Non-Linear and On-Demand

Much of the excitement around video is linked to the meteoric rise of YouTube through user generated content, and more recently, the growing competition from a plethora of social networking platform firms that are refocusing their strategies on video.  The rapid growth of Netflix, Amazon Prime and other on-demand services and various time-shifted applications (such as BBC iPlayer or DVR time-shifted viewing) have further fuelled the speculation about the demise of the linear, programmed TV.  Consumer expectations continue to grow rapidly, including higher resolutions, in-home storage, multiple devices and anywhere anytime viewing, which will facilitate the continued rise of non-linear, on-demand consumption of video. Despite all the excitement around on-demand video, however, it is linear programmed TV that is still dominating all major developed markets (including the USA and the UK), making up 80-90% of all viewing.  This pattern is unlikely to change fundamentally in the foreseeable future, simply because the economics underpinning video distribution could not support such a shift yet.  The total cost of delivering all video consumptions through the unicast, on-demand model is prohibitively expensive in comparison to the current cost of all video distribution.  Any additional revenues that can be generated from multiscreen, on-demand viewing simply cannot cover it.  According to IHS Technology Principal Analyst Ed Border, the dominance of the traditional multi-cast model of linear TV could continue for at least another 20-25 years.[1] Although the creation of non-linear, multi-device, on-demand services has not led to the demise of  linear TV, it is having a significant impact on how video is created, distributed, consumed, archived, and monetised.  In particular, by supporting the emergence of new business models underpinning video distribution, on-demand video opens up new opportunities for personalised marketing and e-commerce.  As the number of connected devices is projected to grow from 4.5 billion in 2015 to 9.6 billion globally by 2018[2] - with mobile phones and tablets making up the bulk of new devices- non-linear, on-demand, unicast distribution of video is projected to continue to rise rapidly, creating significant new business opportunities for different stakeholders. Alongside professional content based on pay-per-view or advertising, the most significant growth in on-demand, unicast viewing is in short, free, amateur videos, which do not function as an evening’s entertainment like cinema or TV, but often as a momentary diversion in the context of another activity.  Such short videos are also a main source of knowledge and information for a growing number of viewers, and YouTube has already become the second most popular search engine behind Google, making it one of the most important knowledge reference platforms in the world. In addition to economic constraints on video distribution, another important factor limiting the transition is that on-demand services (such as Netflix or BBC iPlayer) are great for delivering popular shows that the audiences know they want to watch, but they struggle to replicate the spontaneity of programmed or live TV, which are curated and arranged by highly trained experts.  Although on-demand, personalised viewing will continue to rise, people often cannot be bothered to curate their own content.  This is particularly the case for non-millennials, because programmed TV is an integral part of their lifestyles and daily routines.  Old habits die hard, and this will serve to slow down the transition from linear programmed TV to on-demand video consumption in the short to medium terms. [1] The future of video distribution. [2] Cisco Visual Networking Index: Forecast and Methodology, 2014-2019.

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