In 2017, the online video market skyrocketed. Internet became more and more powerful and overcame Television in several fields, like ad revenues.
Let’s do a recap of 2017 : market, uses, formats, content and try to understand what 2018 will bring us !
1. The fast-growing VOD market, widening the gap with the physical video market
What is happening today in France is also happening in the world and in the USA. The digital video market that had already outpaced the physical market continues its trajectory leaving a gap of almost 2000 million. The evolutions of certain types of VOD can explain this increase.
If we look at the detail, there are 3 types of VOD:
1.Transactional Video On Demand (TVOD), the transactional rental video, which makes up around 18% of the global digital video market (Google Play for example)
2.The EST (Electronic Sell-Through), the video on demand final purchase, which makes up around 16% of the global digital video market (Orange VOD for example)
- SVOD (Subscription Video On Demand), the best known, subscription video on demand, which makes up around 65% of the global digital market (Netflix most used)
In the United States, the value of the EST and TVOD markets are approximately equal to around $ 500 million. But the gap is with the SVOD which is from about 1900 million worth. Figures that can be explained by the 339.8 million current consumers in the VOD market worldwide (including 6.1 million in France). The continuous increase is accompanied by the fact that it is estimated that in 2021, there will be 470 million consumers of VOD in the world (with 7.8 million in France). Even if the SVOD market, which is undoubtedly the most growing one, is going to experience a decrease because, for example, the US market is saturated and is very competitive.
Regarding OTT (Over-The-Top) services, an explosion of views has taken place around the world. Indeed, in 2017 the number of viewing hours on OTT video content is close to 13 billion, when at the end of 2016, less than half was reached. The main consumers of these services are the United States, which alone accounts for 58% of these views, compared to 21% in Europe and 19% in Asia. Note that more and more people are watching these videos on mobile devices rather than on computers. Indeed, according to Conviva, the activity on video applications has increased by 160% against 23% on computer, confirming the trend of mobile video.
2. Online video : many original formats for different uses
Last year, globally, the video became an essential way of communication. That’s why, 52% of marketers from all over the world gave to video the award of the most valuable content. We expect that within 2020, 80% of the consumer traffic on the internet will be videos. But why video is so powerful? One of the reasons is probably the possibility to create many formats possible. In 2017, 4 formats started to be very powerful and will probably shoot up in 2018.
A. Live video, for entertainment… and business !
Already important in 2016, in 2017 lives became a standard for big platforms such as Facebook, Periscope, Instagram, Twitch or Livestream. This fast growing market should reach 70 billion dollars worldwide within 2021. Live videos are way more powerful than normal videos: viewers watch them almost 3 times more, with an average engagement rate 12 times superior. Needless to say that platforms such as twitch (Amazon) or Douyou (supported by Tencent) in China contribute to this development.
It is in China, that several successful tendencies emerged in 2017 :
-> Live “Showrooms” (Music stars singing in karaoke on their own song)
-> Launch of video platforms owned by several brands, such as Taobao or JD.com, allowing influencers to promote their products. These applications get a lot of success, of course, as 46% of Chinese viewers already used it. On influencers side, they get a very good remuneration.
These platforms invests on live videos allowing viewers to directly interact with their influencer(s), which makes fans very happy… and conversion rate goes up to 30%.
Big brands starts to implement this strategy, like for example Maybelline New York, who launched in 2016 a live streaming campaign with the famous model Angelababy. This was a huge success with 10 000 lipstick sold in 2 hours.
B. The Informative Snack is also successful
What ? You don’t know what it is ? Of course you do ! They are short videos made with extracts from image banks with very easy reading texts. For example, in France, the media Brut has had more than 2 million views on its videos and big brands start to use it for commercials, Air liquid used it for CH2ange or General Electric for its GE Reports.
C. Stop Motion, renew with the past
It’s not a “new trend of 2017”, but 2017 was the year when this old format made a great comeback. You know, these videos made with a lot of pictures following each other making some kind of animation. Some brands understood the potential of these videos, like Instagram who, last October, announced they would put an option to create stop motion in 2018.
D. 360° videos, to generate engagement
360° videos are developing slowly but surely. Whether it is on a computer or on a smartphone, these videos allow to discover universes, scenes, everything in a 360° view. Normally used by professionals, in 2017, the devices needed to screen this format became more popular and reached the mainstream. Everyone tries to use it today, whether it is Youtubers, Social medias or companies…Probably because these videos generate 4.5 times more sharing that any other kind of videos.
E. Virtual or augmented reality : a slow democratization and a B-to-B usage
For few years already, this type of technology has been growing, improving and more and more popular over the years. A recent study made by the Deutsch Bank Research supposed that the Augmented Reality sector, between others, should have a boom to reach 7 billion market value within 2020. The number of users should grow up to 300 million when today they are only 60 millions. A rise that will be linked to a better access to devices, as in 2017 most of the brands lowered their helmets prices. For example, the HTC Vive is now 200€ cheaper.
The AR / VR market is led by Samsung, Sony and Facebook (after they bought Oculus 3 billion) which possess 60% of the market share in the second trimester of 2017. Samsung largely leads the market with more than one million Gear Vr sales, followed by the 950 000 sales from Sony and the 345 000 sales from Facebook. These Company’s investments rose up which almost destroyed all competition.
Recently, Amazon and Ikea began to develop applications using AR, to be able to see your future buyings at home, filling one major barrier in e-commerce.
Other applications are also possible:
-> In medecine to relieve patient’s pain baiting their attention, to treat psychological deficiencies or to teach chirurgy to students
-> In tourism, to be guided in cities and places, and to have information on what’s around us
-> In automobile, one of the first in this sector, developing this tech even further
It is a promising market for 2018, considering all investments already made last year.
3. Advertising: video ads on track to become the first advertising channel
You may not have noticed it, but 2017 is a year where Internet advertising has diversified. In addition to the fact that the global video advertising market will grow from $ 3.53 billion to $ 13.3 billion by 2020 (future world’s largest online advertising channel) and $ 2 million in additional investment in digital advertising, we have seen various types of advertising blooming :
1. NATIVE ADVERTISING
Is increasingly popular, especially because of the many adblockers on the internet. Also because this type of advertising is more or less accepted by Internet users. Native ads allow to bypass adblockers but also do not degrade too much user experience.
2. INTERACTIVE PROGRAMMATIC VIDEO
Quite common on Facebook or YouTube, this format of video advertising requires interaction with the user, which gives him a specific experience that tends to be more effective than a simple advertisement. This kind of ad is already used by websites like Ikea, Skittles or Gatorade.
Even if it’s not an ad format, it’s an increasingly important tool because it can be much more effective by targeting users more effectively. The collected data make it possible to know which ads are suitable for this or that person, and thus geolocation becomes a formidable tool to drive sales and promotion.
4. Video market: the disintermediation caused a concentration of major players to win the content market
In 2017, we saw an increasingly common trend among creators, disintermediation. We all know Tidal’s example in music. In 2017, Disney announced the launch of its own VOD service (planned for 2019). But disintermediation does not only affect the big players in music and video, it affects ALL content creators, who can now launch their own media or their own premium streaming platform or VOD.
At OKAST, we know it well, since we have helped many independent clients towards the creation of their VOD platform, like Qwest TV, the Quincy Jones project, RING TV for combat sports fans, China Screen for those who wish to discover China through the prism of premium documentaries, and soon ZOKAST for children from 4 to 12 years !
Note that technologies such as blockchain, which should be democratized in 2018, heads in the direction of the disintermediation, and hopefully will allow the development of premium independent contents platforms.
This disintermediation is also scaring for traditional big players, who operate concentrations to better control the strategic market of content. Thus, after Time Warner being bought by AT&T, in 2017 Disney acquired Fox (TV and Cinema) in order to compete with the almighty Netflix.
War of content production is raging
Content production is the source of all conflicts:
-> To launch its own platform, Disney wants to remove all its productions from Netflix (film and series).
-> In the same time, Netflix produced some Marvel series (Daredevil, Jessica Jones, Luke Cage etc …), a license bought by Disney ?
-> Amazon, for its part, was asked to stop airing HBO programs in early 2018.
In a word: everyone wants to produce its own content to offer exclusivity and attract a maximum of subscribers.
And the pace of production will not slow down: 2017 has experienced an investment of more than 13 billion dollars in cumulative online video (thank you Facebook, Apple, Amazon, Hulu or Netflix). For 2018, Netflix expects an investment of over $ 7 billion. Apple and Facebook, are less active in this market, despite the Apple short film, Détour.
To win this war of contents, the GAFAN rely on big names, director, Showrunners or writers. Robert Kirkman (creator of TheWalkingDead comics) will join Amazon and Shonda Rhimes (Gray’s Anatomy, How to Get Away With Murder). David Fincher collaborated (again) with Netflix for Mindhunter series. After the release of its film “Bright” (with Will Smith), Netflix plans to continue in this direction with a $ 100 million investment for the next Martin Scorsese film The Irishman. Amazon relies on celebrity names like Orlando Bloom or big license like for its Lord Of The Ring series project. Thus, the SVOD market may be very hectic in 2018.
FOR THOSE WHO WOULD NOT HAVE COURAGE READ ALL ARTICLE ?
In audiovisual and media sector, 2017 is the year where:
-> The digital video market continued to grow, further widening the gap with the physical market
-> A trend of independence for producers and creators has raised, resulting in the further development of VOD services in OTT
-> Video formats are growing, giving way, mainly to live format, Informative snack and 360 °
-> Advertising has become smarter for the sake of efficiency and to better adapt to its audience
And in 2018 we expect to see:
-> The digital video market dominates the video market almost completely
-> The advent of live and 360 ° formats
-> New trends of disintermediation from other creators, producers or distributors of films and video content
-> A fast development in VR / AR / MR technology in terms of mainstream usages or type of industries using it
-> An increase of the original content produced by SVOD services
-> Advertising becoming more personalized and less intrusive