Video on Demand - Cause and Effects

MARCELA KLEINSEPTEMBER/2013

What are the causes and effects of the increased use of

“Video on Demand”?

Agenda

Video on Demand: Introduction and definitionCause and Effects:

Internet Access and Audience USA Crisis and Cable TV Fee Netflix VOD Operation and Content Negotiation Cable TV own VOD products and Market competition

SummaryDiscussionConclusion and RecommendationReference List

Agenda


Internet Access and Audience USA Crisis and Cable TV Fee Netflix VOD Operation and Content Negotiation Cable TV own VOD products and Market competition


Video on Demand: Introduction and definition

Video consumption

Free access - Youtube

Video On Demand known as VOD is a process that enable users to watch videos whenever they wish to.

Required: Device (TV, Mobile, Tablet, Computer) + internet connection + content provider

Video on Demand: Introduction and definition

Entertainment business

Do not need to: follow the schedule of the TV channels move physically to a certain place to watch or rent a

movie

Agenda


Internet Access and Audience USA Crisis and Cable TV fee Netflix VOD Operation and Content Negotiation Cable TV own VOD products and Market competition


Cause and Effects:

Internet Access and AudienceUSA Crisis and Cable TV feeNetflix VOD Operation and Content

NegotiationCable TV own VOD products and

Market competition

Cause and Effects:

Internet Access and Video Audience

USA Crisis and Cable TV fee Netflix VOD Operation and Content Negotiation Cable TV own VOD products and Market competition


Changed how to communicate and get entertained: habit of watching TV

The total video

audience was concentrated

on the big screen


Internet changed how to communicate and get entertained: habit of watching TV

Computers, notebooks and smartphone are now little televisions accessing websites that provide videos


Share of Television Viewing by Device

(18-44 years old)348 responses

The Multiscreen Marketer, page 15, online


Public consequence: TV programs were recorded and upload on Youtube Find it online its favorite show or news

Business consequence: New scenario could affect advertisement revenue

(Advertisement) Build a Youtube channel uploading their own content

Cause and Effects:

Internet Access and Audience

USA Crisis and Cable TV fee

Netflix VOD Operation and Content Negotiation Cable TV own VOD products and Market competition


USA economic crisis - 2007 - peak in 2009. Consequences:

Financial arrangements Identify other possibilities to access entertainment

“A sharp rise in housing vacancies due to the

mortgage crisis alone has led to five million fewer U.S.

households viewing pay-TV services”.

(The NPD Group, para. 2, online)


Netflix was already known in the market by delivering DVD’s.

The company saw in this scenario the opportunity to grow its business in a niche not yet explored: online.

Cause and Effects:

Internet Access and Audience USA Crisis and Cable TV fee

Netflix VOD Operation and Content Negotiation

Cable TV own VOD products and Market competition


Netflix background:

Reed Hastings had to pay $40 in fines due date returning of the movie Apollo 13

1998: Founded NETFLIX.

His clients would choose the title

online, order the DVD, receive it at home, and return

by mail

1999: monthly subscription.

No due

dates, late fees, or

shipping and handling -

2007: one billion DVDs

delivered


Now: + than 37 millions subscribers*Do not disclose the number of titles in its

catalogWas never able to negotiate movie releases

with the content providerNew releases are sold as ‘gold’ and they are

exhibited in the premium hourNetflix subscribers = US$ 10/month - full access to a “second hand” content

Cable TV subscribers = more than US$ 100/month – some new releases + scheduled “second hand” content

*Netflix.com – 2013


With the healthy business situation content providers started to “coming to Netflix for deals instead of vice versa.”

Content providers had to start to consider a new business model to sell content. Studios “are considering them a viable distribution partner. ”

(Fitzgerald, qtd in Foley, para. 2, online)

Cause and Effects:

Internet Access and Audience USA Crisis and Cable TV fee Netflix VOD Operation and Content Negotiation



After watching the VOD trend cable TV consider creating their own VOD

Client subscribe for regular Cable TV + have access to content by others devices


“Foxtel Play gives even more Australians who might not be able to access the core service the freedom and flexibility to enjoy Foxtel across multiple connected devices and at price points to suit different budgets and

tastes.” (Freudenstein, qtd in Griffith, para. 19, online)


Consequence for clients when a market competition exist:

prices became more affordable the quality of the product and service improves companies start to create ever better business option to

hold consumer loyalty.

Agenda


Internet Access and Audience USA Crisis and “expenses” on Cable TV Netflix VOD Operation and Content Negotiation Cable TV own VOD products and Market competition


Summary

Different areas had to develop before Video On Demand became a possibility

Economic aspects that happened during the last 6 years had an important role

Although cable Tv seemed to have had a solid empire, the emergence of Netflix shook the business structure

Agenda




Discussion

Do you have the habit of waiting for a TV program to start?

Do you watch video online? Are they legal? (from a provider, such as Foxtel) or illegal? (For a Youtube channel)

Would you pay to for a Video on Demand product?

Do you have Netflix in your country?

Agenda




Conclusion and Recommendation

VOD is winning a fixed position in the society New habits will probably be irreversible

The sensation of having the power of choice will increase even more in the following years

The convenience of reaching any content anytime and anywhere will became regular


All parts of this market will need to adapt and improve their service:

devices industry - updated to video trends to produce devices capable to support the upcoming features

content producers and provider - develop a suitable scrip for the online viewer

telecom companies - provide high internet connection advertisement agencies – create campaigns avoiding

the traditional TV advertisement language


In a close world where options to get

entertainment will not be the main issue perhaps the next

challenge will be how to help the audience to choose what they will

watch…

Agenda




Reference List

‘The Multiscreen Marketer’, 2012. IAB. Retrieved 25 August 2013 from http://www.iab.net/media/file/The_Multiscreen_Marketer.pdf

‘The NPD Group: Average Monthly Pay-TV Subscription Bills May Top $200 by 2020’, 2012. NPD Group. Retrieved 25 August 2013 from https://www.npd.com/wps/portal/npd/us/news/press-releases/pr_120410/

Fitzgerald, B., qtd in Foley, M., 2013. ‘Here’s Why Content Providers Suddenly Adore Netflix’, Wall St Cheat Sheet. Retrieved 25 August 2013 from http://wallstcheatsheet.com/stocks/heres-why-content-providers-suddenly-adore-netflix.html/?a=viewall

Freudenstein, R. qtd in Griffith, C., 2013. ‘Just hit play: Foxtel launches broadband internet ground-breaker’, The Australian. Retrieved 25 August 2013 from http://www.theaustralian.com.au/australian-it/personal-tech/just-hit-play-foxtel-launches-broadband-internet-ground-breaker/story-e6frgazf-1226687739169

Netflix, 1997 (updated 2013) Retrieved 25 August 2013 from https://signup.netflix.com/MediaCenter/Overview

http://www.iab.net/media/file/The_Multiscreen_Marketer.pdf

https://www.npd.com/wps/portal/npd/us/news/press-releases/pr_120410/

http://wallstcheatsheet.com/stocks/heres-why-content-providers-suddenly-adore-netflix.html/?a=viewall

http://wallstcheatsheet.com/stocks/heres-why-content-providers-suddenly-adore-netflix.html/?a=viewall

http://www.theaustralian.com.au/australian-it/personal-tech/just-hit-play-foxtel-launches-broadband-internet-ground-breaker/story-e6frgazf-1226687739169



https://signup.netflix.com/MediaCenter/Overview

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