To say that consumers have moved to VOD is perhaps an understatement. It might be more accurate to say that there’s a landslide.

And Play2Live is a gaming and eSports streaming company perfectly positioned to ride the wave of this huge trend.

This article aims to explain some of the technical jargon, identify market leaders and highlight the trends — and then to show just how well Play2Live is placed on the market.

Understanding VOD jargon

Linear vs non-linear TV

Linear is the term used to describe real-time TV, transmitting according to set schedules. Non-linear or VOD (video on demand) describes on-demand programming, available to view at any time.

OTT

The internet has proved to be a disruptive force for the distribution and consumption of media content. Most consumption is now via audio and video. Providers of over-the-top services (also called over-the-internet services) have driven the disruption. For example, YouTube and Netflix have replaced traditional TV and Skype has replaced long-distance telecoms providers. Some studies predict that by 2019, 80% of the total internet traffic will be online video. Millennials in particular have moved away from linear TV media towards internet and social networks.

Transactional Video on Demand (TVoD)

This is a “pay-as-you-view” model, with consumers paying for each individual item viewed, either through purchase or renting for a period of time. iTunes by Apple is a good example.

Subscription Video on Demand (SVoD)

This model provides a wide range of content to consumers, often in the form of packages, for a monthly subscription fee. The 3 biggest players are Netflix, Hulu and Amazon Prime Video.

An interesting development in this space is the move away from licensed content towards originals. Netflix’s House of Cards and Hulu’s The Handmaid’s Tale are good examples. It is estimated that $10 billion per annum will be invested in the production of original content by 2022 — this is triple the current amount. Even Facebook and Apple seem to be investing in original TV-quality programmes, and Disney will be launching its own direct-to-consumer channels.

Virtual Multichannel Video Programming Distributors (vMVPDs)

vMVPDs aggregate live and on-demand linear television, but deliver the content directly to consumers over the internet, generally via internet-connected devices and with a subscription charge. Content owners can reach OTT users via these distributors.

Examples of vMVPDs and their owners include:

· Sling (Dish Network)

· DIRECTV NOW (AT&T)

· PlayStation™ Vue (Sony)

· YouTube Live (Google)

· Hulu Live (Disney)

· fuboTV (NY-based start-up, specializing in sports)

Internet-connected devices include

· Roku

· Apple TV

· Amazon Fire TV

· Gaming Consoles

· Various iOS and Android devices

One of the main selling points for these services is the “skinny bundle” — a reduced number of selected channels that consumers can purchase for less than they would pay for full bouquets from traditional TV. Consumers also don’t have to buy individual OTT programmes or apps from each content provider.

Key trends in VOD and OTT

Live streaming is gaining in strength.

It has been reported that at least 40% of millennials have created their own live videos, and about a third of internet users have streamed videos made by friends, family or celebrities. Celebrities and artists use live stream to connect directly with their fans.

The current leaders, Facebook and YouTube, are being challenged by rising numbers of video distributors and subscription channels. Even Twitter is wanting to be part of the trend and is partnering with the BBC for videos and news.

There is a move away from cable and satellite TV.

“Cord cutters” — customers moving away from traditional cable or satellite — and “cord nevers” — those who have never subscribed to pay TV — are moving to more flexible and affordable video offerings: to Netflix and Hulu for movie and TV formats; to Google, DirecTV and Sling TV for “skinny” packages of TV channels; and to Facebook, YouTube, PlayStation Vue and others for shorter programming.

In fact, according to analyses from MoffettNathanson Research and Leichtman Research Group, the number of households paying for cable or satellite dropped to 79% in 2017, down from 88% in 2010. More than 500 000 customers cut the cord in the fourth quarter of 2017 alone. Giant companies like Comcast and AT&T are down to about 83 million subscribers.

Netflix, on the other hand, doubled its subscriber base in the past five years, reached 100 million subscribers in the second quarter of 2017, and increased its annual revenue more than tenfold between 2005 and 2016. It has more subscribers in the US (>50 million) than the total for the top six cable TV companies (approx 48 Million).

The number of people signing up for “skinny” packages doubled in 2017 to 4.6 million, up from 2 million in 2016, and with Sling TV accounting for 2.2 million on its own.

There is significant growth in the value of the VOD market

The estimate is that the VOD market will be worth over $61 billion by 2019 — a CAGR of 19.4% from 2014. America remains the biggest market, but Asia-Pacific, the Middle East and Africa are expected to grow significantly.

This growth has been driven by the number of devices that now support digital media, together with a significant increase in internet access speed. Consumers now have the option to access the media content of their own choice, whenever and wherever they like. Content includes information, entertainment and social activity.

A Cisco report predicts that by 2021 global internet traffic will be 127 times the volume of internet traffic in 2005, that broadband speeds will have doubled and that an individual would need 5 million years to watch all the videos that will be available every month.

Mobile devices are driving consumption

Mobile devices have become the preferred medium for music and video content. The smartphone market has grown exponentially, with a CAGR of 17%, compared to 9,5% for all other mobile devices. The growth in data traffic is even greater.

According to a Statista report, approximately 2.5 billion people — over a third of the world’s population — will own a smart phone in 2018, and this could nearly double in 2019. At the same time, data usage is expected to grow 10-fold from 2014. It is therefore easy for consumers to access music and videos.

Phones are being adapted specifically for gaming — providing high resolution displays, plenty of CPU and GPU, long battery life and extra features such as optional gamepads.

There is a shift in marketing and advertising spends towards digital media

Spending on digital media is expected to surpass TV advertising for the first time in 2018. And there is also a shift to spending on mobile rather than desktop devices. The split is currently 53% mobile to 43% desktop, with an expectation that up to 70% is likely to move towards mobile.

However, content creators are finding it increasingly difficult to make a living based on an ad-supported model. So, for example, streamers of video games are having to contend with their fans using ad blocks, and with an increasingly competitive environment, where the advertising cake must be cut into smaller and smaller pieces. They are looking for new ways to monetise their channels. This includes requests for donations, selling of branded merchandise, or working as influencers or affiliates for brands.

VOD and the gaming industry

The market is bigger than previous predictions

According to Newzoo, there were over 600 million viewers of gaming video streaming in 2017, with $116 billion in revenues. This is nearly 11% up on their earlier projections for 2017, and was largely as a result of significant growth in China and Japan.

It is useful to look at both the numbers of streamers and the numbers of concurrent viewers to get an idea of both the size and the growth of the market.

The following table shows the number of active live video game streamers on some of the major platforms, as at the start of 2018:

Table 1: Live Video Game Streamers Worldwide, Jan 2018