The world’s largest media and entertainment company, The Walt Disney Company, is fighting back against the rise of Netflix. This week, they announced the launch of their own Video on Demand (VOD) service, Disney +. Disney will be facing off against big players like HBO, Amazon Prime, Sky and Apple TV (who have just announced intentions to start producing their own content early next year).
With the powerhouse behind Mickey Mouse throwing their hat into the ring, the VOD market is becoming increasingly crowded. Users will be forced to choose which platform to spend their hard earned cash on. Stranger Things fan? You’ll need to subscribe to Netflix for that. Can’t get enough of Game of Thrones? Don’t let that HBO subscription run out. Viewers of Handmaid’s Tale will have to make Hulu their preferred platform. It’d be quite the investment to subscribe to all these services, so with that in mind – what is the future of VOD?
More fragmentation, more piracy
According to a recent Sandvine report, an estimated 6 out of 10 internet users watch video online – that’s the main reason so many companies are interested in this growing industry. Subscription (Netflix, HBO, Amazon Prime) and non-subscription (Facebook Watch, YouTube) services that produce exclusive content will be competing not only against each other, but against online piracy services.
P2P services such as BitTorrent (which represent 22% of content upload traffic) are re-emerging and more users are utilising these platforms in order to share video content. The fragmentation of VOD services is forcing those users who can’t afford to subscribe to multiple services to turn to piracy platforms instead.
Strategic alliances with content aggregators
With more and more VOD providers entering the market and with piracy services experiencing an increase in traffic, the future of VOD depends on content aggregators. The way we see it, there are two viable solutions:
- An alliance between the biggest and baddest VOD providers – a platform on which users could find a catalogue of content produced or owned by Netflix, Disney +, Amazon Prime, etc.
- An alliance of VOD providers made possible by telecommunications companies. Just like with cable TV, telecommunications companies would be in charge of offering the content produced by providers to users. These users would no longer have to choose between different VOD providers – they could access all the same content through a single content aggregator platform. In fact, they’d have even more options with access to content produced by more traditional providers like Warner Bros. and Dreamworks.
Netflix is in the process of doing just that. In Spain, Netflix has reached an agreement with the country’s leading telephone operating company, Telefónica. In the UK Netflix has joined forces with Sky to offer users access to their joint catalogue. It’s a smart strategy. This way, Netflix will not only reach more users and increase the amount of data they have access to, but they’ll also have an advantage over competitors who are more focused on developing and improving their own platform, rather than seeking out new alliances.
What we know for sure is that Video on Demand is a rapidly growing industry. The market is supported by an increasing number of providers and an increasing number of users ready and willing to invest in VOD services; and currently crushing the competition we have Netflix, which makes sense. After all, if Game of Thrones taught us anything, it’s the importance of a strong alliance.