22 STREAMING MEDIA INDUSTRY SOURCEBOOK 2018
to lose their direct relationship with the consumer,
says Joel Espelien, a senior advisor with The Diffusion
Group. The aggregator model succeeds with consumers because it offers simplicity, and because providers still enjoy a direct consumer relationship. He believes we’ll see more aggregators launch. Apple and
Google, with their gigantic app store infrastructures,
are the most likely suspects. Plus, as Espelien notes,
they already have everyone’s credit cards.
While TV Everywhere had a strong year, the area
was overshadowed by the rise of vMVPD services, and
that’s really where the future is going. While TVE saw
strong demand, Ireland sees broadcaster apps as a way
for pay TV subscribers to explore back catalogs and for
broadcasters to monetize that content. The area continued its evolution this year, but there was nothing
to get excited about. Consumers are paying attention to vMVPDs, something that will continue in 2018.
With Apple and Facebook getting into the streaming video business, two questions for 2018 are how
much will we watch their content, and how many new
nontraditional players are going to enter the field?
Ireland wasn’t surprised to see developments from
Apple and Facebook, since there had been speculation for years that they’d do something involving aggregation and original content. Successes by AT&T
and You Tube TV in gaining audiences and advertising show that the area is still young and there aren’t a
lot of players competing. In 2018, he thinks Apple and
Facebook will continue their original content plays
and may even launch whole new services using original content to differentiate themselves. The big fish
he’s been waiting on is Verizon. Perhaps 2018 will be
the year it launches its own vMVPD.
As for subscription services, Espelien suspects Disney’s OTT play will debut
this summer, when the kids
are out of school and parents would prefer they watch
noncommercial TV. He sees
the service as being largely
child-oriented, but considering that Disney owns Marvel
and the Star Wars franchise,
which have plenty of adult
fans, that’s not a given. Putting
all the Star Wars titles exclusively on a Disney-branded
OT T service would be a great
way to get attention, he believes, similar to what CBS
did with Star Trek.
But the potential launch
that has Espelien really excited is Amazon creating a
free skinny bundle inside of Prime. This could be the
big story of 2018, he thinks. Call it “free paid TV,” something that’s never existed before in television history.
People would need to subscribe to Amazon Prime for
$100 a year to get it, but many people think of that as
paying for the shipping service. If Amazon bundles
an ad-supported, ultra-skinny cable channel service
within that, it feels like free. Such a move could even
help Amazon’s channel aggregation business, he believes, as viewers might see the bundle as such a good
deal that they decide to sign up for one or more premium channels.
In 2018, content providers will need to battle sub-
scriber churn, which Espelien says is much higher than
for traditional pay TV services, as well as what he calls
“A viewer who consumes content on a particular
platform will continue to consume content on that
platform unless something of sufficient force diverts
them from their path,” Espelien says. “You Tube for
kids is an incredibly high-inertia platform, meaning
they watch all kinds of random crap within YouTube
and getting them outside of You Tube to watch any-
thing is actually kind of hard. YouTube has platform
inertia among kids. Netflix itself has platform iner-
tia among the Netflix-and-chill generation. They’re so
used to watching stuff on Netflix that when they finish
something they grab a new show on Netflix or wait for
a new movie to come out. Netflix for them has a lot of
inertia. I think we have multiple sources of inertia now.
In other words, it’s not that viewers are these magical
free-floating electrons again, that early internet fan
boys and girls thought was going to be the case. View-
ers of all ages hunker down and nest in these different
IDC research director Greg Ireland sees a strong future for service aggregators, with Amazon Channels being the first, which allow
consumers to select the services they want and then pay for them all with one monthly bill.