The introduction of online streaming marked the tipping point in the television industry. Netflix was one of the first companies to launch a streaming product in 2007. The introduction of online streaming follows a series of evolutions in the television industry. The industry began with black and white which was followed by colour television, big boxes and flat screens. The three original channels expanded to 300 that ushered the cable and satellite television. The most recent revolution is the online streaming which has marked the tipping point in the industry. Original and entertainment content is now offered at a low cost, technology has advanced to support online streaming and providers are changing their business thanks to plagiarismcheck models to incorporate online viewing. As the audience shifts from traditional TV viewing to online platforms, the traditional providers should make their content available online to keep up with the shift in the industry.
Economic changes
The emergence of online streaming has occasioned numerous economic changes among the traditional television network providers. The market for media stocks has shown extreme volatility. In 2015, Walt Disney reported a drop in earnings that was partly attributed to ESPN subscription losses. The loss I earnings have fanned fears that viewers are dropping cable. Industry giants such as Time Warner, CBS and Twenty-First Century Fox have consistently recorded a reduction in revenue. The industry leaders are losing their top positions in the market.
The new online streaming model has introduced content production models at low costs. The new system is challenging the existing belief that the production of high-quality content requires high costs. Under the new system, top-tier entertainment program costing $5 million per episode can attract up to 15 million viewers. YouTube channels are an example of the online streaming channels that have demonstrated the ability to drive millions of views. The online content creators are offering content at low cost to challenge the longstanding belief that entertainment content is only produced expensively.
Business Model
Online streaming has completely changed the existing business models in the television industry. Streaming television channels and videos have bypassed the traditional distribution models of free-to-air, cable and satellite broadcasting networks. The new model has disrupted the dedicated infrastructure such as cable lines, broadcaster towers and satellites. It has also altered value chains. Online streaming has changed the way content reaches the viewers by and the ease of accessibility of the information. The viewers can access content using their electronic portable devices and personal computers. They do not need to sit around the living room near a mounted television set. The linear programming schedule is now obsolete.
The traditional players in the television industry and the new players introduced through online streaming have independently and jointly re-engineered their business models to offer online streaming. Netflix, Youtube and Hulu have joined forces to create original series. Lions Gate already runs a subscription-based online-streaming service. Disney also acquired Marker Studios to introduce the service of creating and distributing YouTube clips. CBS and HBO which are traditionally FTA networks have introduced autonomous streaming channels. Companies which operated outside the television industry such as Google and Apple have produced video-streaming services which offer original content. The easily accessible online content has expedited the shift from linear viewing.
Technologies
The rapid development of technology has facilitated online streaming. The robust fixed-broadband infrastructure necessary for online streaming is fully developed in a majority of countries. In North America, 96% of the households have access to the stable internet that is required for streaming and Europe reports a readiness of 74%. The technological developments also favour the people who are constantly mobile due to fast wireless connectivity. The market already has a glut of the smart electronic devices. Almost 1 billion TV sets, tablets and smartphones that can stream online videos are in the worldwide market. The technological improvement will further expedite the adoption of online streaming.
Demographic Changes
The availability of high-quality content online has driven a huge audience away from traditional television programs. The youthful population was the initial target of online streaming. However, the proliferation of internet-enabled electronic devices to the population of all ages has made the entire population a target for online content. The amount of time spent to watch television shows online has increased by 60% since 2012. Online videos account for about 80% of fixed-data and mobile traffic. The drop in traditional TV viewing has had an adverse impact on subscription-TV business. The number of cable-cutters and cable-thinners is on the rise. The number of TV subscriptions began plateauing in 2012 and dipped in 2017. The decline has occurred more drastically over the past five years. The increase in audience for online streaming is seen by the increase in online advertising revenues. The marketers have adjusted to the shift from traditional television and they are conducting most of their advertising on online platforms.
Conclusion
Online streaming has caused the greatest shakeup in the television industry in recent times. The current trend of cord cutting has led people to believe that cable television is almost dead. Online video is substituting traditional broadcast television at a fast pace. The hours spent streaming online is in the rise as the hours spent on traditional television continue to dip. The shift from traditional TV to online streaming is coming at the time of high proliferation of internet-enabled devices and higher access to the strong and stable internet. The viewer feels it is an opportunity to watch their favourite content from any place at any time. The traditional TV content providers are investing in getting their content streamed on YouTube and other social media platforms. The audiences of all ages are also shifting to online platforms. The cable and satellite television channels should continue investing in offering their content online to keep up with the shift in the television industry.