TMCnet Feature
March 01, 2022

Streaming wars and fragmentation: Not good for consumers.

Media consumers quickly adopted subscription-based video-on-demand platforms such as Hulu (News - Alert) or Netflix because it gave them the flexibility and power of choice from a single place. Having access to hundreds to thousands of movies and series on-demand to watch anytime and from any device was an offer not everyone could refuse. Cable TV and DVD rentals quickly lost to online streaming video.

But now, the entire subscription video-on-demand market is slowly becoming so diverse and breaking into distinct groups of consumers over time— that consumers are left with an overwhelming distributed amount of options.

The Beginning of Streaming Video Fragmentation.

Streaming players such as Netflix, Hulu, and Amazon Prime, were the top Subscription video on demand (SVOD) on the market. As they were the top SVODs, that got all the content. But this lasted for a couple of years when new players such as Disney, HBO, ESPN, Viu, and Apple came to take a piece of the pie. These new kids on the block took their licensed content away from the hands of the traditional SVODs; they opened their platform and began creating content like there was no tomorrow.

For instance, Disney (News - Alert) Plus and HBO are either removing all their content from Netflix or Prime or putting an extremely high price and geo-restrictions on their media licenses. As a result, all SVOD platforms are now only delivering content collections that they have the right to and targeting explicit audiences. On top of that, many SVODs are also cornered into creating their multimedia content, including series, movies, etc.

Good News for Streaming On-Demand Video Platforms.

In good light, streaming video fragmentation creates laser-focused SVODs that attend to specific interests and niches. Suppose consumers have particular likes (or dislikes) they can now choose from many different video streaming platforms. For instance, sports lovers can hire ESPN (News - Alert)+ and forget about Netflix and Disney+, or for those NatGeo, Marvel, and Star Wars lovers, Disney+ would be the way to go. This is a win-win, as consumers get what they want, and broadcasters tap into niche markets.

In addition to creating laser-focused SVOD platforms, video streaming fragmentation is also opening the doors for the streaming players to be free from the traditional few production and distribution companies like Universal Pictures, MGM, Sony, or Paramount Pictures.

Since video streaming is now popular, SVODs can also grow into media production companies, such as we have seen with Netflix, Hulu, Amazon Prime, and Apple+ — pure SVOD platforms that turned into production companies. They can now create and release original series and movies for their specific and exclusive audiences.

Streaming Wars and Strategies

Although everyone was quite skeptical initially, now everyone is starting to understand the entire context. Video streaming is powerful, and everyone wants a piece of the pie. Now, SVOD platforms are becoming quite good at buying film rights to fill their media categories and bring new consumers or avoid current ones from leaving.

An example of this strategy is Amazon which recently acquired MGM for 8.5 billion dollars. This will bring classics like James Bond, Rocky, Hannibal, and others, into the Amazon Prime SVOD platform. Such a move has been one of the boldest, from a pure SVOD platform to a film studio. Amazon bought MGM for its reputation in the cinema, and MGM joined Amazon as a way to stream their movies.

But the Amazon Prime - MGM acquisition wasn't the only move; AT&T acquired Warner Media and Discovery, Disney bought 21st Century Fox, Paramount is now the property of ViacomCBS, and Universal Pictures is merged with Comcast. For now, a couple of production companies remain independent (waiting to be purchased or to launch their own SVOD platform). For instance, Lionsgate (that owns Starz Play), Sony Pictures, Legendary, and A24— all are still independent production companies. 

The Streaming Video Market Fragmentation: Not So Good for Consumers.

Streaming video market fragmentation is helping providers, producers, streaming platforms, and everyone else involved in the streaming industry, but unfortunately is not helping the consumer. The centralized power of choice and flexibility that initially attracted users to video streaming is slowly shrinking. Unfortunately, nowadays, the on-demand video market is fragmenting or distributing too much to the point that consumers have a worse power of decision.

The result of streaming wars and video market fragmentation is making SVOD platforms so concentrated on niches, unique industries, and brands. So endless new Over-The-Top (OTT) platforms providing SVOD or live content are being born.

Take, for instance, ESPN+, with a good reputation for providing live and on-demand sports streaming services. Although you can watch matches, fights, or championships— not all leagues and sports are live-streamed on this platform, and if there is a live game showing in ESPN+, you would usually need to pay for PPV (due to license). This is why sport-specific services such as UFC live or are coming into the picture. If we continue down this road, it is quite likely that we see further fragmentation, to the point that sports teams launch their own streaming platform. Imagine seeing Chicago Bulls or Barcelona FC with their own streaming video-on-demand platforms. Only die-hard fans would join their streaming platform!

Video Fragmentation: Trends and Predictions.

For broadcasters and OTT SVOD and live platforms, fragmentation creates more competition, and for consumers, it creates a lot of noise and headaches. Subscribing to many different streaming services can be an overwhelming, frustrating, and expensive experience. In addition, keeping track of where to watch their favorite programs, teams, and movies can also be problematic. In addition, although a niche viewer might be ok with their favorite streaming platform, they sometimes would want to watch something else.

The streaming industry will likely continue to fragment to the point that consumers will get tired and start looking somewhere else. In fact, the traffic from file-sharing technologies like BitTorrent is suddenly rising again with a tight correlation to streaming fragmentation. Users are finding alternatives to subscription video-on-demand services in their old favorite file-sharing sites.

It is also likely that users tired of media fragmentation will start using unconventional streaming services such as Plex, Emby, or Jellyfin. Such platforms allow users to create their own libraries, organize them, and stream them anywhere. There has been an interest in these streaming services combined with seedbox servers because they let users create their personalized Netflix-like media libraries.

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