Ten predictions for digital media in 2018

Viktoria Holubniuk Blog March 16, 2018 | 0

1. There will be blood in the escalating battle amongst premium OTT video giants, as the market becomes over-saturated, early winners and losers are declared and Netflix finds itself increasingly in everyone’s lines of sight — including Disney’s and Apple’s.

Originals continue to be the primary weapon used on the OTT video battlefront, extending digital media’s “New Golden Age” for creators. We already know that traditional pay TV providers like Comcast will enter the fray in 2018, as will Disney, when it launches its own pair of “Netflix Killers.”

But Apple almost certainly will also join the premium SVOD fray in 2018. It’s all-out war in the premium OTT video world, as cord-cutting accelerates and traditional cable and satellite providers shed more paying subs.

2. Most other new premium OTT video market entrants in this beyond-crowded premium OTT video space — including so-called niche-focused OTT video services — will be swallowed up or simply languish, squeezed out by market leaders and the sheer scale of Google and Facebook, with which they simply can’t compete for ad dollars.

Google and Facebook already own about two-thirds of that global digital advertising market. That means that most OTT video players simply cannot succeed on ad dollars alone — and other means of monetization will be beyond their reach because they fail to deliver a sufficiently compelling, differentiated and emotionally connected media experience. Winners will swallow up losers in an environment of accelerating M&A.

3. The Hollywood community will begin to increasingly understand the power of new cost-effective technology-driven ways to test and measure new characters, stories and engagement in order to more smartly and efficiently place their big expensive bets.

Innovative new services like comics-driven motion book company, Madefire; mobile-first horror-focused company Crypt TV; and mobile-focused text storytelling company Yarn point the way. Meanwhile, Netflix, Amazon and Facebook will continue to mine their deep data about all of our hopes and dreams to maximize “hits” and minimize “misses” as compared to traditionalists. And they will increasingly do a good job at it, as they become more confident in their creative pursuits.

4. Spotify will go public at a lofty valuation, but those numbers and overall investor confidence will decline throughout the year, together with Pandora’s, as these two pure-play global streaming music leaders find it increasingly difficult to compete against “big box” behemoths Apple, Amazon and Google/YouTube.

Yes, Spotify and Pandora boast massive scale. Yet scale alone does not financial success make. In fact, pure-play distribution success leads to higher and higher losses due to sobering industry economics these pure-plays can’t stomach, but the behemoths can due to their multi-pronged business models. These harsh realities mean that investors of many pure-play streaming services will take a hard look at themselves in 2018 as they contemplate their strategic next steps. Many will realize that they can’t go it alone. And that leads to M&A, which brings me to…

5. One company’s struggles are another company’s opportunity, and successful “bigger fish” will step up their M&A efforts to acquire those companies that see no long-term path to making it on their own.

M&A is a hallmark of today’s overall digital, multi-platform tech-infused transformation of the media and entertainment business. Just like AT&T made its move to acquire storied traditional Time Warner in 2016 and Verizon closed its acquisition of Yahoo! in 2017, expect some more massive deals in 2018. Right now, Fox is reported to be chased by Disney, Comcast and Verizon for OTT video-driven reasons. And don’t just look within U.S. borders — there is no virtual wall in our borderless digital media world.

6. Data finally becomes a high-profile, high-priority “missing link” in the strategies of most media and entertainment companies that will try to correct course.

Virtually all traditional media and entertainment companies now openly covet Netflix’s, Amazon’s and Facebook’s user data, as well as how those services leverage that data to their seemingly untouchable advantage. The quest for data — and the services that provide, analyze and inform — take on new urgency amongst the traditional media and entertainment ranks.