All the major television networks will offer standalone direct-to-consumer OTT streaming services by 2022, according to a report from The Diffusion Group.
“Big media companies are reacting more boldly to changes in TV viewing behavior,” Mike Berkley, TDG’s senior advisor said in a press release. “Consolidating, bulking up on originals, and marketing directly to consumers are driving their strategic direction.”
The trend began about three years ago with launches by HBO and CBS. Each of those services now has 5 million subscribers. The success may have pushed others: Disney is nearing launch of ESPN Plus and plans a Disney-branded service for early next year. The service, which will feature animation and Marvel and Star Wars titles, will coincide with the expiration of Disney’s contract with Netflix.
Berkley, who wrote the report – which is entitled “The Future of Direct-to-Consumer Video Services-Analysis & Forecasts, 2018-2028” — suggests that there are “early signs of an emerging media tribalism” in which networks will reserve their best products for exclusive direct-to-consumer (DTC) streaming, at the expense of their video service provider partners. This, he notes, could lead to conflicts with operators with whom they have long had relationships if they feel that too much high-value content is no longer available.
“The legacy model is built upon decades of comfortable relationships between networks and operators, ” noted Berkley. “If networks extract too much high-value content too quickly, channel conflicts are inevitable.”
Indeed, video service providers (VSPs) have a lot invested in bundling up a channel line-up and selling it to end consumers as pay-TV subscriptions. It’s a very fine balancing act for networks to continue to extract programming fee increases from these VSPs, while also bypassing them with DTC offers for the same content, but with exclusive content attached to it.
VSPs won’t go quietly. But they are also evolving. Many video providers now bundle Netflix the same way they bundle HBO, although the economic model is very different. Traditional pay-TV operators are also experimenting with offering OTT streaming packages themselves.
Late last month for example, Consolidated Communications said that it will add AT&T’s DIRECTV NOW streaming service to other OTT options the operator markets, including HBO NOW.
Bernie Arnason contributed to this post.
