Ooyala: 9 predictions for online video in 2018

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Jim O’Neill, Principal Analyst at Ooyala, has offered his predictions for the online video industry in 2018.

“If you haven’t already buckled your seatbelt for all the changes in the competitive 2018 digital media and entertainment landscape, do so now.  Expect to see more OTT services launching, merging and, alas, even folding … Here’s my outlook for the coming year:”

  1. VR & AR: Is 2018 the year for both technologies?: While Augmented Reality (AR)  – driven by a significant buy-in from Apple (ARKit), Facebook (Camera Effects platform) and Google (ARCore) – will blossom during the year. The hallmark Virtual Reality (VR) 2018 event will be the Winter Olympics. This global event hopes to enlarge the VR-verse (universe) as companies slowly move away from clunky, 3-D style headgear. In 2018 expect more lightweight, Google Glass-type wearables; and suits that can make you feel temperatures, and even pain!
  2. OTT continues to grow and the target on Netflix’s back gets bigger: While Netflix continues to generate huge consumption figures and subscriber growth, “other” OTT services quietly grow with it. Niche SVOD services that feature the content Netflix doesn’t have, including local broadcast stations, sports and events (potentially in the form of pay-per-view specials) will grow.
  3. Cord cutting continues: In 2016, pay TV continued to decline when it lost about 2 million subs; and in 2017, losses in Q2 and Q3 alone neared 2 million. Losses will be higher in 2018, perhaps as high as 5 million.
  4. We’ll see an even more mobile world in 2018: Ooyala saw mobile video plays top 58 per cent of all video consumption in Q3, the sixth quarter of growth in that segment. That share will top 60 per cent in the first half of 2018 as more wireless operators push more OTT content – both SVoD and AVoD – to customers and as mobile data charges decline across the world. There has been similar growth of long-form video on mobile devices: smartphones are catching up to tablets as the viewing device of choice.
  5. Amazon – Playing new games with sports: Amazon spent a purported $50 million to stream 11 NFL Thursday Night Football games this year, a drop in the bucket compared to what it may spend in 2018 as it strives to become a next-gen sports streamcaster. Coming up for auction in 2018 are, among others, rights to English Premier League soccer, which carried a price tag of $1.3 billion for rights to the past three years. Amazon also this year cut a deal for rights to stream 37 live ATP World Tour tennis events to the UK and Ireland. The retailer also will have to decide if it wants to keep Thursday Night Football rights – which likely will carry a higher price tag this year.
  6. The cost of content will reach new heights in 2018: Netflix is planning to spend $8 billion on content in 2018; Amazon will spend nearly $5 billion, and HBO, $2 billion. Apple is willing to spend $1 billion or more, as is Facebook – and, if live sports rights are included, those numbers could grow even more. Content costs will continue to rise, driven by the competition among distributors.
  7. Traditional advertising’s slow death spiral: The advertising industry is finally learning that the future is interactive ads and more sponsored programming: in short, a true sea change in how advertising is consumed. Look for lighter ad loads on AVOD sites, better targeting and snappier campaigns utilizing data and new technology.
  8. Data, Artificial Intelligence (AI) & machine learning will permeate: This year, more devices will use voice inputs to help you find your content. Apple’s Siri, Google Home and Amazon’s Alexa all are leveraging AI and machine learning to help you find what viewers want to watch without having to type in titles, names or genres. AI will help with more than just discovery and recommendation: Companies will begin to harvest the fruit of targeted advertising on mobile devices used at home and beyond.
  9. More M&E M&A: It’s unlikely that the government will ultimately block AT&T’s proposed $85 billion acquisition of Time Warner: the key will be the assurances by AT&T that its actions will be fair. That won’t be the only mega-deal: Disney WILL make its deal for several Fox assets and I predict a 2019 closing. Those deals will likely spawn additional deals to feed consumers’ insatiable content appetites.

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