While Netflix has attempted a takeover of prime-time evening viewing, YouTube, Facebook, Instagram, and Snapchat have sought to colonize the day. In this year and beyond, each of these companies will increasingly compete for whenever people have time to watch – with major implications for how TV is funded, created, and monetized.
The progress that the tech companies have made is striking. Nearly half (48%) of Netflix viewers surveyed by Ovum said they watch Netflix more than any other TV and video service (see Ovum opinion piece – On Netflix's quest for "moments of truth", CES003-000462). Three-quarters (75%) of survey respondents said they watch YouTube at least once a month, and 40% every day (see Figure 1). Over 95% of 16–24-year-olds identified as so-called monthly active users (MAUs), and 67% as daily active users (DAUs).
Figure 1: YouTube and Facebook are driving daily video viewing at massive scale
Source: Ovum's Digital Consumer Insights 2018
Four key trends will emerge:
Netflix will explore new ways to attract YouTube's viewers. In its 1Q19 letter to shareholders, Netflix highlighted mobile as a major growth opportunity, noting how little cellular traffic its service consumed compared to the likes of YouTube, Facebook, Snapchat, and Instagram. To change this, Ovum predicts the dominant online subscription video service to invest in more series with sub-20 minute episodes like recent releases Bonding, Special, and Love, Death, and Robots. We also expect experiments in presenting and surfacing content on mobile devices, such as vertical viewing, Black Mirror: Bandersnatch-like interactive content, and recommendations based on users' location and context.
YouTube will explore new ways to attract Netflix's viewers. Over the past two years, the Google-owned video platform has steadily increased its efforts to extend viewing onto the connected TV screen and into prime time. Key will be the spread of Android TV to smart TVs and set-top boxes and partnerships with celebrities and established entertainment brands. But rather than ape Netflix by investing in high-budget multi-hour dramas, YouTube looks likely to focus on driving "binge snacking" by hooking viewers into watching multiple short unscripted shows and clips served up by its autoplaying algorithms.
Jeffrey Katzenberg's Quibi will prove more of a catalyst than a disruptor. The DreamWorks Animation founder's plan to launch a subscription service offering YouTube-like short-form series with HBO-like production values later this year has no doubt influenced Netflix and YouTube's short-form plans. But Quibi could get squeezed between YouTube and the likes of Disney+ and other big-media apps when it's only just getting started. Convincing people to pay for an untried version of something they're used to getting for free (short-form content) will be a tall order, especially when the owners of super-premium franchises such as Star Wars and Game of Thrones will be competing for subscription dollars too.
Broadcasters will pursue new platform plays – and policy-makers. On average, the main free and ad-funded broadcaster apps were "never" watched by 50% of the internet users surveyed by Ovum. True, people can also watch the broadcasters' content via traditional TV platforms, and some apps performed better than others. But given that 46% of the more digitally savvy 16–24-year-old demographic also selected "never," many should be worried. Ovum expects only a few broadcaster apps will survive standalone; others will need to consolidate or collaborate with sister brands and peers to attract larger audiences. Those with public service mandates will lobby regulators for guaranteed prominence on Amazon Fire TV, Android TV, Apple TV, and other digital platforms, just like their channels enjoy on traditional TV.
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