The Videolution: New/Old Wine in New/Old Bottles and More

By Mika Skarp

Video now consumes a whopping 50% of mobile Internet traffic and nearly 60% of all Internet traffic. By the year 2020, video consumption on mobile alone is predicted to top 90% leaving carriers bracing for a storm they're uncertain they'll be able to weather. Remember that this not only represents an increasingly large portion of all traffic but an larger portion of a rapidly increasing total amount of bandwidth consumption.  What are the business models that will support that kind of demand going into the future and what opportunities are to be reaped for those who rise to the challenge?

To understand how we got to where we are today in the world of online video it's good to look back at where we've been and the many sea-changes that have occurred. It's amazing to think, but it wasn't even that long ago that all video was consumed either on television or in the movie theater. Delivered and consumed within a highly centralized mass media structure, producers and distributors enjoyed complete control over all distribution channels. While the advent of the VCR and the home video market forever changed the film business, traditional, linear, broadcast TV charged on maintaining a total monopoly on distribution networks, be they plain old over-the-air-transmission, satellite or terrestrial cable.

True to the principles of capitalism, this control over distribution translated into equal control over what kinds of content would be produced and transmitted. While in the beginning there were at best three or four broadcast channels all programmed for real-time consumption and no way to avoid advertising. While VCRs took a small bite at this, it wasn't until the arrival of TiVo, the first PVR service, that consumers could exact any real programmatic control over the content stream in their homes.  And just as with the oft-maligned one-size-fits-all cable TV packages the message consumers were sending came in loud and clear. They wanted more choice and more control over the content they consumed. The only problem was that linear, single steam TV services capped out an certain number of simultaneous channels. Thus traditional broadcast TV was forced by technological limitations to play the increasingly unpopular role of content gate keeper. 

Fast forward a decade to the confluence of Cable Internet and TV services over DSL and Fiber and the issue of channel limitation quick evaporated. And just as quickly it opened up a whole range of new specialty channels targeting niche viewer segments. So while the channel owners, namely the carriers, were still gate keepers, they become proportionally more liberal in that task.

But the really dramatic change came with OTT TV and a complete liberalization of video distribution. No longer reserved for a handful of broadcast channels or rapidly converging Telcos, but literally anyone on the planet who had a digital camera and an internet connection. 

While technically there are still some issues because there is no control of distribution networks, OTT TV works on the basic premise that consumers want content on-demand, period. Netflix's $6.7 Billion in revenue in 2015 would suggest that the idea has legs.  In the near future we should expect to see equivalent of Spotify for video; a place where you can find everything ever produced with or without advertising.

From a content producer perspective it's a field day of opportunity as there are many more channels and many many more potential buyers. This dynamic partly explains the rise of independent producers and the often touted "new golden age of television" that we're still currently in. But it also presents a challenge for producers when it comes to getting paid. As any independent artist on Spotify knows, the reality of global distribution and even niche popularity doesn't translate into big checks. In this model, the only producers that get paid upfront are those with marquee name recognition as it's only those star-driven vehicles that make any money.  And now we come full circle, as advertising is once again central to many of these new distribution models and can once again be inserted into the stream, but now hyper targeted at the viewer level. While it may feel like an unpleasant return to another era, that's the price of getting high-quality, high availability content on-demand. But the good is unquestionably good. Producers and distributors can at last build on the long promised long tail of content, including multilingual programming, while advertisers can spend their dollars more effectively. This undoubtedly opens up large new markets, but fierce global competition as well.

Despite the sequential sea-changes in content production and distribution to the digital home, the big opportunity lies with mobile. Already video represents the primary use of handheld devices. And while it's possible to use Periscope or YouTube live to make live broadcasts, it's not yet in the mainstream.

In Finland we've recently been introduced to the inclusion of helmet camera-sporting referees for inclusion in feeds to air during live broadcasts. It's an interesting new element, but needs improvement. For example the lack of zoom makes it a bit limiting. But perhaps most interesting are the developments in Virtual Reality, and here, we're already seeing some shows filmed in 360° allowing viewers to place themselves within the video space and select the angle they prefer. It's not a stretch to assume that VR equipment will soon allow us to broadcast our very own 360° view to the internet. 

The idea of bringing VR into sport broadcasting is an interesting concept, but will need to bring several POV streams together to make for an interesting show. Certainly this would take the concept of crowd-sourcing TV content to an entirely new level. This will open up new issues about content ownership, when an individual's POV is the center of attention. It's probably an easy guess of who would win that battle but it all brings to the fore an interesting direction for more immersive, more immediate forms of entertainment. All of them with enormous bandwidth demand and equally enormous potential business opportunities.