How Much Will Households Spend on Video Streaming?

Are U.S. streaming video subscription customers already showing signs of reaching the limit of willingness to spend on such services? One survey has been interpreted that way. The majority of respondents to a survey (59 percent) are not willing to pay more than $20 a month for any single streaming TV service, according to a recent survey of more than 2,600 U.S. consumers sponsored by The Trade Desk, a supplier of programmatic ad buying. The survey was conducted by YouGov. 

Some 75 percent of consumers indicated they would not pay more than $30 a month for video streaming. A couple of caveats are in order. Consumers taking surveys often casually say they will or will not do something. Those responses often do not match with their actual behavior. 

And, obviously, it is in the business interest of a programmatic ad buying firm to convince wider sections of the market that advertising support is required to reduce overall end user cost.

The money quote: “The survey indicates a willingness from consumers for streaming services supported by ads, particularly if the format and pacing of commercial breaks differ from traditional TV content,” The Trade Desk says.

The issue, as always, is that consumers prefer ad-free formats, but also prefer not to spend too much money on such content. Hence, the delicate balance of revenue models: recurring payment with no ads, recurring payment with some ads or lots of ads but no recurring payments. 

It’s all about perceptions of value, as consumers prefer no ads, but will tolerate them, up to a point, to save money. “Given the choice between getting something for free or paying for the exact same thing, they’ll make the choice to get it for free,” said Randall Rothenberg, Interactive Advertising Bureau CEO. 

“Consumers are willing to view ads if it means their subscription costs go down,” The Trade Desk notes. That tendency can be seen in toleration of advertising across multiple formats and venues.  

It is possible to argue that the willingness to spend responses will prove incorrect. Many of us would be quite comfortable with forecasts that total spending on streaming video could top $40 a month, and for significant numbers of consumers will reach about $80 a month to $100 a month. 

And there are heavy-user households that likely already are spending more than that on total video entertainment (linear plus over the top services). Another survey taken in 2019 already found at least five percent of consumers willing to spend $70 or more on video streaming services per month. 

The other issue is that content is going to fragment onto different services. And some surveys suggest a clear majority of viewers will buy a whole service to see one particular favored show. So no matter what consumers now believe, they will be confronted with a more-fragmented content market that creates new incentives to buy multiple streaming services. 

The point is that it is not unreasonable to expect that most households will not ultimately find they spend much less than they do at present, for video services.

Amazon Fire TV for Rural Service Providers

Amazon now is opening up its Fire TV platform to partnerships with communications service providers. The Fire TV Edition for Operators is available today in North America, Europe, India and Japan.

After successfully introducing Fire TV partnerships with Tata Sky in India and Verizon in the United States, Fire TV is now expanding the device offerings available to operators across several continents, including rural connectivity partners in rural U.S. markets where traditional linear video services are unprofitable for the service providers. 

Amazon is working with the National Cable Television Cooperative (NCTC) to enable its members the ability to deliver low cost Fire TV streaming media players directly to their customers. 

NCTC has over 750 members, including independent cable and telecommunication operators, delivering service to 16 million broadband and eight million video customers.

Analysys Mason 2020 Predictions

It is nice to see a set of predictions that are not "blue sky" for a single-year period. 

5G Millimeter Wave Will Drive Changes to Indoor Communications

Any way you look at it, different methods of handling indoor cell phone coverage will have to be created in the 5G era, partly because millimeter wave signals do not penetrate building walls, partly because energy-efficient glass blocks RF signals and partly because even mid-band and low-band signals are attenuated by building walls, hills, trees and other obstacles.

So what emerges might include new organizational or industry roles for indoor mobile communications, as well as more indoor transmission platforms, extending beyond traditional distributed antenna systems and built on indoor small cells.

Less clear are business models which might be built by third parties to supply indoor communications in business settings. Is there a possible new role for third parties that build, operate and maintain indoor 5G networks? How big is that opportunity? What is required and what sorts of firms might be positioned to capture any opportunity?

Organizations and consumers might also create their own infrastructure, businesses perhaps relying on use of private 5G or Wi-Fi, consumers relying mostly on Wi-Fi, but with possible signal boosting techniques becoming more commonplace.

Much depends on how difficult or easy, costly or not, creating indoor 5G coverage eventually becomes, as a practical matter. Roles for third party integrators and infrastructure suppliers increase if indoor 5G remains costly, but diminish to the extent end users can build their own networks affordably.

The best example are local area networks of all types, including Wi-Fi.

Millimeter wave spectrrum is the big change, because millimeter wave spectrum represents the biggest portion of new spectrum assets to be made available for mobile and untethered communications suppliers (licensed and unlicensed) for the foreseeable future, even if spectrum sharing and aggregation become key methods for increasing network capacity.

There simply is not that much available spectrum below 6 GHz that is not already licensed for use, as the National Telecommunications and Information Administration frequency allocation chart shows. 

In this illustration, the width of the bars corresponds to capacity. Note the skinny bars to the left, which are the traditional “mobile” bands. 

The horizontal axis represents the frequency spectrum from approximately 1 to 90 GHz. The orange bars show the approximately 11 gigahertz of new spectrum released by the FCC for both licensed and unlicensed use. Again, the width of the bars represents capacity, so compare the orange blocks with the “current IMT bands” in the one gigaHertz to 3 GHz range. 

source: Anokiwave

The red and green blocks show frequency allocations for the aerospace, defense and satellite communications industries, parts of which might ultimately be available using shared spectrum mechanisms.

As most are becoming aware, frequency and coverage are inversely related. Millimeter wave signals, compared with 4G signals in the mid-band (around 2 GHz), might be as much as 30 times less able to penetrate obstacles such as walls. 

source: SureCall

That makes indoor signal reception a big deal for 5G using millimeter wave spectrum. But indoor signal reception also has been a problem for 4G signals inside buildings. That is going to be true even for 5G signals in low-band and mi-band regions.

SureCall, a supplier of cell phone signal booster technology, has released what it calls the world’s first 5G signal booster, the Force8 for boosting 5G signals inside commercial buildings. 

The Force8 will boost 5G signal strength for T-Mobile users in commercial buildings throughout urban, suburban, and rural areas across North America, while also amplifying 3G and 4G LTE signals for all North American service providers, SureCall says.

The Force8 will amplify mobile signals for T-Mobile US 600 MHz signals and AT&T’s 2.3 GHz frequencies.

CTA Predicts $422 Billion in Consumer Tech Sales in 2020

The U.S. consumer technology industry will record $422 billion in retail revenues in 2020, up about four percent over last year, according to a new Consumer Technology Association forecast.

Spending on software and streaming services (including music, video and video gaming) is projected to reach a new high of $81.2 billion in 2020, representing 11 percent growth year over year.

Video streaming will grow to $24.1 billion in 2020, up 29 percent, while on-demand music services will generate $9 billion in revenue, up 15 percent.

Video gaming software and services category will grow five percent to $38.3 billion in revenue.

Smartphone sales will grow about three percent to  $79 billion in 2020. 5G devices alone will generate $15.3 billion in revenue, an order of magnitude increase over 2019.

Laptop sales will create $33.3 billion in revenue. Television sales will hit $23.4 billion. In 2020, 4K sets will account for $17.6 billion in revenue. 8K TVs will reach $1.6 billion on sales of 504,000 units.

Why Meetings Fail

In a recent McKinsey survey, 61 percent of executives said that at least half the time they spent making decisions, much of it surely spent in meetings, was ineffective. And just 37 percent of respondents said their organizations’ decisions were both high-quality and timely.

Part of the problem is that productive meetings require planning. The other problem is that some meetings should not be held at all. 

source: McKinsey

Some meetings, but not all, have topics or agendas that hint at goals. But less often do organizers clarify whether the meeting is meant to share information, discuss it, or decide something. 

“It may seem rudimentary, but we can all recall meetings (and large-group meetings in particular) where the lines between sharing, discussing, and deciding were blurred or absent—or where the very purpose of the meeting is unclear, as was true of the healthcare company’s growth committee and its ever-expanding list of discussion topics. In such situations, meetings may begin to seem frustrating and even futile,” McKinsey consultants note. 

What Happens if T-Mobile Merger with Sprint Fails?

Some analysts believe the T-Mobile US merger with Sprint will be blocked. Others believe the merger will be approved. But skepticism is higher than might have been expected at this point in the process.  Either way, more shuffling of assets is likely to happen. 

Neither T-Mobile US nor Sprint has the scale to compete long term in a U.S. market that virtually requires contestants owning both fixed and mobile assets.  And though it is possible that a major application provider could emerge as a buyer or investor, the most-likely combinations involve cable companies and any of the smaller or would-be mobile providers.

Altice USA could be interested in merging with either T-Mobile or Sprint, as might Comcast and Charter Communications. Dish has held talks to acquire Sprint and merge with T-Mobile in the past, so that is another possible combination. 

Dish faces a clock that is winding down, and would have to find some way to get its network built before the Federal Communications Commission takes away its mobile spectrum licenses.