Latin America. If you have not prepared yourself to know all the changes that the competitive world of digital services and entertainment will bring us in 2018, do it now! Expect to see more OTT services launching, merging and, unfortunately, falling.
This year will be really exciting; many are plotting new routes or change direction altogether but definitely, all will try to bring the consumer on board.
What does the 2018 have? I tell you what I expect for this year:
1 VR and AR: Will 2018 be the year of both technologies? Augmented Reality (AR) - driven by major purchases from Apple (ARKit), Facebook (Camera Effects platform) and Google (ARCore) - will flourish during the year. The most important VR event at 2018: the Winter Olympics. This global event hopes to expand the VR-verse (Virtual Universe) as companies slowly move away from the annoying little ergonomic headsets. In 2018 we will find more light wearables like Google Glass and even suits that can make us feel temperatures, and even pain!
2 OTT continues to grow and the target on the back of Netflix grows. While Netflix continues to generate huge consumption figures and increase subscribers, other OTT services grow silently next to it. The niche services that feature content that Netflix does not have, including local broadcast stations, sports and events (and potentially pay-per-view specials), will grow.
3 The decline of cable TV is becoming more acute. In 2016, pay television continued to fall when it lost around 2 millions of subscribers; and in 2017, losses only in Q2 and Q3 were close to the 2 million. This year these losses will be higher, it is likely that they will reach the 5 million.
4 We will see a still more mobile world. In Ooyala we found that mobile video occupied the 58% of all video consumption in the third quarter, being the sixth quarter continuous growth in that segment. We believe that these numbers will surpass the 60% in the first half of 2018, this as more wireless service operators press with more OTT content-both SVOD and AVOD-to customers and to the extent that the prices of data usage mobile phones decrease worldwide. There has been a similar growth of long-form video on mobile devices: smartphones are reaching tablets as the preferred viewing device.
5 Amazon and its new plays in sports. Amazon spent 50 millions of dollars to broadcast 11 NFL Thursday Night Football games at 2017, a grain of sand compared to what they plan to spend on 2018, seeking to become the new generation's sports channel. The 2018 bid is, among others, for the English Premier League broadcast rights, which cost $ 1.3 billion for the last three years. Also this year, Amazon closed a deal for rights to broadcast 37 ATP World Tour tennis events live for the UK and Ireland.
The company will also have to decide if it wants to maintain the rights of the NFL Thursday Night Football, which probably carries a higher price is 2018.
6 Content spending will reach new heights in 2018. Netflix plans to spend $ 8 billion USD to produce content in 2018; Amazon will spend almost $ 5 one billion USD, and HBO $ 2 one billion. Apple plans to invest $ 1 billion or more, just like Facebook, and if exclusive live sports are included, those numbers could grow even more. Content costs will continue to rise, driven by competition among distributors.
7 The slow decline of traditional advertising. The advertising industry is finally understanding that the future lies in interactive ads and sponsored programming. In short, they must make a radical change in how advertising is consumed. Expect to see lighter advertising loads on AVOD sites, better segmentation and more agile campaigns using data and new technology.
8 Penetration of the use of data, Artificial Intelligence (AI) and machine learning. This year, more devices will use voice biometrics to help us find content. Dragon TV from Nuance, Apple Siri, Google Home and Amazon's Alexa are taking advantage of AI and machine learning to help us find what we viewers want to see without having to write titles, names or genres. Artificial Intelligence will stop limiting itself to improving discovery and recommendation: companies will start to reap the fruit of targeted advertising on mobile devices used at home and abroad.
9 More mergers and acquisitions of companies in media and entertainment. It is unlikely that the US government ends up blocking the acquisition of Time Warner for $ 85 billion USD proposed by AT & T - the key is in the guarantees that AT & T delivers to make their actions fair for consumers. That will not be the only big business: Disney will close a deal to acquire several assets of Fox and I can predict the deal will be closed in 2019. These offers will likely give rise to additional offers to feed the insatiable appetite for consumer content.
I am sure that I am not the only one forecasting what you expect for next year. I would like to listen to what you think will be the most important trends for this year.
Text written by By Jim O'Neill, principal analyst at Ooyala.