Just five years ago, if you wanted to distribute your SVOD content via the internet and retain any kind of a full-quality experience, it was an intimidating and extremely costly endeavour. The technical infrastructure for streaming services required a huge investment and an armada of top-flight engineers, as well as a precarious alchemy of science and experimentation to get it just right. But as with all things digital, the rapid scaling of this business in the last couple of years has presented fewer and fewer barriers to entry.
Today, more US consumers subscribe to an SVOD service than have either a PVR or even a cable television subscription. Outside of the US, SVOD subs are more than double than the number Stateside, and the number of SVOD services and subs keeps growing.
CBS All Access and Showtime Anytime services have reportedly topped 2 million paid subscribers each and are projecting 8 million by 2020. ‘Niche,’ or more aptly titled ‘Vertical’ services like CrunchyRoll or WWE each have over one million subscribers and are acquiring new customers daily. This kind of growth has inspired companies to get into the subscription streaming business in droves, while spending extraordinary amounts on infrastructure; in many cases, even more than what they were spending on content.
In the rush to market, there are cautionary tales that have surfaced, but out of the struggle some smaller, more clever companies have emerged that seemed to really get it right. A handful of other companies seized on the opportunity to perfect and commoditise the delivery itself, the so-called back end, rather than build their own consumer-facing brands and content offerings. These companies saw a brand-new product opportunity in this industry with an off-the-shelf solution, licensing their technology to third parties who wanted to avoid the forbidding investment in recreating the infrastructure, and thereby acquiring very high valuations because it seemed like they figured out how to bottle a modern miracle.
One of these industry leaders is BAMTech, a technology company spun off from one of the early streaming media companies, MLB Advanced Media. BAMTech suddenly came under the bright media spotlight last August when Disney acquired a 33% stake in the company to the tune of $1 billion. That valuation really opened a lot of people’s eyes. Was this one of the great deals of the year, or did the sellers just time their sale brilliantly?
I think it is the latter, because the enormous valuations placed on back-end services like this represent a very brief window in time. Companies like BAMTech and others have convinced many frightened traditional media executives that theirs is the only virtually guaranteed solution, but we should always remember how quickly initially costly bespoke solutions to intimidating technological problems scale, become more practical, and, in effect, become commoditised.
In the last couple of years, a burgeoning cohort of top-quality white label vendors for streaming services have proliferated across the world. There are a variety of turnkey solutions available now that can get your brand and content streamed over the Internet for a fraction of what it cost before, and these costs are literally going down by the month as these providers compete with each other to solicit the same potential clients.
So don’t be fooled by those who try to convince you that barrier to entry is insurmountable. SVOD services are proliferating everywhere in a way that’s beyond what happened with linear channels. There is a lot of competition out there and, if you want to get into the streaming business, you can certainly, and perhaps surprisingly, find a genuinely affordable combination of cost and service offerings to suit your streaming needs, whether you’re looking to service a specific region or the whole world.
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