Facebook restricts Live streaming access

Facebook has introduced new restrictions on its video streaming platform, Live, suggesting those who break other Facebook policies will be banned for a period of time.

The move comes in response to the live broadcast of the terrorist attack in Christchurch, New Zealand. The social media platform broadcast the incident for 29 minutes, with around 200 people viewing the content, before it was cut. After heavy criticism, Facebook needed to act in an attempt to prevent a repeat of such a broadcast.

“Following the horrific terrorist attacks in New Zealand, we’ve been reviewing what more we can do to limit our services from being used to cause harm or spread hate,” said Guy Rosen, VP Integrity at Facebook.

“As a direct result, starting today, people who have broken certain rules on Facebook – including our Dangerous Organizations and Individuals policy – will be restricted from using Facebook Live.”

Although some might suggest this is a potential limitation of free speech principles, Facebook has had to do something about the grey areas. It is unreasonable for moderators to view and approve every piece of content, while artificial intelligence technologies are still not advanced enough to tackle the problem. Taking a merit approach, removing privileges from those who already break the rules, is a less-than adequate approach but one of the few options without shutting down the feature completely.

The ‘one strike rule’ is a tightening up of rules which already existed. Facebook has been limiting the access of those who break the platforms rules, though this is a much more stringent approach specific to the Live feature.

“From now on, anyone who violates our most serious policies will be restricted from using Live for set periods of time – for example 30 days – starting on their first offense,” said Rosen. “For instance, someone who shares a link to a statement from a terrorist group with no context will now be immediately blocked from using Live for a set period of time.”

This is an incredibly difficult equation to balance, and this is not a perfect approach. It is still reactionary not preventative, but it should limit the risk. Unfortunately for Facebook, and everyone in general, whatever is done to attempt to limit these abuses, and technological abuses in general, will only be hurdles; there will always be a way to get around the safeguards.

The only way Facebook can prevent a repeat of this incident is to shut down Live completely, however, the vast majority of those using the feature are doing so as intended. More work needs to be done, but Facebook is attempting to make progress.

Streaming platforms are starting to become less attractive

Netflix started as a platform where old-series could be relived, but now with rivals aiming to replicate the success of the streaming giant, the content world is becoming increasingly fragmented.

The big question which remains is how big is the consumers appetite for content? How many streaming subscriptions are users willing to tolerate?

The news which hit the headlines this morning concerned Hulu. Disney has come to an agreement to purchase Comcast’s stake in the streaming service, for at least $5.8 billion, in a divorce proceeding which will take five years. This transaction follows the confirmation AT&T sold its 10% stake in Hulu to Disney last month.

Disney consolidating control of Hulu is not much of a surprise to those in the industry, but fan favourites disappearing from the various different streaming services might shock a few consumers.

AT&T has also confirmed it will be pulling WarnerMedia content, such as Friends and ER, from rival’s platforms. The Office, one of the most popular titles on Netflix, will be pulled by owner NBCUniversal. The series, and other NBCUniversal content, will also be pulled from Hulu in favour of parent-company Comcast’s streaming service which will launch next year. Disney will also be pulling its headline content, the Marvel movie franchise for example, back behind its own paywall. Amazon Prime has its own exclusive originals, and YouTube has ambitions with this model as well.

Over the next 12-18 months, content will be pulled back away from the licensing deals to reside only on the owners streaming platform. Users will find the content world which they have come to love is quickly going to change. Some might have presumed the cord-cutting era was one of openness, a stark contrast to one of exclusivity in traditional premium media, but it does seem to be heading back that direction.

It is perfectly reasonable to understand why this is being done. These are assets which need to be monetized, and the subscription model is clearly being favoured over the licensing one. WarnerMedia, 21st Century Fox, AT&T, Comcast and Disney might have had an interest in the licensing model in by-gone years, but following the consolidation buzz, it has become increasingly popular to create another streaming service to add into the mix.

The issue which may appear on the horizon is the fragmented nature of the streaming world; consumers wallets are only so thick, how many streaming services can the market handle?

The test over the next couple of months, or years, will be the quality of original programming. Netflix grew its original audience through a library of shows other content companies were ignoring, but today’s mission is completely different; original and local content is driving the agenda.

The question is whether other providers will be able to provide the same quality? With subscription revenue being spread thinner across multiple providers, will there be enough money flowing into the coffers to fuel the creation of this content? Will the pressures of increased competition decrease overall quality?

Today it is very easy to find the best and deepest range of content available. You might have to subscribe to more than one service, but at the moment consumers are able to afford it. Tomorrow might be a different case. The more streaming services in the market and the more fragmented the content, the more decisions consumers will have to made. Having 4/5 services is probably unreasonable. And we’re only talking about quality of experience, the mess of different discovery engines is another topic.

The question which remains is whether the economics of a fragmented content segment can support the original content dream which has been promised to consumers, or whether the old-world of low-quality, low-budget, limited and repetitive content returns. Soon enough Disney+ will launch, as will Comcast’s streaming service, to add to Hulu, Netflix, DirecTV, Amazon Prime, YouTube’s premium service, and any others which might be in the mix.

Content will become fragmented, thinner on the platforms, before consumers wallets become strained. How long the budget for content will last in this scenario remains to be seen as executives look to cut corners and increase profitability. It’s hard to see how current trends are going to benefit consumers.

Loyalty penalties for broadband, mobile and TV finally tackled

Ofcom has introduced rules which will aim to tackle ‘penalties’ imposed on renewing customers by broadband, mobile and content providers.

As part of the new rules, providers will have to inform customers 10 to 40 days prior to the end of the customers contract, the period where financial penalties would be applied for changing providers. In the notification, customers will be told the end date of the contract, differences in contract pricing moving forward, termination conditions and availability of cheaper deals.

Although customers will still have to be proactive in contacting rival competitors for better deals on the market, the hope is a more transparent approach with spur consumers into finding the best possible option. Telcos will have a year to ensure the right business processes and technologies are in place to action the rules.

“We’re making sure customers are treated fairly, by making companies give them the information they need, when they need it,” said Lindsey Fussell, Ofcom’s Consumer Group Director.

“This will put power in the hands of millions of people who’re paying more than necessary when they’re no longer tied to a contract.”

The initial idea was put forward back in December, with the belief as many as 20 million UK consumers have passed their initial contract period and could be paying more than necessary. The Department of Digital, Culture, Media and Sport escalated the issue in February with a public consultation aimed at moving the industry towards a position where loyalty was rewarded, ending aggressive cultures towards customer acquisition.

In September last year, the UK Citizens Advice Bureau (CAB) launched a super-complaint with the Competition and Markets Authority (CMA) suggesting service providers over-charging renewing customers to bring in an extra £4.1 billion a year. Research commissioned by Broadband Genie has found many over 55s could be paying too much for their broadband service but lack the knowledge or confidence to choose a new package.

“Pre-emptive alerts and information about broadband and TV contract periods are good news for consumers since many have in effect been paying a premium for their loyalty once out of contract,” said Adrian Baschnonga, EY’s Telecoms Lead Analyst. “Today’s rules pave the way for a more proactive dialogue between service providers and their customers, which can unlock higher levels of satisfaction in the long term.”

While it will certainly take some work to bed in, such rules have the potential to move attitudes in the industry to prioritise customer retention over acquisition to meet profitability objectives. Much research points to this being a more rewarding approach to business, though few in the telco space practice this theory.

“uSwitch’s research found that the aggregate cost of out-of-contract charges to telecoms consumers is £41 a second,” said Richard Neudegg, Head of Regulation at uSwitch.com. “This is why time is of the essence – everyday spent waiting for these notifications to be rolled out, another £3.5 million is overspent on these services – meaning that more than £350 million has already been wasted since the consultation closed in February.

“While it has been a long time coming, this is an important step by the regulator to address what has long been a clearly unacceptable gap in the rules, penalising consumers to the tune of millions.”

This is a step in the right direction, but it will take more to ensure telcos shift their culture. The idea of customer acquisition over retention is deeply engrained in every aspect of the business and will define how the business operates. That said, progress is progress.

Verizon continues quest to correct content car crash

The Verizon mission to conquer the content world has been anything but a smooth ride to date, and now it is reportedly searching for a buyer for Tumblr.

According to the Wall Street Journal, Verizon executives are on the search to offload the platform. The Verizon Media Group has been under considerable pressure in recent months, as the promise of value through content and diversification has eluded the telco.

Looking at the most recent earnings call, Verizon Media Group revenue was $1.8 billion, down 7.2% year-on-year for the quarter. Declines in desktop advertising were primarily blamed, with the dip continuing to more than offset growth in mobile and native advertising. Considering the effort the telco had to exert to acquire Yahoo, not to mention the headaches it had to endure, some might have hoped there would be more immediate value.

The last couple of months have seen Verizon attempt to make money from the mockery, with a particular focus on job cuts. In January, it was announced 7% of the media unit’s workforce, some 800 roles, would be sacrificed to the gods of profits, and now it seems Tumblr is being marshalled to the alter.

What is worth noting is this is a platform which has promise.

After being acquired by Yahoo during 2013 for $1.1 billion, Verizon inherited Tumblr through the much mangled $4.8 billion acquisition of Yahoo in 2017. Although some might struggle to understand what Tumblr does, the all-encompassing blogging platform currently has 465.4 million blogs and 172 billion posts.

Tumblr is a tricky one to understand what it actually does, but instead of trying to pigeon hole it into a definition perhaps the better approach would be to let it just be itself. Tumblr defines itself as a blank canvas, allowing users to post text, photos, GIFs, videos, live videos and audio, or pretty much anything the user wants to.

Perhaps this is why Verizon has struggled with the brand and presumably failing to realise the potential. Telcos generally cultivate traditional and relatively closed-minded cultures. With Tumblr just being itself, rather than fitting into a tidy tick-box exercise, Verizon may be struggling to communicate the value to customers or even devise an out-of-the-box business model to monetize it effectively.

This assessment is perhaps supported by where the media business has seen success. Financial news for example, or the delivery of sports content. These are not exactly complex business models to understand, more difficult to deliver however, as they are more functional. These are the areas CFO Matt Ellis was boasting about during the earnings call.

While there has not been any official commitment or denial to the rumours from Verizon so far, there does seem to be some appetite from the industry. According to Buzzfeed, Pornhub VP Corey Price is ‘extremely interested’ in potentially acquiring Tumblr, promising to re-discover the NSFW edge, one of the factors which drove the popularity of Tumblr during the early days.

The future of Tumblr might be a bit hazy for the moment, but one thing is clear. Verizon is mapping out a very effective usecase on how not to diversify into the content world.

Google goes back to ad-supported model for its YouTube Originals

Google seems to come a cropper when it comes to its YouTube content ambitions, announcing all of its Original content will now be available for ‘free’.

As part of the evolution of YouTube, Google attempted something which could have been viewed as quite drastic; it introduced a paywall. For $11.99 a month, users could access ad-free content, Google’s library of music and also its Original content. For a platform which has a reputation for free content, it was a strategy which flew in the face of logic.

However, it would appear this strategy has been less than successful. This is not to say it is dead, but more work needs to be done on the foundations before the palace can be built. Starting at some point this year, YouTube Original content will be available for ‘free’, with adverts, on the YouTube platform for all to view.

“Today, we announced that all new YouTube Original series and specials will soon be available for fans around the world to watch for free with ads — just like they enjoy other content on the platform,” YouTube said in a blog entry.

The paywall business model might be attractive in the long-run, but Google is still a business with investors; it has to make money now as well.

“Presumably YouTube’s gargantuan global audience means its more lucrative to use advertising rather than subs to monetise those shows [YouTube Originals],” said Ed Barton, Chief Analyst at Ovum.

“YouTube has huge audiences in many countries which don’t have much propensity to subscribe to online video services so focusing on advertising presumably unlocks a lot of value in those markets.”

Perhaps this is what we should take away from this move; Google tried to do something new, it didn’t reap the rewards, and now the team is going back to the tried and tested ad-supported model. It was too much self-disruption to stomach is a single sitting.

The content conundrum

Despite content being one of the biggest discussions in the tech world over the last few years, the question of how to make money still remains.

On one side of the fence, you have the paywall business model. There are numerous benefits here, recurring revenues and brand stickiness being the most obvious, though it does also create a sense of authority in the field. This premium perception will be attractive to the content creators, and it does also simplify the process of paying the creators themselves.

However, a paywall does make it more difficult to scale viewing figures and does mean you have to justify the cost to consumers. Dud content is punishable through the trials of social media meaning more attention (and money) much be spent on creating original content.

Looking at the ad-supported model, the practice which drove Google to the behemoth it is today, content is much more accessible and simpler to scale. You also have the advantage of not being punished for suspect-quality content as consumers are being entertained for ‘free’.

But there is also the downside, which mirrors the paywall approach almost perfectly. Content creators will be afraid of de-valuing their work, while there is also the complicated matter of getting paid. Consumers are not necessarily guaranteed to come back, and when you have created a reputation for a free-content provider, shifting users towards premium products becomes much more difficult.

Google’s long-term ambitions

The ad-supported business model has fuelled Google’s growth over the last decade, though it would be stupid to ignore the trends which are in the market.

“Google and YouTube should certainly have an eye on over-arching trends in the content space,” said Paolo Pescatore of PP Foresight.

“Traditional content creators are gradually moving towards the world of OTT, and YouTube is the most popular streaming platform on the planet. It has to figure out how to change its perception in the eyes of the consumer, ushering the masses behind the paywall.”

As Pescatore points out, consumers view YouTube as a platform for free content. This engrained perception will present challenges in driving adoption of the premium products, however offering the Original programming for free might work as somewhat of a teaser to justify the expense of a subscription.

YouTube is a platform which can survive by solely focusing on the ad-supported model, however it will be leaving money on the table. Premium streaming services are certainly gaining more traction, creating more value throughout the entire digital ecosystem. Why would Google want to ignore this potential boost to revenues?

Diversification is key for every business, not just the ones who are under financial pressures. Google has consistently shown it is an organization which consistently strives for the new and is not afraid of setbacks.

The movement towards a paywall on the YouTube platform might not have worked for the moment, but there are simply too many gains to ignore. Releasing YouTube Originals as free content might be a smart way to alter the perception of YouTube, demonstrating the value of what is behind the paywall to consumers, and also proving content creators their pride and joy would not be devalued on the platform.

For the moment, Google executives seem to have decided that there is more money in ad-supported revenues than the paywall for YouTube Originals. This might not help long-term ambitions of making the paywall model work, but perhaps it was too much of a drastic step away from the traditional Google business model.

This is a minor set-back, but the YouTube paywall is far from destroyed.

YouTube censorship contributes to disappointing Google numbers

Google holding company Alphabet saw its share price fall by 8% after it announced disappointing Q1 numbers.

The company was fairly elusive about the reasons for a deceleration in its revenue growth on the subsequent revenue call, but many commentators picked up on comments around YouTube as significant.

“YouTube’s top priority is responsibility,” said Google CEO Sundar Pichai. “As one example, earlier this year YouTube announced changes that reduce recommendations of content that comes close to violating our guidelines or that misinforms in harmful ways.”

“…while YouTube Clicks continue to grow at a substantial pace in the first quarter, the rate of YouTube Click growth decelerated versus what was a strong Q1 last year reflecting changes that we made in early 2018, which we believe are overall additive to the user and advertiser experience,” said CFO Ruth Porat.

At least one analyst on the call expressed frustration at the lack of further clarity on the reasons why Google’s revenues aren’t what they expected them to be, but the YouTube stuff seems fairly self-explanatory. Pichai made it clear that YouTube is all about reducing perceived harmful content on the platform, while Porat referred to changes made at YouTube in early 2018.

So what were those changes? To YouTubers they were one of many wholesale restrictions on the types of content that are monetised (i.e. have ads served on them), broadly referred to as ‘adpocalypse’. Every now and then a big brand found its ads served against content it disapproved of, resulting in it pulling its ads from YouTube entirely. In the resulting commercial panic YouTube moved to demonetize broad swathes of content.

While this is an understandable immediate reaction to a clear business threat, it also undermines the central concept of YouTube, which is to provide a platform for anyone to publish video. On top of that YouTube increasingly censors its platform, including closing comments, tweaking the recommendation algorithm and sometimes even banning entire channels. These restrictions must surely have contributed to the amount of ad revenue coming in, but Google seems to have decided it’s worth it to keep the big brands sweet.

Here’s some further analysis from prominent YouTuber Tim Pool followed by an example of just the kind of indie creativity YouTube has built its success on (which, to be fair, doesn’t seem to have been demonetised this time). A move towards favouring big corporates over independent producers is a much bigger risk than you might imagine for YouTube, as Google’s disappointing Q1 numbers imply.

 

Amazon’s vigilante division Ring moves into crime reporting

Internet retail giant Amazon is making a big push into the neighbourhood watch world and now it even wants to report on local crime itself.

This is what is indicated by a recent Amazon job listing, which is looking for a News Managing Editor, who ‘will work on an exciting new opportunity within Ring to manage a team of news editors who deliver breaking crime news alerts to our neighbors.’ Ring, which makes connected doorbells with mounted video cameras, was acquired by Amazon for around a billion bucks last year.

Why would a smart doorbell outfit want to get into crime reporting? Good question, the answer for which seems to be found in the Neighbors by Ring app. This app essentially creates a local social network through which virtual curtain-twitchers can share footage of an undesirable types they’ve spotted lurking around their property through their sentient doorbells.

The idea is clearly an attempt to bring the concept of neighbourhood watch into the connected era, which is fine on the surface. After all, who wouldn’t want to know if there are dodgy people in their area? But as we’ve seen with regular social media, this does have the potential to create a self-reinforcing loop, with almost anything being potentially identifiable as a threat. And then there are the privacy and legal implications of sharing an image taken of someone without their permission and flagging them as a likely criminal.

Rather than seeking to minimise the possibility of this app whipping paranoid communities into a fervour of vigilantism, Amazon seems to think even more crime reporting is needed and is prepared to invest in it, hence this appointment. According to the job spec this person needs to have ‘a knack for engaging storytelling that packs a punch’.

The Neighbors by Ring app page paints a picture of a network of parochial snitches with the cops on speed dial, an Orwellian dynamic that’s sure to end well. The underlying strategic aim for Amazon seems to be to create as big an installed base of Ring doorbells as possible to drive demand for its nascent in-home delivery service. But it may inadvertently end up driving demand for handguns, snarling guard-dogs and panic rooms in the process.

 

Disney+ streaming service looking good ahead of November launch

Disney might have a lot of ground to catch up on the established players in the streaming world, but its offering does look pretty competitive.

Priced at $6.99 per month, the streaming service will be home to an armoury of content, old and new, launching in November. The platform will also give customers the option to bundle in ESPN+ and Hulu services, creating the depth and breadth of content which one day might be able to compete with Netflix.

“Disney+ marks a bold step forward in an exciting new era for our company – one in which consumers will have a direct connection to the incredible array of creative content that is The Walt Disney Company’s hallmark,” said CEO Bob Iger.

“We are confident that the combination of our unrivalled storytelling, beloved brands, iconic franchises, and cutting-edge technology will make Disney+ a standout in the marketplace and deliver significant value for consumers and shareholders alike.”

Perhaps one of the most useful features of the platform will be the downloadable content. Every title will be available for subscribers to download and watch offline, a move which might push the other platforms in this direction. Netflix is another which has introduced this feature, though it is limited to date.

Alongside properties such as Pixar, Marvel and Star Wars, the content library will also include all of Disney’s family favourite films, all 30 seasons of The Simpsons, Fox titles like The Sound of Music, The Princess Bride and Malcolm in the Middle, and original content leaning on well-known assets, such as Marvel Studios’ series Loki starring Tom Hiddleston.

This is perhaps the worry many commentators have had surrounding the Disney entry into the streaming world, as while it certainly does have attractive assets, the breadth and depth of content does not match Netflix. This is one of the reasons Netflix is dominating the streaming world, and perhaps why Sky has continued to maintain its leadership position in the UK premium TV segment; content to serve all purposes, audiences and moods.

Disney will find success in the early days, such is the power of the brand and the curiosity of consumers, $6.99 is cheap enough to allow for curiosity, but long-term success will depend on whether the team are bold enough with content acquisition and curation. Netflix is incredibly aggressive in securing and funding a wide range of international and locally-tailored content, and Disney will have to match these actions to maintain success in the long-run.

That said, the team is promising big things. By the end of year five, Disney expects 50 original series, 10,000 past episodes and more than 500 movies in the content library. These numbers certainly sound promising, as long as the content meets user expectations.

What we don’t know right now is much about the platform itself. Disney has said the content will be available through all devices and has also named PS4 and Roku as launch partners. The idea is to enable users to view the content wherever desired, but whether the platform will be any good we’ll only know in November.

This is where the leaders in the content world have made their presence known. Netflix and Sky for example have intuitive and simple platforms, whereas some are difficult to navigate or do not look pleasing on the eye. This will have a negative impact on user experience and considering how many streaming options are going to be on the market, this will go some way in deciding Disney’s success.

November will come around quicker than many will hope for, but Disney is certainly giving itself a good start in the streaming world with what looks like an impressive offering.

T-Mobile US finally makes foray into TV world

Some might have started to think it was never going to happen, but T-Mobile US has finally unveiled its own attempt to crack the content market TVision Home.

The service, which will initially be launched in eight US cities on April 14, is the re-branded and upgraded version of Layer3 TV, the platform it acquired in early 2018. It might have taken a while for the proposition to emerge, but T-Mobile US is entering the highly congested and increasingly fragmented world of content.

“The Un-carrier has already changed wireless for good, and today’s news brings us one step closer to taking on Big Cable,” said John Legere, CEO of T-Mobile. “And with the New T-Mobile, we can do more than just offer home TV service, we can offer millions of Americans more choice and competition for TV AND home broadband. I can’t wait to begin un-cabling cable and giving millions the opportunity to cut the cord with Big Cable forever.”

While this might not be the big splash some were hoping for, T-Mobile US does plan on launching a streaming service to compliment this cable offering later in the year. For the moment, this is an effort to disrupt a traditional industry, something which Legere is very good at doing, and there is of course an element of the unusual in the launch.

The TV service itself is not the Uncarrier move, but the Satellite Freedom initiative certainly is. According to T-Mobile US, 48% of US customers are locked into a contract and face paying hundreds in early termination fees. To win over customers, T-Mobile US will offer any Dish or DirecTV customers who make the switch a prepaid card with up to $500 on it.

For the moment, it looks more like a bundling service, though this isn’t necessarily a bad thing as it does address a point of irritation for the consumer. Netflix and Amazon Prime will be bundled into the service to start with, while T-Mobile US promises more third-party bundles in the future.

The service begins with 150 channels of local and national content for $99.99 a month, though existing T-Mobile US customers will get a $9.99 discount, while any premium services (such as Netflix, Amazon or HBO) will be extra. When you add everything together, it isn’t that much of a discount on the average cable cost across the US, which T-Mobile US claims is $107.30 per month.

The platform itself is simply an upgraded version of the Layer3 TV service which it acquired to $325 million last year, though considering how long T-Mobile US has kept everyone waiting, it does seem a bit underwhelming. While a lot has been promised, such as the box becoming redundant as the TVision app is installed on hardware, minimal details don’t inspire much confidence. T-Mobile US is promising to deliver on the commitments sharpish but considering how long it took to get the basic proposition to market we’re not entirely confident.

Ultimately, the success of this service will come down to two things. Firstly, pricing, T-Mobile US has been successful in the past by offering more for less, and secondly, the experience. Should the 150 channels offer good content, customers will certainly be happy, though there are plenty of examples of failed forays into TV because the content doesn’t deliver on expectations.

Another interesting development will be the personalisation features. T-Mobile US has stated each member of the household will have their own profile with the discovery engine presumably tailored to that individual. It might sound great, but we are still not convinced this is a feature which many customers will find that intriguing. It might be a nice to have, but we doubt it will be a factor in the buying decision making process.

While there is promise for the future, the launch is a bit flat. Legere has a reputation for creating innovative ideas and challenging the status quo, but this looks to be an assault on a segment which has already been disrupted. There are promises to launch a streaming service, and that might have been something more in-line with what the industry expected, but this service is attacking an industry where the revenues are already declining.

That said, you can’t ignore that this is an opportunity for Legere to make more money for T-Mobile US. The cable segment is declining, but it isn’t dead. The service is not necessarily anything new, but T-Mobile US does have an existing customer base to leverage. This might dictate the quality of content on the platform, possibly the decided factor for success or failure, and we already know Legere is a cunning businessman. Content owners will be intrigued by what he can offer.

Whether it was unreasonable to expect more remains to be seen, though this service doesn’t necessarily look any distinguishable from others on the market.

Don’t expect upstarts to knock Netflix off its throne – report

A new report from UK analyst firm Re-Think has painted a gloomy picture for those attempting to muscle into Netflix’s dominance in the streaming world.

With the likes of AT&T, Disney and Comcast all attempting to diversify revenues, the riches being raked in by Netflix in the entertainment streaming market must look very tempting, though the rewards will not come easily. This is not to say there is not room for new services, the price point creates an opportunity for multiple service providers in a single household, but Re-Think is predicting Netflix will continue to hoover up profits.

“Despite moves by major studio conglomerates come 2024 Netflix will remain the dominant force in streaming, earning more streaming revenue than the big three put together,” the report states. “Its market share will dilute from 63% last year to 52% by 2024, but our forecasts show that Netflix cannot be shifted from the number one spot.”

Despite going through years of dredge, swallowing the ‘reward’ of being a loss leader in an emerging market, Netflix shareholders are beginning to see the breaking dawn. During the last earnings call, CEO Reed Hastings proudly told shareholders revenues had grown 35% to $16 billion across 2018, with operating profits almost doubling to $1.6 billion. The business finished with 139 million paying memberships, up 29 million across the year.

139 million might sound like an incredible number already, but then you have to consider whether this is just the beginning. International subscriptions, outside of the US market, accounted for approximately 63% of the total offering plenty of headroom for growth. The team is forecasting an additional 9 million additional subscriptions over Q1 alone.

This is the challenge which the upstarts are facing. Not only is this a company which is sitting very comfortably in the number one spot, but it has momentum which it is doubling down on. At IBC last year, Maria Ferreras, VP of EMEA Business Development at Netflix pointed towards partnerships with telcos (carrier billing), more original and local content, as well as launching in new markets to continue the growth.

During the results call, Hastings confirmed these plans were scaling up. The relationships with local partners were working well, and the team were searching for more, while more investment was being directed towards content. Investments over the last twelve months totalled $7.5 billion, and this number will only grow. It probably won’t be on the same trajectory as previous years, but the number of big-budget titles are visibly increasing on the platform.

“The extraordinary success of Netflix has got it lined up in the sights of the big studios and content houses and the big question now is how well it will stand up to that assault on multiple fronts,” the report states.

Hulu is an established platform, as is Amazon Prime, but with Disney entering the market with an impressive portfolio, while Comcast is pushing forward, and AT&T will soon start making waves with its $85 billion acquisition of Time Warner. There is a lot of competition emerging on the horizon, but these the upstarts have a lot of distractions.

Over the next couple of months, we see two developments which will worth keeping an eye on in this space. Firstly, the protection of traditional TV services and also the consumer appetite for AVoD services, streaming with advertising.

Advertising is clearly big business. In the UK, you only have to look at the success of Sky as the leader in the premium content space as an example. Like the social media giants, Sky has created a sophisticated advertising platform, AdSmart, allowing advertisers to drive engagement through hyper-targeted campaigns. This model continues to work with Sky, but perhaps it is living on borrowed time.

The Netflix model is the opposite. An upfront payment and the promise of no advertising to break-up shows or movies on the platform. The more people who subscribe to Netflix, or similar platforms, the lower the tolerance for adverts will become. Netflix might be missing a cash generation opportunity, but it also might be irrevocably changing the industry. This will not happen overnight, but it might be the light at the end of the tunnel.

The second point, protecting legacy services, is going to be a tricky one. The likes of Comcast and AT&T will have cash revenues to worry about as they effectively cannibalise themselves in search of the OTT dream. Looking at the revenues on the traditional TV services, Re-Think is forecasting AT&T will decline from $64.7 billion in 2018 to $47.7 billion in 2024, Comcast from $25.8 billion to $20 billion and Disney from $11.5 billion to $9 billion.

Should these companies encourage users to migrate to their streaming alternatives, the decline could be even steeper. This might give the streaming service more opportunity to succeed in an increasingly fragmented market, but investors might get spooked. It’s a catch-22 situation, with one option killing revenues but the other holding back a more future-proofed concept.

The challenges for those trying to break Netflix dominance is not only dealing with the beast’s popularity, but also handling the internal politics of change. This might be much more of a challenge, especially when you consider the traditional culture of the challengers.

Ultimately the feedback here is relatively simple; Netflix is king and don’t expect the usurpers to wobble the throne too much.