One of the biggest takeaways from 2018 is that streaming is here to stay, and for pay-TV providers hemorrhaging traditional TV subscribers, buying media has become an expensive way to potentially make up for those losses.
The most notable example of this was AT&T's $85 billion takeover of Time Warner this year. The acquisition is being used primarily to create streaming properties that customers can specially access with network subscriptions.
The other side: Early positive earnings results suggest that AT&T's investment seems to be doing all right for the telecom giant, but Verizon's strategy to spend $10 billion assembling a digital media business has played out much worse. And not all telecom executives think an original content strategy makes sense.
By the numbers, highlighting streaming dominance in 2018:
- Younger generations are primarily streaming TV: Americans collectively spend nearly 8 billion hours per month consuming content on connected TV devices, according to Nielsen's latest OTT (over-the-top) TV report. But younger generations are more likely to stream. In total, 61% of young adults in the U.S. watch mainly streaming TV, per Pew Research Center.
- Streaming drives new shows: The number of scripted streaming shows overshadowed the number of basic cable and broadcast shows for the first time ever, according to new 2018 projections from FX Network Research.
- Demand is high for streaming originals: New research by Parrot Analytics and Kagan, a media research group within S&P Global Market Intelligence, shows demand for Netflix Originals is estimated to overtake the share of demand for licensed titles by October 2019.
- Streamers continue to take home awards and talent: Netflix made Emmy history this year by tying a traditional broadcaster (HBO) in taking home the most awards. Netflix, Amazon and others also continue to steal high-profile TV talent. Netflix announced Monday that it tapped another former ABCer — this time ABC Entertainment president Channing Dungey for VP, original content.
Between the lines: For now, Netflix is the dominant SVOD (subscription video on-demand) service with the most subscribers and programming, but that could change when new streaming giants (AT&T, Disney, etc.) launch their services and take their valuable franchises with them.
- According to research firm MoffettNathanson, of the top 50 shows of all time (based on IMDB rankings), 22 are currently licensed to Netflix, 16 to Hulu and 5 to Amazon Prime. (The remaining 8 aren't currently licensed to an SVOD.)
- We saw how these deals play out two weeks ago when AT&T agreed to license "Friends" (which it now owns through its Time Warner acquisition) for $100 million through 2019, despite the fact that it could've used that exclusivity to bolster its own streaming service. Still, the company decided the money was well worth it. (Netflix was previously paying $30 million for the franchise.)