On demand streaming services as a major threat for traditional television?

Let’s be honest, who of us really does watch “traditional” television? By that I do not mean using the television as a medium for watching anything, but actively watching news, shows, series etc. on it.

I don’t. And I know a lot of people who don’t do it either.

Why is that? I either check news on my smartphone or watch Youtube channels like “LeFloid” etc. for additional information. If I want to watch a series, I do not want to wait for a certain timeslot in television to do so. I want to be in charge of when and how much I consume of something. Personalized, quick and easy.

Since one does not have an influence on the traditional television program, on demand services like Netflix, Maxdome, Watchever and so on emerged. And they are growing enormously. People like the idea of having a broad selection of movies and series to watch whenever they like, including the ability to pause and resume at a later time. You furthermore have the possibility to choose between packages (including HD quality, number of simultaneously usable devices etc.) for different prices. The basic price mostly is below 10€ per month, which I think is fair for an unlimited access to all kinds of entertainment.

This business model is predominantly aiming on a younger generation (14-35), because a lot of series, which are a huge success story lately, are also aimed at this generation. The generation Y has kind of grown into this developments and rising variety of entertainment, while the older generation widely still is in favor of traditional television.

The phenomenon of on demand services though is not only observable in the television industry but also massively in the music business. Spotify is to name here for example. Why would I buy a physical record or pay for a single song on Itunes or where ever, if I could just pay a monthly fee for unlimited access to a truly huge music library with on demand music streaming – all savable in a digital music library of course.

Naturally, the threatened industries like television are aware of this situation. It does not hinder them to raise ridiculous monthly fees for everyone though – at least in Germany. Whether you own a television or not, you have to pay a monthly fee of currently around 18€. The justification for that is, that you could possibly own another device (like computers etc.) for consuming public television. It is not important if you really do consume. So this is actually not a fee, but rather a hidden tax.

Even more ridiculous is, that you have to pay this fee for every private residency you own. If you permanently live in Munich for example and have a beach house at the north sea in Germany, you are charged twice. One could now think, that you then at least have no commercials at public television, but that’s not the case. Meanwhile there is a lot of commercials in German public television – that means you pay for watching commercials. Great. Additionally, the content produced by ARD, ZDF and so on is redundant and does not meet my expectations and interests at all.

But let’s prove the potential of demand services (here on demand video) with some numbers.

Screen Shot 2017-05-16 at 16.01.36

The illustration above shows the revenue development of video on demand (VoD) services (deep blue) from 2007 until 2018e in million € in Germany. With regard to the compound annual growth rate of 22% over the last 4 years, one can’t deny the related disruption potential.

On demand services definitely will further evolve and eventually succeed the widely outdated current means of entertainment consumption  – sooner or later.

What do you think about that?

Kind regards

Luca

Picture source 1:
https://www.google.de/search?q=video+on+demand+entwicklung&client=firefox-b&source=lnms&tbm=isch&sa=X&ved=0ahUKEwic-JCgyfTTAhUCBSwKHV9-ATAQ_AUICygC&biw=1440&bih=711#imgrc=2i0t8t6EvEKUGM:

Picture source 2:
https://www.google.de/search?q=on+demand+streaming&client=firefox-b&source=lnms&tbm=isch&sa=X&sqi=2&ved=0ahUKEwj4yaisy_TTAhXGFSwKHa3zDhkQ_AUIBigB&biw=1440&bih=711#imgrc=8iYdCAqkWKy8JM:


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