If you went back to 2019 and started reading a lot of articles on the streaming industry, you would quickly come to the conclusion that the streaming industry would soon be rolling in profits, churning out cash in the summer of 2023 the way cable systems did twenty years ago in the heyday of the pay TV business.
Then, if you skipped back to 2023 and you started reading recent articles about streaming services axing shows, cutting costs and still not making any money, you might come to the conclusion that something has gone horribly wrong. Even though most consumers have embraced streaming, the streaming bubble has burst. The major streaming companies are still swimming through billions of dollars in red ink.
Bightcove’s CEO Marc DeBevoise brings a longer perspective to the debates over the future of streaming than the ups and downs of the past few years.
After doing pioneering digital work at NBCU and Starz in the 2000s, he held a variety of roles between 2011 and 2020 that helped develop and then lead CBS’s digital strategy and operations. At a time when some analysts still viewed broadcast networks as old media ill-equipped for the digital age, DeBevoise’s teams launched pioneering entertainment and news streaming services like CBS All Access (now Paramount+) and CBSN (now CBS News streaming service), that showed broadcasters could successfully compete in a digital/streaming world. In March of 2022 he was named CEO of Brightcove.
In this Q&A DeBevoise provides a much wider perspective on the future of the streaming industry. He argues that the recent spate of gloomy articles about major streaming companies and the industry’s persistent problems of red ink and high churn rates, obscure the fact that the industry is still big and growing, particularly in international markets. He is also bullish on some important tech trends that could help streamers do a much better job of attracting users and improving their financial prospects.
This is a edited version of a much longer conversation:
TV Tech: When you look at the streaming landscape, what are some of the big opportunities and challenges you see that are shaping the streaming industry and what you are focusing Brightcove?
Marc DeBevoise: The seat I sit in today is a little different than the seat I used to sit in at CBS where I was evangelizing for a slate of content, and how we can use what were then novel ways to get that content into the consumers hands.
Streaming is no longer novel. Streaming is now part of the fabric of everybody's lives.
I took this job [at Brightcove] because I believe the space is in transition. In terms of a baseball analogy, I used to say we were in the early innings. Now I think we are at the middle to late innings, not the late ones yet, but fifth or sixth innings.
And the good news is that streaming is a massive market. It is still growing. In terms of bits and bytes, 90% of global internet traffic is streaming video; 66% of total internet viewership is streaming video. That's up from 53% of your year ago. Global time spent is up 14%; the average user spends like three hours and the average U.S. user has like seven services.
So it's set to be a $250 billion market by 2026. It is a big and growing industry. Contrary to the stories you see about the big media companies that are slowing down their investments and the whole industry is melting down and what’s going wrong, it is a big, growing industry, especially around the globe.
There's still meaningful growth in Asia, meaningful growth in Japan, growth in Europe and in some of these other territories. So what you're seeing is the big guys got a big spike and COVID that has now slowed them down. They're not shrinking. In fact, they're still growing subscribers and they're certainly growing viewership.
But what's happened is that the costs don't match the expenses. They over spent; they spent a lot to grow into COVID. What you're finding is that the big guys are now hitting the profit wall and Wall Street's not giving them a pass anymore on big losses.
So, part of our thesis and strategy is that the big guys are going to have to outsource a meaningful portion of their tech stacks because they need to save money. They can't hire 1000 engineers every time they want to solve a problem.
And they're gonna have to shrink their content library, their content investment on a yearly basis. I think that $160 billion, which was the content spend last year, is going to either flatten or come down over the next few years.
But you have to remember that the Nielsen data says streaming is the number one media for consumption. It is now bigger than cable is bigger than broadcast. And when you at how much growth there is and how much traffic there is, one of the fastest growing spaces and one of the largest chunks is this thing that Nielsen calls "other". This category, which is everyone else [beyond the big six or seven companies] has grown 16% year over year, and it's like a meaningful portion is probably like seven or 8% of the U.S. audience. So that part is really growing. There is a big market there to service.
And if you look globally, Netflix isn't going to run the table in every territory. That was the big fear. Now you have real local services that are going to have real impact.
So I believe we are looking at a future that is going to be driven by dozens, if not hundreds of major services around the globe, rather than the six or seven that you read about or talk about all the time.
Don't get me wrong. I'm not saying YouTube and Tiktok aren't doing incredible things and that Netflix and Paramount Plus aren’t doing well. They are all going to be massive. But the BBC is going to have a play in the UK and 131 will have one in Thailand and Coupang in South Korea and TVer in Japan and Sky in the UK as well.
Even smaller ones, Masterclass and all the others are doing well. There are real markets for those kinds of services and they will do well.
Another point I want to make about the market is that we think of streaming as being all about the media industry. We think about all these media companies trying to push content out to consumers. But I actually think there's an even potentially larger, if not very large market, in how enterprises use streaming video. If you look at how marketers have to reach customers today, video is one of the most efficient ways to drive purchase intent, conversion.
And that’s not just about buying ads on television or on a streaming services. It's doing it on your own site, doing it on social media, and having a way to really manage it. Already some of the biggest marketers in the world are actually functioning almost like media companies. They are actually putting out so much content that you would think they are media companies.
And then the last point [about growth] is what we are doing right right now. We're streaming a video to each other right now.
One of the biggest concerns most major corporations have today is how they are going to communicate, engage with my employee base, and with my constituency base. So I think there's just a big transformation that's still ongoing there. And if you're a corporation that doesn't have a marketing strategy that includes streaming video somewhere on the outside, and a communication strategy to your employees, I think you are missing the boat.
So there are a lot of big shifts going on and some of them are about cost savings. But at the end of the day, it is a big and growing market and you know, we still believe like I did your 10 years ago, that there are a lot of opportunities.
TVT: Some of the financial pressures you mentioned from Wall Street have pushed a lot of companies towards free ad-supported streaming TV channels. How do you see that space developing?
MD: We are helping our customers get there. We're a big content manager but we also have a partnership with a company called Frequency that helps us offer a soup to nuts solution for FAST channels.
I think you have to have a dual stream revenue model or hybrid ad and subscription services, as did CBS All Access/Paramount+. Many others are doing the same thing.
The FAST channel explosion in the US has been massive but I think it's peaked [in terms of distribution]. Most of these platforms are not taking more channels, they're not adding more channels. So it's really going to be about swapping out channels from the 200 to 300 channels that are most valuable for Samsung and Roku and Pluto and the other big platforms.
But globally, FAST has not caught fire yet. FAST channels really have limited distribution everywhere else. Pluto has done a good job of rolling out internationally. I think Roku is starting to expand internationally. I think Samsung really has done a decent job in many territories. So I think you're gonna see that distribution expand and I think you're gonna see more of those channels expand on a global basis.
The good news is that streaming is the most valuable ad inventory out in the market today. So we see it as a growth business but more as a growth business globally in terms of distribution.
Of course viewership is still growing pretty heavily in the U.S.
So the expansion of channels has probably slowed down but the amount of viewership is still there. People love the price point. Free is unbeatable, right?
And I actually think that's why broadcast has survived and done pretty well, relative to what you would have thought.
The real pain point in the industry is the decline of cable subs, and the cable networks that were wholly reliant on those fees. They're the ones really suffering. You see it in CNN, you see it in some of the broader cable networks.
TVT: Another impact of the financial pressures on streamers you mentioned earlier, has been on their interest in cost savings. How do you see that impacting the way they approach tech spending and potentially outsourcing some operations?
MD: Right now they are spending so many resources just getting content to the different platforms that they have to reach and to all the different places where they have to have a presence, which means that they just haven't been able to spend the resource on optimizing how what they do on each platform and doing all the things they need to do to improve the viewer experience.
We really think this is the moment for the industry to turn from tech insourcing to tech outsourcing. They need to cut costs.
The technology we have is as good as the larger streaming services out there and we are up to scale. The scale of our traffic is larger than some of my previous employers’ overall scale of traffic because we're doing it for 3,000 customers around the globe.
We can give you an ingest a content management system, a DRM and cataloging system, a playout and analytics tool. We can give you those things to run a full service out of the box at a much cheaper rate. We did a deal in the first quarter with the digital media company that needed to save money that I can’t name. But that deal shows that we can provide the infrastructure, soup to nuts, for large media entities.
So there's a way to save money and do things at the same scale so you can devote resources to the things that really will differentiate you, which is both content if you're a big content service, and potentially on things like targeting and ad tech.
