INDIAN WELLS, CALIF.— Expect TV to be delivered online sooner than later? Check it out: Netflix streaming comprises 33 percent of Internet traffic during peak couch-potato usage, i.e. between 10 p.m. and midnight. The first assumption comes from a PriceWaterhouseCoopers consumer survey and the second, from video veteran Michel Proulx, who talked over-the-top TV at the Hollywood Post Alliance Technology Retreat being held this week.
“Netflix is arguably the most important digital platform player out there,” said Proulx, retired chief technology officer for Miranda.
The opening SuperSession of this year’s 20th annual HPA focused on “the new normal,” or more literally, that there is not one. The explosion of screen choices, over-the-top delivery, formats, audience behaviors and metrics continues. The professional video content industry is changing so rapidly that there is no longer a set point. The key is to anticipate how people will use media, said Guy Finley, executive director of the Media and Entertainment Services Alliance.
“We have to imagine the life of the future consumer,” he said.
MESA is doing a three-year study on the impact of digital entertainment in the household, while Finley used a focus group closer to home—his 9- and 6 ½-year-old sons. These two would be watching some form of video all the time if they were allowed, he said. They’re accustomed to ubiquitous Internet access. The family’s long-time remote vacation cabin is no exception. They are technically “cord-nevers,” though dad has cable. That has no relevance to them, he said. They make no distinction between “television” and the “Internet.”
Finley said these “future consumers” are watching 200 videos per month online, many of them long form. And they want what they want when and where the want it, all the time and in all cases, he said.
“When you tell them the Super Bowl is on in 20 minutes, they say, ‘why isn’t it on now?” he said.
They’re also growing up with platforms galore. Finley threw up a slide of his household media “ecosystem.” A 24-inch TV in the kitchen connected to Roku; a 40-incher upstairs with Apple TV and a Sony PS2; the 50-inch TV in the living room, which, he said, “is a big part of their lives.”
Finley’s household inventory continues: Two Xboxes, a Blu-Ray player, iPods, iPad Minis; iPhone 5s (that’s plural, not the model number) iPads, MacBooks and a PC laptop. The Finleys pay around $150 a month for a combination of broadband, cable TV, TiVo, Xbox Live, Netflix and Amazon Prime, and they leverage UltraViolet and iTunes.
He noted how the Xbox comes with just five games… “but the HDMI interface makes it the primary content consumption device,” for Netflix, NFL, etc.
This is all coming about just two decades after the introduction of nonlinear editing; 17 years after the DVD was introduced; 14 years after the first TV network did a full season of hi-def; nine years after YouTube came online and seven years after Netflix started streaming. The industry transition to digital technology shattered long-entrenched content models. “Just look at the music industry” is the standard caveat.
Sony’s music division can testify. Digital music piracy was blamed for slashing industry revenues by half. Michael Frey, president of Sony’s Digital Audio Disc Corp., described in anecdotes how Sony has adjusted, during his SuperSession keynote.
On a given day, he said Sony will deliver a million tracks to points around the globe within seconds. Immediacy and ease are the two-man rule of preventing content piracy, he said.
“If you look at something like ‘Game of Thrones,’ it has 4.3 million viewers and 4.8 million pirates. If we don‘t satisfy people’s appetite, they will take it. You have to give them something unique and special. If you don’t, they’ll go away,” he said.
“From a post perspective, how we leverage time is imperative, because if content producers don’t provide it, people will find it,” he said.
Both Proulx and Frey emphasized the global reach of digital distribution.
“Somewhere between 50 and 60 percent of Sony’s purchases are international,” he said.
He said most of Sony’s transactions are done digitally—for physical goods. He said disc-based media isn’t likely to go away soon because people still like to get something tactile for their money.
“The average purchase on iTunes is less than $3.50. The average purchase on Sony’s site is $90,” he said. “We are selling more physical goods through digital channels than digital content.”
A similar old-versus-new revenue disparity is true of traditional compared to over-the-top TV as well, Proulx said in his presentation. He put up a slide with two figures: 514 and nine. The first represented the $514 billion in revenues traditional TV providers took in last year. The nine represented $9 billion for OTT. The chief difference is growth rate—4 percent traditional; 25 percent nontraditional.
Proulx also listed three advantages of digital platforms: Global reach, on-demand capability, and a unicast model that allows precise metrics for targeted advertising.
The metrics empowered by digital platforms are useful for post production as well. Christy King is in-house technology consultant and vendor manager for Zuffa, owner of the Ultimate Fighting Championship mixed martial arts franchise. King spoke about leveraging “big data”for making changes and decisions in post—down to the optimal length to make clips before fans move on.
UFC moves about 1 TB of content per day through 250 distribution points. The sports franchise is able to track and observe usage phenomena for its content because, in part, it holds all the rights. King said UFC didn’t necessarily know what it was looking for, nor what it would find, when it set about analyzing big data. One unexpected result was an observable wave of piracy in a another country. The footage involved a home-country fighter who won a match with an opponent in a rival nation, she said.
Blake White of PriceWaterhouseCoopers presented a different type of big data, organized from a consumer media survey. Seventy percent of a sample of 1,000-plus people had cable TV. They consider it a “utility,” he said. Forty percent have Netflix; 66 percent had more than one video description. Nearly three-quarters want a la carte video, and believe it would be cheaper. Other numbers:
—35 percent said availability of Internet content had no impact on their subscription package. Many, however, expect TV content to migrate to the web, he said.
—56 percent use a mobile device while watching TV.
— 64 percent of consumers prefer automated recommendation.
—6 percent said they seek friends’ suggestions “because the technology knows the truth of what we really watch.”
—88 will watch what they’ve already watched.
—45 percent channel surf
—59 percent are influenced by family and friends.
—63 percent say original programming is crucial for selecting a subscription; though that skews older.
In terms of convenience, White said there was “no time for real time.”
—57 percent record content, even risking social media spoilers.
—76 percent are willing to share their personal information when offered free benefits.
—80 percent were willing to share personal data if the company lets them know how it will be used.
—87 percent want to manage their personal data.
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