It is a tradition for us at TVersity to try and make new year predictions related to the TV industry and while we usually do not publish it, this year we decided to do just that. Hope you find it interesting.
The transition from TV channels to TV apps will continue in full force as HBO launches its direct to consumer offering and others rush to do the same — this one is obvious, the announcements were made late last year and unless something unexpected happens we should see HBO, Showtime and some other content providers dropping the pay-TV subscription requirement.
HBO will not get it (the price) right initially but they will keep at it until they do — HBO is walking a fine line with their direct to consumer offering, trying to avoid cannibalization of its pay-TV subscription revenues and in the same time make its new service competitive with Netflix. This is so difficult that they are more likely to stumble initially then succeed, however they will presumably keep trying and eventually they should get it right (probably not in 2015 but maybe in 2016).
More original content exclusive to the web will further erode the perception of Cable value among consumers — The abundance of great web-only content (Netflix and co.), and the weakening of cable-only content (HBO and Showtime) will undoubtedly continue to erode the value of Cable, leading to the dreaded cord-cutting phenomenon.
The Internet will finally make a dent in the pay-TV market share — Every once in a while there is a trend that is obvious to all (or most) in its inevitability yet no-one can accurately predict the timing in which it will go mainstream. Cord cutting appears to be one of those trends and as a result it has been both over and under hyped in recent years. Unlike other areas, TV seemed immune to Internet disruption for a very long time. The appeal of the subscription business model of pay-TV, made it hard for TV eco-system participants to do anything that jeopordizes it. Yet the growth of Netflix beyond 50M subscribers along with the abundance of original content exclusive to the web, are finally forcing some eco-system players to make disruptive moves. If all goes well, by the end of 2015 the number of US houdeholds subscribing to pay-TV will start to decline (as opposed to staying flat in 2014) but the overall market-share decrease will continue to be small enough for the big MVPDs to write off. In this respect many of the big MVPDs are behaving like the three wise monkeys and I suspect they will continue to do so in 2015.
Virtual MVPDs will flop — Common wisdom suggests that the Internet creates an opportunity to re-invent TV distribution and consumption. However history has taught us again and again that translating the pre-Internet model to the Internet without true re-invention simply does not work. Virtual MVPDs are destined to repeat past mistakes, yet some deep-pocketed ones will keep at it and may eventually produce a valuable niche service (if this last part indeed happens it probably won’t be in 2015).
Smart TV increase in market share but decrease in usage — TV set makers will continue to force consumers to buy smart TVs and consumers will continue to prefer devices like Apple TV, Chromecast (a new model will probably be released in 2015) and Fire TV over the smarts built into their TV sets. Dumb TVs are the future baby but it will take several more years for the TV makers to get it.
Established in 2005, with headquarters in NYC and R&D in Israel, TVersity offers a comprehensive software platform and a suite of solutions for operators, service providers and smart TV vendors that solves the PC to TV, Mobile to TV and Web to TV problems, utilizing set-top boxes, connected TVs and mobile devices. TVersity also offers the leading DLNA media server to consumers.
Also published on LinkedIn