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Americans are embracing online video, enjoying more freedom in choosing the content they watch, which has hurt TV viewership, according to a new report from Nielsen. The shift to online video is going to pressure cable and satellite TV providers - despite many consumers not necessarily cutting the cord, less viewership will hurt advertising and pressure providers to find ways to evolve.
More consumers have broadband Internet access and can choose from Netflix, Amazon, Hulu, YouTube and other services - as more broadcasters and content providers test online video services - with 45 percent of Americans streaming television shows at least once per month, eMarketer said.
"Content is still king, but consumers are shaping their own content-discovery experience, and the evolving media landscape has not lessened consumer demand for quality, professionally produced content," said Dounia Turrill, Nielsen SVP of insights, in a statement. "What has changed is the number and reliability of new media available to viewers."
Netflix CEO Reed Hastings believes traditional broadcast TV is operating on borrowed time, and it might not last past 2030. It's not necessarily surprising, as Hastings has painted a doom and gloom picture for broadcast TV over the past couple of years, though it appears to be coming true. There are currently more than 34 million Netflix subscribers in the United States, while the service continues to roll out in overseas markets.
"It's kind of like the horse, you know, the horse was good until we had the car," Hastings reportedly said. "The age of broadcast TV will probably last until 2030."
Even if broadcast TV continues to persevere, there is growing interest among premium movie channels and broadcasters - HBO, CBS, and other channels are dabbling in subscription online video services. It wouldn't be surprising to see traditional TV apps becoming apps on connected smart TVs, Blu-ray players, and other entertainment devices.
BitTorrent has successfully appealed to musicians willing to share their music using the company's "Bundles" feature, and has stepped up with the announcement of its first original programming. Children of the Machine features human survivors in the year 2031, trying to survive in an android machine-controlled world.
Children of the Machine will launch in late 2015, and will feature an eight-episode mini-series that will be free with advertising. The series will cost $4.95 without advertisements and $9.95 for a special edition version that includes extra features.
"This is a science fiction show catered to the typical tech-savvy, male-dominated audience," said Marco Weber, the show's producer. "We're not trying to launch a romantic comedy, so the concept of this show moved us toward BitTorrent."
Two men were arrested for their role in pirating the Expendables 3 movie, with officials from the Police Intellectual Property Crime Unit (PIPCU). The US release date for the movie was August 15, but copies of Expendables 3 were found online as early as July 25.
The two suspects, 36 and 33 years of age, reportedly uploaded the high-quality film after stealing it from a cloud-based storage system. Lionsgate Films said there was severe financial impact by the movie being related so early online, saying it cost millions of dollars in potential lost revenue.
"Today's operation shows you the significant impact intellectual property crime has on our creative industries, with millions of pounds being lost as a result of criminal actions," said Detective Chief Inspector Danny Medlycott, Head of PIPCU. "The public need to be aware that piracy is not a victimless crime. By downloading illegal music, film, TV and books, not only are you exposing your own computer to the risk of viruses and malware, but you are also putting hardworking people's livelihoods at risk as piracy threatens the security of thousands of jobs in the UK's creative industries."
ESPN could begin to roll out online streaming video subscriptions for select programs and live sporting events, giving viewers the chance to watch its broadcasting without needing a cable or satellite TV subscription. The effort could begin as early as February, when ESPN will reportedly offer access to the Cricket World Cup, which is held every four years - and while not a major event in the United States, is one of the largest sporting events in the world.
Pricing information and other details about the streaming service remains unknown.
"We think about, are there sports events we could offer where the consumer would pay us directly - not the content on our current linear networks," said John Skipper, ESPN head, earlier this year. "This has to be new [content], and it would create third revenue stream for us. I do want to be clear: we are not looking to linear channels an the content that's on them now. We're going to acquire new content and new kinds of things to do direct-to-consumer."
The expansion of 4K content and high frame rate movies present graphically appealing content, but digital animation studios are struggling, a recent industry expert noted. Production schedules could be impacted due to high-resolution images, forcing studios to reconsider how they create films.
"They are both going to present a huge challenge," said Bruno Mahe, Illumination Mac Guff technical head recently told the BBC. Traditional animated films are viewed at 2K resolution with 24 frames per resolution, but 4K boosts the videos up to 4K resolution and 48fps - and it isn't an easy transition.
In addition to slowing down production, studios also need increasingly powerful render farms to produce images and send them to other animation facilities.
Rising electronics powerhouse Xiaomi plans to invest $1 billion in providing more online TV content to subscribers, which will complement Xiaomi TV and the company's set-top box.
China has more than 600 million Internet users, with a growing number watching online video via smartphones - and Xiaomi wants to compete against Alibaba, Tencent, and others in the growing market. The country was the second largest movie market in 2012, trailing the United States, with continued growth expected over the next several years, analysts predict.
Here is what Chen Tong, a recent Xiaomi hire and former Chinese Sina Internet company executive said: "We want to repeat the success of Xiaomi's hardware integration model in the television industry."
We've been hearing about a music subscription service from YouTube for a while now, but it looks like it could be more of a reality in the near future. Yahoo's CEO, Susan Wojcicki, revealed during a recent interview that they are working on it, and should be unveiled before the end of the year.
Wojcicki also talked about an ad-free experience with YouTube, noting that the ad-supported model has been fine up until now, as it has provided them with the mountain of one billion users, but there are people out there - like myself - who don't want ads, and are willing to pay for that privilege. Wojcicki mentioned apps where there are ads, or you can pay to remove those ads.
The current state of TV is evolving and has led to established companies testing out direct-to-consumer services away from costly cable and satellite bundles. Both HBO and CBS recently announced online video subscription services, providing viewers with another way to watch content. Other content broadcasters are expected to follow suit, despite pressure from cable and satellite providers that offer premium subscription packages - in a continually evolving market.
Beyond HBO and CBS, the WWE wrestling brand, UFC mixed martial arts (MMA) promotion, and other established brands now have their own online on-demand video services.
As more American consumers begin to watch programs online, the future of TV content appears to be online - at the expense of cable and satellite providers - which could be even more disruptive in the future. Consumers can also choose Netflix, Hulu, Amazon, and other online video services that provide TV episodes, movies, and exclusive content for their subscribers.
HBO recently announced it plans to launch a standalone online streaming service in early 2015, but pricing details were not disclosed. CBS announced its online streaming offering will cost just $5.99 per month, but the HBO channel could end up costing upwards of $18 per month, according to analysts from Barclays.
Content providers creating their own online channels are turning the screws on cable and satellite TV service providers, and partners could pressure HBO to not cannibalize their subscriber base. HBO will have to try to appeal to consumers while not undercutting their partners - and if Barclays is accurate with an $18 per month service - it seems unlikely that most consumers will go for it.
There could be potential battle lines drawn between premium channels and their broadcast partners, but industry analysts believe they will have to wait and see how HBO GO proceeds in the future.