36 percent year over year for Q3 to over $2 billion, despite the suggestion that it simply hoped to break even in each launch country in 2016.

However, Netflix has decided against launching into China’s heavily regulated market and will instead generate revenue by licensing original content in the country. The strategy of creating more original content as opposed to licensing it from third parties continues to grow: a total of 600 hours of programming was created in 2016, and 1,000 hours are planned for 2017.

All in all, this will also be another profitable year for Netflix. Profit is likely to be about $180 million, up around 45 percent.

Amazon Prime Video is difficult to discuss in isolation because the video streaming service is tied up with the overall Prime membership. However, there are a few interesting titbits to be derived from the public statements Amazon makes. Amazon has now been profitable for 5 consecutive quarters. The drivers for this profit include Amazon Web Services, an increase in profit margins on the retail side, and, most significant to this discussion, the increased spend per head of Amazon Prime customers who spend more than twice as much with the company as non-Prime customers.

Amazon Prime Video is in the midst of a major original content push, led by The Grand Tour, for which it reportedly paid $4.3 million per episode. 

Overall, the video service makes up a significant though not dominant part of the value proposition that includes music services, free same-day delivery, and special offers. Prime members are believed to number in the tens of millions, although publicly Amazon has never divulged an exact number.

The service also received a boost with the launch of The Grand Tour in November, a program featuring the three ex-presenters of the BBC’s Top Gear. Amazon reportedly paid $4.3 million per episode. Internally, content acquisition and creation is obviously still seen as a primary driver of membership.

It has been reported by The Wall Street Journal that Amazon has held discussions with the NBA, NHL, and MLB as well as soccer and surfing leagues about acquiring the rights to live games. This, along with a slim package of live channels, could well be the next evolution of the service and would put it more on a par with iPlayer than Netflix.

So where does that leave us at the end of the year? The primary three platforms—iPlayer, Netflix, and Amazon—continue to grow and adopt different expansion strategies in terms of content and distribution. However, with the growth of Facebook Live and the eventual maturation of Periscope’s professional offering as both a marketing and distribution platform, we may well see a change in strategy. The main three platforms may need to decide whether to embrace social media as a distribution platform, a marketing platform, or both.

Twitter, with its purchase of rights to content such as NFL games, is already moving into the main three’s areas of specialty. However, Facebook changed tack in early January 2017 by not renewing deals with third-party content creators to deliver through Live. Many commentators saw this as Facebook reducing its emphasis on live, but I see it more as Facebook considering that the platform is now self-sustaining without paying third parties to populate it. If Facebook does take the momentous decision to create content of its own, we could see serious disruption in the space.

This article was published in the Spring 2017 European edition of Streaming Media magazine. 

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