The
online streaming video industry is a relatively young,
but incredibly strong industry that heavily relies on IT to operate on a daily
basis. This industry has experienced some significant changes since its
somewhat recent start. These changes
have come partly from the technology that has since been introduced, and partly
by the changes in the lifestyles of the consumer population it appeals to.
The
technology of the online streaming video industry was dominated by a company
named Real in its origin. Real was the host of the first online audio streamed
event in 1995, and then blazed a trail again with the first live video streamed
event in 1997. By 2000, some estimates
state that as much as 85% of all streamed content on the internet was in Real
format. However, as Microsoft began to
dominate in the sales of desktops and laptops throughout 2007, their Windows
Media Player would take over the video streaming industry, pushing Real into
extinction; but Windows Media Player was far from perfect. It would eventually
be overrun by a more design-friendly Adobe Flash Player, followed by the Mac
brand, as it began to make its resurgence with the introduction of the iPad
(which did not support Flash) in 2010.
This brings us to today where Adobe Flash is still a major player, but
Html5, which is supported by Apple, has begun its climb in the market. (Streaming
Media)
The
history of the online video streaming industry is much like that of its
technology. There have been a wide range of players and the industry has always
remained quite diverse. Today, the
online video streaming industry is used in a wide range of fields: business
(both for informing and advertising), education, and entertainment. (Media College) Within each of these
fields, since its origin, the industry has changed dynamics as well. Streaming is now accessible with smart phones
and tablets from almost any corner of the world. This has pushed the companies involved to
change with the market or risk extinction, much like that of the original
company, Real. The ability to make these
changes is what pushed Netflix, the leader in online video streaming, into the
industry to begin with. Netflix started
out as a by-mail DVD rental service that revolutionized the video rental
industry. Just as they had taken over
the industry and pushed the once stronghold competitors out, they took their
service a step further. In 2007, Netflix would move into the online video
streaming industry and has yet to look back. Its success has completely changed
the video entertainment industry forever by bringing streaming video services
into, and now out of, the home. This has
led competitors like Amazon and Hulu to jump in; but none have enjoyed the
success of Netflix, at least in movies.
The second largest player in the online video streaming industry is
YouTube. Together with Netflix, they hold
over 50% of the downstream traffic in the online video streaming industry and
the industry is not looking to slow down. (Business
Week) Technology keeps allowing for
consumers to access the internet in at the touch of a finger, and this
accessibility will continue to drive the strengthening online video streaming
industry for years to come.
The streaming video
industry has prevailed over numerous barriers to commerce, but still has many
to overcome. Some barriers are
evolutionary ones that remain constant over time but change in small ways. Lack of CPU power, lengthy download times,
and not enough bandwidth are all examples of barriers the industry had to
overcome in order to increase consumer satisfaction and grow businesses, with
download times and bandwidth still being issues as the industry evolves. For
example, when online streaming was first developed, lengthy download times were
the biggest complaints of consumers. IT
has since developed new software, like Adobe Flash, that allows for a “single,
unified, streaming format” (Wikipedia, 2014), and client media players, that
allow consumers to play streaming video before the file has finished
transmitting (Wikipedia, 2014). Bandwidth,
also known as the rate at which data transfers (TechTarget, 2010), has been an
issue for video streaming because of the large volume it takes to stream, but
IT companies have found ways to improve bandwidths and networks to accommodate
the increased demand. To accommodate the
demand for high definition (HD) streaming the industry has developed
technologies such as WirelessHD (Wikipedia, 2014), which allow the user to
access HD content without needing additional special hardware. It is very
important the businesses that operate within this industry stay ahead of the IT
curve due to the high levels of rivalry.
The online video
streaming industry is easily entered, with constant rivalry and new entrants
taking form on a regular basis. Due to this, IT has a constant and
ever-evolving role to play in keeping their company competitive and a viable
option for consumers. All of the barriers discussed above constantly need to be
observed and improved upon in order to stay ahead of the next rival. Some
sites, such as Netflix and Hulu, offer specific programming which is exclusive
to their sight; an option that helps these businesses to lure customers. Even
so, without constant improvements in downloading speeds and security options,
the bargain-hunting consumer will look elsewhere for a more user-friendly alternative.
This type of constant competition drives these businesses to constantly develop
and evolve strategies so they may remain worthy adversaries in a fast-paced,
highly competitive industry.
Works
Cited:
Streaming media. (2014, May 30). Wikipedia. Retrieved
June 11, 2014, from http://en.wikipedia.org/wiki/Streaming_media
10 Barriers to eCommerce and Their Solutions.
(2008). Toronto Web Development. Retrieved June 10, 2014, from http://www.voloper.com/documents/white-papers/ecommerce_white_paper.pdf
Rouse, M. (2010, March 1). bandwidth. TechTarget.
Retrieved June 10, 2014, from http://searchenterprisewan.techtarget.com/definition/bandwidth
Courtney LaBorde
Jennifer Heard
I enjoyed your post and I think that it is a very informative look into the video streaming industry. However, I believe one of the biggest barriers that effect consumer habits is most likely the price, content or licensing, and convenience; after all convenience is what is probably one of the biggest drivers of digital media. As the article claims, digital media can be accessed mostly anywhere, from TVs and computers to cell phones, and likewise has made accessing media content quite convenient. However, Redbox, which is similar to a vending machine for movies, brings new movies for about $1 dollar a day and they have machines placed in thousands of convenient locations. They also have digital media content available for streaming. With all of their options and licensing, they have taken a good piece of consumers from Netflix as the company continues to be successful. As well as major entertainment companies such as CBS and Disney gain advantages on licensing as other companies want to compete to gain those licensing in order to compete. Amazon and Netflix took this on by creating their own content, which helps to differentiate them from other digital media outlets. Amazon further differentiates themselves' by adding their digital media streaming to their Amazon Prime membership which many people already subscribe to for other benefits with Amazon, such as free shipping, etc. Consumers try to get the best "bang for their buck"; therefore they look for the perfect blend of convenience, perks, and licensing. As mostly all digital media streaming is already HD content, then download speeds, streaming quality, and the relative convenience is mostly affected by their internet provider. This highlights the need to increased innovation in video compression methods, efficient use of existing copper and fiber infrastructure, as well as new ways to help bring it all together for the consumer. Overall, I enjoyed this post and found a lot of interesting thoughts to consider.
ReplyDelete-Group #8
GROUP 4
ReplyDeleteAnother problem that companies like NetFlix and Hulu are facing are legal issues and the debate of net neutrality. Service providers such as Comcast and Time Warner provide television and internet. Due to ever increasing internet speeds and greater access to streaming video; more and more users are streaming only those specific shows or movies. When streaming shows via the internet, large amounts of data pass through digital fiber optic networks owned by Internet Service Providers (ISPs) such as Comcast and TimeWarner. As the use of streaming video increases, the ISPs have to lay more wire for access to the content.
Naturally, this comes at a price and ISPs wanted to charge very high fees to content providers and customers for high data usage. In May 2014, Comcast executive vice president, David Cohen, said that in five years' time, the company will have ‘a usage-based billing model rolled out across its footprint.’ Cohen suggested that the caps could start out at 350GB/mo and eventually move up to 500GB/mo. While this might not be a major issue now, it could become one by 2020 (O’Toole, 2014). These data caps would directly and significantly threaten online streaming video providers.
“Netflix is growing as a media provider, adding unique content, and also making the move into ultra-HD 4K resolution offerings. This means two things: The number and amount of people streaming media will likely continue to grow, and the amount of data in each stream will as well. Digital Trends estimates that watching one thirteen-episode season of House of Cards on Netflix could consume as much as 200GB of data if streamed at the 4K resolution; adding on the five seasons of Breaking Bad at 4K would easily put users over the Comcast’s data caps — and the amount of 4K content available isn’t going to decrease either.” (Knapp, 2014)
A battle has ensued at the Federal Communications Commission between streaming content companies along with consumers and ISPs. The ISPs are being charged with violating net neutrality legislation leading users to experience buffering messages and sputtering when streaming content. To settle the dispute, Comcast proposed to charge for interconnection fees in order to "ensure that their data reaches customers with speed and quality" (Popper, 2014). Although the deal hasn’t yet been approved, Comcast’s proposed purchase of Time Warner Cable for $45b would put Comcast in approximately 34 million homes in the US.
In April, this year, the FCC announced new rules governing Internet service that effectively put an end to net neutrality (Smith, 2014). However, in May, the chairman of the FCC indicated that the agency could move to block the rise of internet fast lanes; a phrase used to describe a premium that ISPs charge content providers for increased speeds provided for internet customers. Had this not occurred, companies such as NetFlix and Hulu would likely have found it financially difficult, if not impossible, to meet the demand of their customers (Fertik, 2014)
References
O’Toole, J., (2014). Comcast plans data limits for all customers. CNN Money. Retrieved from http://money.cnn.com/2014/05/15/technology/comcast-data-limits/
Knapp, M., (2014). Comcast Planning to Cap Data Usage: Netflix Troubles Ahead?. Wall St. Cheat Sheet. Retrieved from http://wallstcheatsheet.com/technology/comcast-planning-to-cap-data-usage-netflix-troubles-ahead.html/?a=viewall#ixzz34Tgm85c3
Popper, B., (2014). Deal with the devil: why Netflix broke its own rules on net neutrality. The Verge. Retrieved from http://www.theverge.com/2014/3/24/5541916/netflix-deal-with-the-devil-why-reed-hastings-violated-his-principles
Smith, G., (2014). Everything You Need To Know About The End Of Net Neutrality. Huffington Post. Retrieved from http://www.huffingtonpost.com/2014/04/24/net-neutrality_n_5206510.html
Fertik, M., (2014). Yes: Net Neutrality Moves Forward. Forbes. Retrieved from http://www.forbes.com/sites/michaelfertik/2014/06/11/yes-net-neutrality-moves-forward/