Which Firms Will Lead the Next Generation of Video Aggregation?

As surely as night follows day, one already can predict that as consumer demand for unbundled, on-demand access to TV series content is satisfied, the fragmentation of desired content on many different distribution services will lead to dissatisfaction with the unbundled approach, leading suppliers and distributors to try and recreate the linear video subscription bundle.

As leading over the top video distributors work to create unique,  “must see” video series that create product differentiation, many consumers will find they are buying multiple subscriptions.

As always, that is going to create demand for a bundled approach that allows convenient access to multiple services. That is why numerous suppliers are creating new devices that can aggregate video from multiple sources and display that content directly on a TV.

That creates a “logical” or “virtual” bundle rather than the formal bundle now sold as “cable TV.” Only this time, the distributors are Amazon, Google, Apple and others.

That also is why some linear video distributors already have moved to add Netflix access to standard TV decoders.

In principle, the new aggregators (Apple TV, Amazon Fire and Google Chromecast) threaten to rival or displace traditional aggregators, over time, allowing consumers to create their own bundles.

Though there is risk for traditional programmers as well--who might well see far smaller audiences--the new aggregators should make it easier for consumers to buy and then watch content from multiple independent sources.

The habit of getting and watching over the top television already is well established.

Some 77 percent  of U.S. adults say they regularly watch television shows using either cable TV (55 percent) or satellite TV (23 percent), while 43 percent view streamed video. About  67 percent of Millennials report they watch streamed video, according to Harris Interactive.

About 38 percent of respondents say they've subscribed to premium cable TV channels in order to watch specific shows, while 24 percent have subscribed to one or more streaming services for the same reason, Harris Interactive reports.

Among those who regularly watch television shows using streaming, 74 percent use a computer to do so, while 55 percent use a television (attached to a set-top box, a game system or a television with integrated online capabilities).

About 37 percent watch on tablets, including 63 percent of tablet owners. Some 30 percent watch on smartphones, including 42 percent of smartphone owners.

It isn’t clear how those preferences might change, though, as more content traditionally available only from a bundled linear video subscription gets “unbundled,” albeit slowly.

Looking specifically at streaming TV's likely "core" constituents, half of those who list streaming among their top venues for television shows say they've subscribed to streaming services for access to specific shows, according to Harris Interactive.

In the near term, that means more fragmentation of the video subscription business, as consumers buy discrete services to get access to a couple of lead unique series (“House of Cards” or “Orange is the New Black,” for example.

Also, there is new potential for creation of “premium” services. About 40 percent of respondents say they would be willing to pay more for a service that allowed them to stream current shows ad-free.

About 37 percent of respondents report they  would pay more for a streaming service that allowed them to temporarily download TV episodes, for when they're away from an Internet connection.

As you would guess, streamed video gets viewed on a variety of screens. About 85 percent of respondents report they most often watch TV on an actual TV (live feed, recorded or on demand). That is down from about 89 percent in 2012.

Streaming use, meanwhile, has grown from 20 percent of respondents in 2012 to 23 percent in 2014. Among Millennials, 47 percent of respondents say they use alternate screens, while use of TVs has dropped from 77b percent to 68 percent.

About 23 percent of respodnents say they're watching more online or streaming television in 2014 now than they were a year ago.

Some 37 percent say their online or streaming viewership is unchanged over the last 12 months while seven percent say they watch streamed content less than a year ago.

Half of respondents say they expect no change in viewing habits over the next year. Some 18 percent say they think they will watch more streaming or online video in the next 12 months.

Some four percent of respondents think they will watch less online or streamed video.

The Harris Poll included 2,300 U.S. adults surveyed online between April 16 and 21, 2014.
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