NEWS

Predictions for 2019 continued

As promised, here is another prediction for 2019 – Top 5 Digital Media predictions. Tonight we ring in the new year, and we wish everyone all the best! 


Original article posted here. 

Written by: Kevin Gallagher, Aurey Schomer and Kevin Tran.

2018 was a busy year in digital media: We weathered everything from data breaches to fake news to the official rollout of GDPR. We’ve seen intense bidding wars as big media further consolidates and watched Amazon elbow its way into the digital ad space. And we’ve watched “Stories” take over social media, vacuuming up users from feeds and driving investment in vertical video. Meanwhile, more familiar trends — like cord-cutting and the explosion of esports — continue to present new challenges and opportunities as companies navigate their digital transformations. 2019 promises to be just as busy, and below are our top predictions for the digital media industry across the next year:


1. Tech platforms will face proposed regulation from all angles, with the US clamping down on privacy and transparency, and the EU leading the way on antitrust. 
Through 2018, lawmakers around the world have battered tech companies — mainly Facebook and Google — for their monopolistic tendencies and self-regulation shortfalls. In 2019, we expect that criticism will translate to ramping up of proposed regulations. In the US, we think the immediate push will be around standing up a federal data privacy law in the wake of the EU-derived GDPR, with a long-term eye on antitrust. After all, Trump recently told Axios that his administration is looking at “all of them,” meaning tech platforms ranging from Apple to Amazon, on antitrust grounds. But we expect any actual action around antitrust in 2019 to come from the EU, which has been most aggressive/defensive in its pushback against tech giants. The EU will also continue extracting cash from platforms in the form of fines for data privacy infractions and anticompetitive practices and new taxes that target tech platforms’ ad revenues. It’s also increasingly possible the nations that have disproportionately suffered from tech could stonewall companies from operating altogether, as societal risks outweigh rewards. For example, Facebook has been especially disruptive to social structures in developing nations, like Myanmar, where the social site was used by members of the military to spread genocide-fueling propaganda targeting the country’s Rohingya minority. 

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2. AVOD platforms will move mainstream as SVOD-saturated viewers seek out fresh content for free. 
We expect that AVOD platforms like Hulu, Tubi TV, PlutoTV, Walmart’s Vudu will expand reach and see growing usage in US streaming households. That growth will come from the rising adoption of connected-TV devices or smart TVs that have exposed more viewers to apps-based TV interfaces, making AVOD platforms easily accessible. Users won’t abandon SVOD services, but we think they’ll increasingly supplement them with AVOD viewing. We expect that SVOD uptake caps at around 2-4 services per household — and the global household average is just over two — leading users to seek out free, ad-supported content to supplement streaming habits. Broadly speaking, this shift will be driven by the ongoing “unbundling” of content — where the pay-TV bundle is being broken down and sold in specialized pieces. Unbundling is a necessarily atomizing force, but we think the fragmentation has gone too far, spawning a seemingly infinite number of SVOD services as a result. That amount of choice in paid services is overwhelming for viewers. A retreat back to free content is the likely response.


3. Disney+ will emerge as the clear-cut winner among the high-profile SVOD services launching in 2019, besting WarnerMedia and Apple. 
Disney has some of the most popular and iconic intellectual property on Earth, making its upcoming direct-to-consumer offering, Disney+, a must-have for OTT households. We think the most obvious positioning of Disney+ will be for it to focus on families with children, promoting its most popular content — like “Frozen” and “The Lion King” — to entice initial subscriptions. But Disney+ has appeal that extends beyond kids movies — it also houses mega-popular Marvel titles like “Avengers: Infinity War” and “Black Panther,” the No. 1 and No. 2 top-grossing films worldwide in 2018. Consumers will find it hard to ignore the sheer amount of high-caliber content the service will provide at a reasonable price (we think between $6-$8 per month). That will be doubly true if Disney foregoes licensing revenue to keep its content exclusive. We also think that Disney will include non-sports content from ABC and Freeform to round out its service, and keep ESPN separate in its existing SVOD app. Even though Disney+ is set to be the last subscription to launch next year (WarnerMedia will launch in Q3, Apple in “mid-2019,” and Disney+ in Q4), we think its superior content library, affordable price point, and the global appeal of the Disney brand will propel it to the top spot. 

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4. Amazon buys Snapchat as the social app struggles to add users, compete with Instagram, and make money. 
2018 was abysmal for Snap. In the year, the company lost daily active users for the first time, saw several key executives jump ship, and faced multiplereports about the declining quality of its ads, among other snafus. The hiccups prompted CEO Evan Spiegel to publish a lengthy strategic turnaround plan, with a goal of becoming profitable in 2019. However, we think that Snapcat’s user growth has been irreparably harmed by Instagram’s success with Stories. The company will need a parent company that has the resources and drive to reposition the app — enter Amazon. There’s reason to believe Snap is desirable to the e-tailer. The two are already partnering on e-commerce crossover features, like visual search via Snapchat. Social is becoming a stronger driver of e-commerce sales, and Amazon could drive greater engagement by way of the captive audience a social platform provides. And a social app also gives it yet another source for user data and, in turn, ad sales. Amazon could also convert Prime subs to Snapchat users if it builds up its functionality on e-commerce-driven social features.


5. Publishers will continue buying into podcast hype and entering the space while publishers already invested in the format 
will begin to sour on it. The US podcast listener base will grow in 2019 — Business Insider Intelligence predicts the format will be used by 26% of the US population next year, up from 24% in 2018. And although there will be an uptick in publishers launching their own audio shows to capitalize on the podcast hype, we’ll learn of more companies closing down podcast operations as the crowded landscape makes it difficult to cultivate a following. Apple currently hosts 550,000 active podcast shows, up from 525,000 in April, for example. Even for those able to drum up a following, monetization isn’t guaranteed — podcasters typically aren’t eligible to advertise their shows without first receiving about 20,000 downloads, and the average number of downloads is only 1,600. That helps explain why, between 2005 and 2015, the average podcast lasted only six months before going inactive. We expect publishers to get frustrated with the format’s revenue-generating woes in 2019, with many going the route of BuzzFeed, which shuttered its in-house podcast operation in September.