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Evolution of Platforms

Evolution of Platforms

Evolution of platforms refers to the changing standards and expectations for broadcasting and media distribution.

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Amy Tomlinson Gayle
Amy Tomlinson Gayle edited on 23 Jun, 2021
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From the introduction of television in the 1940s, the media distribution and broadcasting standards were relatively stable until the introduction of video-on-demand (VOD) or, television-on-demand (TVoD) and over-the-top (OTT) service providers, which changed the way people choose to consume media. This includes greater flexibility for the format of viewing and different quality of content provided by these services, which has led to traditional or linear television losing ground to the new platforms like Netflix, Amazon Prime, YouTube, and Disney Plus.

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Following the approval of a color standard, NBC made the first color broadcast in 1954. Besides the increasing popularity of television and the emergence of color television, the 1950s also saw television broadcasters move away from adapted radio broadcasts totoward producing content specifically for the medium, including dramatic anthologies such as The U.S. Steel Hour in 1953 and Playhouse 90 in 1956.

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Broadcasters also began offering news programming with footage to accompany the coverage, rather than relying on newsreel companies as had been done previously. During this decade, advertisers often sponsored an entire program, until the expected length of those programs increased from fifteen minutes (adapted from radio broadcasts) into thirty minutes; this led to increased sponsorship costs and the introduction of multi-advertising breaks in a single program. As well, shows such as Today and The Tonight Show, began to be screened daily, rather than weekly, and further increased the cost of sponsorship.

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Digital video recorders (DVRs) created a sea of change in the way consumers were able to watch shows. Previous to the introduction of services such as TiVo, consumers were able to purchase satellite or cable television packages where time-changing channels were available. Time-changingTime changing allowed consumers to watch shows in a different time zone for some viewing flexibility. But the introduction of DVR allowed users to record shows to watch later and at their convenience. DVRs also offered consumers a chance to record not just new, but also older episodes of a favorite show. Advertisers also used DVRs to track which shows were being viewed and offered targeted ads for these shows, which raised concerns from consumer groups and lawmakers.

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DVRs grew in popularity, to the point that traditional broadcasters and cable providers included DVR systems in their products, removing the competition from third-party DVR services. At the Whilesame time, the internet began to emerge as the new medium for entertainment and created a major shift to the television industry. This brought the same difficulty and challenges to television that the internet brought to other industries, such as newspapers, magazines, the music industry, video rentals, and bookstores. One of the major changes the internet offered was the ability to pirate movies or television shows, which offered anyone with the interest and an internet connection a chance to watch, illegally, anything they wanted at any time.

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YouTube was created in 2005 by three PayPal engineers. The service was initially intended to be a social media platform for users on which to to post, upload, share, and view video content on, and to be capable of allowing users to upload, share, and view content without restrictions. This,in turn, saw users upload personal videos, television clips, music videos, and movie clips that could be viewed worldwide. Unlike other services emerging around the time, such as Napster, YouTube navigated copyright infringement lawsuits by forming agreements with media corporations.

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In 2007, YouTube also launched the first mobile application of the site after Apple launched the first iPhone, further creating a platform that could be viewed anywhere and at any time. This is the same year YouTube launched its first ads on videos, which are semi-transparent banner ads that pop up on the lower section of the video during video play and cannot be clicked away for a few seconds.

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YouTube continued to develop services, such as the company's partnership with Vivendi, to launch Vevo, which was developed in response to complaints about piracy and unfair licensing terms for music videos on the platform. As part of the deal, Vevo distributed music videos on YouTube, which led to Vevo's massive presence on the platform. And alsoThis turned the platform into a go-to platform to see artists' new music videos, and for artists to launch those videos.

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After the popularity of some of the platform's services, YouTube has created themed spaces for these interests orand services. This includes the development of YouTube Kids, which is a family-friendly version of the platform that filters content to ensure it is safe for minors. By 2020, this service attracted more than 8 million weekly users. And YouTube Gaming was launched as a way for gamers to livestream play sessions with a live audience they can interact with in real time, and is meant to counter Twitch.

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Later, YouTube launched YouTube Red, a subscription service that lets customers watch videos and stream music without ads and offers access to exclusive content. This was later renamed to YouTube Premium, which spun off the music streaming service to a separate service called YouTube Music. And, inIn 2017, YouTube launched YouTube TV, an on-demand streaming service launched in select markets. This proliferation of services and options has allowed YouTube to compete in most avenues of the entertainment and broadcasting services and to compete directly with television and be part of the change in the consumption of media.

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However, unlike YouTube, Hulu was dependent on the networks for its success, because Hulu iswas only successful through the use syndicated programs. And as Hulu grew, networks became more concerned over threats the program had to the financial underpinning of cable TV, by reducing DVD sales and avoiding carriage fees. Broadcasters began to pull popular shows from the network. And following more disputes, Hulu turned off support for Boxee, which was an over-the-top (OTT) service that allowed users to watch Hulu on their television. Until and after the shut down of support for Boxee, viewers were only able to watch Hulu on their computers. During this time, cable networks began to offer streaming for free on their own websites to stop viewers from watching elsewhere and generate additional advertising revenue. This began to affect the quality and quantity of advertisers that Hulu was able to attract. As well, Hulu was unable to produce any compelling original content to convince consumers to move to their platform.

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By 2011, Hulu was short of revenue targets, and equity stakes in the company began to be sold by large shareholders. This saw Disney, by December 2017, take a 30 percent stake in Hulu. And, with With Disney's acquisition of 21st Century Fox in 2019, increase Disney's holding increased to a 60 percent interest in Hulu. But it took untilIn May of 2019 for, Comcast to relinquishrelinquished control of Hulu to Disney and for the streaming service to becomebecame a division of Disney and, with Comcast becoming a silent partner. This made Hulu a third component of the company's direct-to-consumer strategy, which complemented the company's sports streaming service ESPN plus and the then-forthcoming Disney Plus.

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Due in part to the limitations of the streaming agreements with Hulu, Disney restructured the company to move Hulu's Scripted Originals team under Walt Disney, meaning the team reported to the chairman of Disney Television Studios and ABC Entertainment. And as of November 2019, FX and Fox Searchlight supplied Hulu with content. This ended with Disney in 2020, eliminating the role of the Hulu CEO, and integrating Hulu into the Disney business model as the company continued to reorganize the business with a greater focus on streaming.

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While not directly comparable, in that Disney Plus was able to launch with Disney's catalogue of classic children's movies and content from the Marvel and Star Wars franchises, Quibi focused on developing original content specifically for the platform. BothDisney Plus and Quibi launched around the same time and needed to navigate the COVID-19 pandemic early in their existence. And both handled the pandemic differently.

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For Quibi, the company was launching with the mobile-first, if not mobile-only, format for the platform intended not to compete with other VOD platforms such as Netflix, Hulu, or Disney Plus. Except around this time, services such as Netflix, Amazon Prime, and Disney Plus were adding to or announcing the upcoming ability to download select content to allow subscribers the opportunity to watch content on their mobile devices without data cost concerns, and competing directly with Quibi. Quibi sawdid not see their potential viewingviewers as a primetime audience not as a primetime viewers, but rather as those viewing content on-the-go between 7 a.m. to 7 p.m. This had Quibi competing with the download capabilities and multi-platform capabilities of the other platforms, and competing with the viewership of YouTube or TikTok, both of which have massive catalogues of user-generated content.

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However, Quibi came with a subscription cost, which was presented as low-cost—offering a subscription for $4.99 per month with advertising or $7.99 per month with no ads. However, compared to Disney Plus offered better value at launch, which launched at $6.99 per month and, offered cost bundles with Hulu and ESPN Plus, and without advertising at that price, offered better value at launch, even without newwas contentadvertising-free. And, Quibi offered a free-monthfree month, which, after the first few months, was found to have less than 10 percent of conversion,; meaning in April 2020, the platform saw an estimated 910,000 users, but by the end of the trial period, there were an estimated 72,000 users paying for a subscription. Paired with a lackQuibi oflacked features in the application, especially the lack of OTT or casting support at launch, and an inability to take screenshots or captures; overall, the platform's rollout faltered.

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By October 2020, Quibi announced they were shutting down, six months after launch, andafter failing to gain traction. The company, in part, blamed the COVID-19 pandemic, despite the increased screen time during the pandemic, and the competitiveness of the streaming landscape.

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Although Disney was able to launch their streaming service with an anticipated $1.8 billion to keep the service afloat, which Quibi did not necessarily have, and despite the platform's comparable 11 percent conversion of early free trials, Disney Plus saw 9.5 million people sign up for the platform in the first three days of availability in the United States in Canada. These early subscription numbers were propelled by the catalogue of classic Disney films, and also by the anticipation for The Mandalorian show, which offered original content on launch that was exclusive to the platform.

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Arguably Netflix is the most popular and successful of the streaming platforms, and is the first service to begin to convince consumers that they could do without cable subscriptions to linear television providers. The company was founded in 1997 by Reed Hastings and Marc Randolph as a video-rental company, where users paid a flat monthly fee for as many movies per month as they wished, but with a limit on the number of DVDs in their possession at one time dictated by the their subscription plan. By 1999, this service was offered online.

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Part of Netflix's early success, especially compared to rival Blockbuster, was the ability to use the company's website for suggested rentals based on a viewer's rental history. In 2006, in order to continue to develop this capability, Netflix launched a $1 million contest to see if anyone could improve the company's recommendation system; this was awarded three years later to BellKor's Pragmatic Chaos team. By 2007, Netflix began to offer subscribers the option to stream some of the platform's television and movies, with most subscription plans offering unlimited streaming. And theThe company partnered with manufacturers of video game consoles, Blu-ray players, and related consumer electronics to offer the streaming service built in. The success of the streaming-only service saw the launch of a streaming-only plan, offering unlimited streaming but without access to DVD rentals.

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These cancellations were due, in part, to licensing and exclusivity deals, with One Day at a Time produced by Sony Picture Television and, not Netflix, and therefore costing more than it could be deemed to be worth in viewership. Another example was theNetflix's fight on the part of Netflix to keep the television show Friends, which led the streaming service to pay $100 million to keep the sitcom on the site; but the deal was not a non-exclusive deal, allowing WarnerMedia, the show's rights owners, to shop the show around to other streaming services. This kind of proliferation can lead to multiple services and platforms offering the same shows and undercut the competitive positions of the streaming platforms, while benefiting the cable networks and original producers of the content.

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Furthermore, the streaming service landscape is beginning to grow in a resemblance of the plethora of channels, with each broadcaster or cable provider offering their own streaming service, similar to Disney Plus or, HBO Max, orand NBC Peacock, but extended to TNT or, TBT orand CW. Although oversaturation in the market would depend on the technological availability and the geographical availability of these services, in the United States it would lead to an increase in saturation which could push the market towards television, where the relative cost of multiple channels could be less than streaming services, and especially if those channel packages were able to be personalized, or it could lead to greater market domination by the more widely adopted streaming services.

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OriginallyOTT devices were originally named for devices that go "over" a cable box to give users access to TV content delivered via an internet connect rather than through a traditional cable provider. This includes devices such as smart TVs, Apple TVs, Chromecast, PlayStation, Xbox, Amazon Fire Sticks, and related devices. OTT viewing has increased as people have left traditional cable subscriptions in favor of streaming platforms. And for traditional cable providers, the ability to develop programming for OTT devices, either with a focus on local content, or on live broadcasting, would allow those services to retain or increase viewership. OTT could also offer traditional cable providers or networks to offer diversified content and develop OTT specificOTT-specific content. The providers of OTT devices are developing similar resources themselves to give consumers either region-specific or device-specific content for entertainment or information.

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Streaming services have been able to develop algorithms and recommendation engines to preclude the need for consumers to browse shows and instead offer a tailored library for the viewing habits of an individual consumer. This has driven the pressure to unbundle cable as consumers have grown accustomed to personalized choice. And, asAs these services continue to mature their recommendation engines, the platforms are able to better serve the viewers. As well, the streaming platforms have been able to disambiguate their offerings from advertisers while being successful. This is especially important as consumer concerns around undue influence of advertisers on programmers and their content has grown, which could push traditional cable providers to unbundle and offer a direct subscription model. Although it is more likely a hybrid model will emerge, where subscription fees are paired with limited advertising.

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As more potential viewers move to subscription services, traditional media has turned to social media, where news streams can be found on Twitter and Facebook, and further. The partnership withbetween social media companies offersand antraditional avenuebroadcasters forallows both social media companies and traditional broadcasters to grow user bases and keep viewers informed. One example has been YouTube, which has offered traditional media organizations a platform to present new content. Furthermore, there has been a suggestion that a service offering a single subscription to allow users to watch content from multiple streaming services, similar to traditional channels, could enter a role known as "super aggregator," which would focus on aggregating rather than creating content. The challenge with this model beingis the streaming services have provedproven unwilling to license original content to other broadcasters or streaming services, as these shows and movies are considered competitive advantages as much as content.

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However, in a reversal in the trend, Netflix offered a linear television channel in a pilot program available in France. The channel was presented as a remedy for viewing indecision, and continued the traditional nature of Netflix binge-watching by offering up to five episodes of the same series back-to-back. And, inIn what seemed like a backwards move, Netflix Direct offered the streaming service as a promotionpromotional tool for those used to linear television as a chance to experience Netflix content and encourage new subscribers to join the service. As well, if offered to a wider audience, it has been suggested that Netflix would use Netflix Direct to release anticipated episodes in a fixed-time event. This way, the streaming service could turn the new episode into a viewing "experience" with a chance to go viral, similar to traditional showshows on air times and live events.

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And, forFor some regions, this would also offer Netflix a better "media chronology," which dictates when a service is allowed to receive a film. In the media chronology, a film is allowed to be released on DVD or Blu-ray four months after release, is broadcast on a free television channel twenty-two months after, and is 22 monthsavailable after,on whilea streaming service have to wait forafter 36 months. ThatNetflix couldDirect would be able to compete as a television channel and would accelerate Netflix's schedule by 14fourteen months and allow them to compete.

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While streaming services have gained ground on a broad front, linear television remains the go-to place for popular live content, such as sports and major events. And TV and video advertising is adapting to new formats for greater personalization, made possible by greater amounts of user data and the increase in fast fiber optic networks and 5G, which can enable greater amounts of data for advertisers. These advances will also offer greater mobile consumption options. And, asAs subscription services and, linear television, and, to a lesser extent, social media platforms, work to create more benefits for consumers, there is an expectation for an increase in network neutrality. Come 2030, there are many possible scenarios for where the television and video industry could end up, which could be summed up in four overarching models or scenarios: a universal supermarket, content endgame, broadcasters return, and lost in diversity.

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Although all of these scenarios are likely, what is more likely is that different regions will see different outcomes, with countries or regions given to strong regulations influencing outcomes in certain directions, while countries or regions favoring little to no regulation seeing a different outcome. And countries with strong national programs offering yet another altogether different end resultoutcomes.

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This scenario would see platform companies taking over from broadcasting companies and working like a supermarket does for retail goods, with the platforms aggregating the services from multiple streaming services to create simplified digital platforms where artificial intelligence helps to offer users a more personalized experience. The differentiator between digital aggregation platforms would come down to exclusive content and live sports offerings, which would be where they compete. But in this scenario, traditional linear television broadcasterbroadcasters would cease to exist in favor of these platforms, which are capable of offering the few services linear television still offers, while also being divorced from an advertising revenue model. This would be especially difficult as more advertisers would, in this scenario, move away from traditional or linear television in favor of the more popular platforms, drying up the well of money that traditiontraditional linear television has come to rely on for revenue. This scenario would require regulators to stay hands off to not regulate the offerings from digital platforms.

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This scenario would see content owners taking over the market with vertical integrations along the value chain, including video, television, distribution, and personalization services. As well,Content thisowners would see content ownersbe withdrawing and withholding content from digital platforms, in favor of distribution through their own platforms where they can reach consumers directly. This would see mostMost competition and diversification would happen in content, while recommendation, search, and related features would not factor into consumer choice. In this scenario, the ability for broadcasters to develop local content would seehelp them continue to survive and develop into content suppliers. For this scenario to work, protections from regulators would be necessary to stop the content owners from buying the local broadcasters. And digital platforms would turn into distribution platforms focused on technical distribution with freemium features driving revenues.

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This scenario would see broadcasters successfully switch to digital platforms and evolve into digital platforms with direct customer relationships and the capability to deliver on-demand products. This would require broadcasters to develop cognitive computing for targeted advertising and personalized recommendation functions. This would see a market structure where broadcaster and digital platforms coexist, with broadcasters focused on local content and digital platforms supply global productions. And this would give consumers the choice to watch linear or non-linear content. This would also require cooperation between local networks and network operators to help traditional broadcaster deliver digital media distribution and customer data, to develop platforms for broadcasters which could use the viewer data to further personalize advertising, which in turn would see advertisers help broadcasters implement these advertising structures in their digital distribution platforms. For this scenario to work, there would need to be strong media regulation at a national level that would favor broadcasters over digital platforms.

In this scenario, broadcasters would successfully switch to digital platforms with direct customer relationships and the capability to deliver on-demand products. This would require broadcasters to develop cognitive computing for targeted advertising and personalized recommendation functions. This would see a market structure where broadcaster and digital platforms coexist, with broadcasters focused on local content and digital platforms supplying global productions. This would give consumers the choice to watch linear or non-linear content. This would also require cooperation between local networks and network operators to help traditional broadcasters with digital media distribution and customer data, to develop platforms for broadcasters that could use the viewer data to further personalize advertising, which in turn would see advertisers helping broadcasters implement these advertising structures into their digital distribution platforms. For this scenario to work, there would need to be strong media regulation at a national level that would favor broadcasters over digital platforms.

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This scenario would see the television and broadcasting market develop into an even more diverse market with no dominant players. Consumers would instead be served by many distribution platforms offering a richness of content with a steady turnover of players in the market. In this scenario, itIt would be likely that strong demand for local content would continue to drive partnerships in the market for platforms to be able to deliver the largest variety of local content. And this would see a strong link between content development and distribution in successful players, with everyone doing everything. And in this scenario, IP operators could begin to act as super aggregators, offering access to content and influenceinfluencing how the market is structured from a consumer perspective. This scenario also suggests consumers driven more by a desire for new and interesting content, rather than offering a single digital platform or service a brand loyalty. This would, of all the above scenarios, offer one of the more rich and complex environments, both for content and for advertisers, and would also require regulators to favor local and national broadcasters' rights over large digital companies.

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Another change whichthat could see multiple system operators (MSO), such as Rogers Communications, Shaw Communications and Videotron in Canada; or Altice USA, Charter Communications, Comcast, and Cox Communications in the United States; or Virgin Media in the United Kingdom,; evolve from operating the cable systems for television broadcasters to offer their bandwidth towards streaming services and off-cable networks. The MSO market has seen increased consolidation, such as Altice acquiring Cablevision and Suddenlink, or Charter acquiring Time Warner Cable and Bright House,. whichThis consolidation can allow MSOs to increase their client base and deepen their commercial portfolio. This would allow MSOMSOs to compete in the market as they increase their fiber portfolio.

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And, as MSOs have already moved from purely cable providers to ISP providers, and MSOs have begun offering OTT services themselves,. theyThey could limit the traffic over their networks to reduce the ability for non-MSO OTT service providers to compete in certain regions. Or, as the market has moved towards OTT services and away from cable packages, MSOs could use their existing facilities to create access nodes and data centers usable by wireless and edge service providers. Access nodes for wireless competitors require location, power, backhaul, and maintenance, which MSOs could sell and provide OTT with, as well as local server space, power, and operators. And with edge services under MSO supervision, cable operators could also offer notice of performance issues, bandwidth constraints, or other problems.

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Similar to this, MSOs could provide universal aggregation and provide increased choice and control of tangible business assets, such as coherent optics, and pluggable dedicated and shared fiber. And, byBy supporting these services, including mobile services, aggregation could expand the MSO application space, and help them provide the network speeds, feeds, and routing capability to support traffic from multiple service types. For MSOs to offer universal aggregation, these companies would have to build different access networks for different services. This could introduce a new version of simplicity to allow cable operators to bring their network to support a different type of services and support concurrent PON, IP, and Ethernet services without radical platform changes.

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