Television viewing habits are being transformed rapidly by new technologies that are coming up in recent times where we have devices that enable us to watch everything that traditionally depended on TV for transmission. Subscription Video on Demand (SVOD) technology is already sending shockwaves through the broadcast world. Top Gear BBC presenter, Jeremy Clarkson’s recent revelation that he will be making a new show on Amazon Prime may after BBC dropped him is an example of such shockwaves. Netflix and Amazon already control 15% and 5% market share of British homes.
Comparative Advantages of SVOD Services
Apparently, the number of people owning TV sets is falling whereas the number of those subscribing to SVOD services like Netflix, Amazon Prime, and Sky Snow is rising steadily. In the US for instance, media consultancy firm SNL Kagan did research that revealed that uptake of SVOD is edging out the traditional cable, satellite, and other pay TV. The SVOD services were found to be comparatively of lower cost and fast. This reality translates to skyrocketing revenues which Mintel projects will have increased from £437m to £1.17bn for the period between 2014 and 2019.
Another advantage of SVOD over a traditional cable company, for example, is that whereas the latter are tied to programming schedules where they have to fit in a vast selection of channels, the former have no schedules at all to worry about. They, therefore, enjoy total control over the programs they can stream and this gives them the ability to target programs at specific audiences who can ensure them high revenues.
Therefore, traditional television broadcasters are facing stiff completion from SVODS regarding bidding for broadcasting deals a BBC TV’s, Danny Cohen admitted last year that Netflix had out-bided BBC in one lucrative deal. Mr. Clarkson’ show has a global audience of 40 million subscribers and costs £160m for three seasons.
Emerging Technology is Increasing Accessibility of SVOD Services
Unlike in the past where SVOD services could only be accessed on laptops or desktops, today, smart televisions are bridging the gap. Some technologies enable viewers to beam wireless content quickly other devices to their smart TVs. Such technologies include Amazon’s Fire Stick and Google’s Chromecast.
Interestingly, some services like Virgin’s Tivo provide their viewers with Netflix as a package.
Limitations of SVOD
SVOD services depend on internet bandwidth. Very slow or average download speed hinders accessibility of SVOD services. Many connected devices competing for one slow bandwidth, result into jerky, stuttering pictures according to Michael Underhill of Enders, a media consultancy firm puts it. He adds that internet speed in the UK is 23Mbps. In such cases, ultrafast Wi-Fi connections of 100Mbps and above required to sustain SVOD’s growth.
TV Broadcasting Companies Leverage over SVOD Services
SVOD accounts for 3 % viewing in the UK while mainstream television channels account for 90 %. Mr. Underhill notes that very few people access Netflix, Amazon, and other companies. He maintains that “While Netflix programs are accessible, only existing broadcast content is viewed most.” He goes ahead to add that Netflix has been made accessible by the content that is funded and created by BBC and ITV. This view is supported by that of Ofcom which holds that SVOD services are a “complementary” form of seeing used to watch and download movies and TV series from the US.
Moreover, traditional TV companies have gone digital which together with free video-on-demand services YouTube services offer fierce competition to SVOD. Traditional broad asters are catching up with their digital video platforms.
Underhill also notes that Netflix produced dramas do not attract mega audiences like “Downton Abbey” “Strictly Come Dancing” and others despite critical acclaim. He says that Netflix does not show interest in shows like X-Factor, Essex or Springwatch as well as live sport and news. Areas that are covered by TV broadcasting companies.
In conclusion, according to Mark Mulligan, despite Clarkson’s shift to SVOD, it is less likely that his career remains robust like before with the online paycheck of a SVOD service whereas his former show at BBC, “Top Gear” may reinvent itself without him. PwC’s Phil Stokes notes that while Chris Evans needs not be too worried, traditional TV companies must innovate. Such companies must avoid being complacent and change with the times to fit in the competitive market.