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February 5, 2013

Streaming is Gleaming

With the growing number of devices available for video viewing, consumers now expect to be able to consume video, especially TV, wherever and whenever they choose. Ericsson reports that 60% of consumers watch video on-demand on a weekly basis, and 67% use tablets, smartphones, or laptops in their everyday TV viewing. This has led to the increased growth of subscription-based streaming video companies including Netflix, Amazon’s Prime Instant Video, and Hulu Plus. These providers offer unlimited streaming from their database of movies and TV series for a monthly fee. In terms of overall video viewing, they face strongest competition from channels like HBO, AMC, and CBS who offer new, original content. As a result, streaming video platforms are beginning to produce their own original content in an effort to attract and retain customers.

Netflix is currently the leader in the space, with over 33 million subscribers and posting revenues well above analyst estimates in Q4 2012. In an attempt to retain this momentum, Netflix is beginning to launch some highly-anticipated original programming. February 1st marked the release of the entire season (13 total episodes) of new series House of Cards starring Kevin Spacey and produced by David Fincher. The series opened to positive reviews, receiving critical acclaim and 10,000 mentions on Twitter within 24 hours of release. Netflix plans to follow this with more exclusive releases in 2013, including the return of beloved comedy series Arrested Development in May and the U.S. release of Ricky Gervais’ new sitcom Derek later this year.

While Netflix is leading the pack, other providers are not sitting idly by. Amazon Studios is also working to produce original content which would likely be featured on its Amazon Prime Instant Video streaming service. The studio currently has numerous TV shows and films in development, including a Zombieland series starring Woody Harrelson.

Though original content is a key focus for these providers, their bread and butter is securing streaming rights to TV shows and movies. Especially important in the competitive environment are exclusivity agreements. Amazon recently scored big with the acquisition of the exclusive rights to hit PBS series Downton Abbey. Seasons one and two are currently available from multiple streaming services including Netflix, but will be exclusive to Amazon’s Prime Instant Video service beginning on July 1st following Amazon’s release of season three on June 18th. These exclusivity agreements only concern paid subscription services, and the show will still be available for a fee on non-subscription services like iTunes, as well as DVD.

Another player in the streaming space is HBO Go, which offers unlimited online access to the full archive of HBO programming to those who subscribe to HBO via their cable provider. The service is currently available on iOS, Android, Samsung Smart TVs, Xbox 360, and will likely be included on Apple TV this summer. Many TV networks and cable channels also offer their original content free to stream online with in-video advertising. With so many options for watching streaming video, we’ll be watching to see who survives the competition.