2015: The Year in Review

In the first few weeks of 2015, Netflix announced its ambitious global expansion plan, pledging to complete its rollout to 200 markets in two years. Yesterday, the platform announced it was ahead of schedule when CEO Reed Hastings told CES delegates that the streaming service is now available in more than 190 countries.

“Today you are witnessing the birth of a new global internet TV network,” said Hastings. “With this launch, consumers around the world—from Singapore to St. Petersburg, from San Francisco to São Paulo—will be able to enjoy TV shows and movies simultaneously, no more waiting. With the help of the internet, we are putting power in consumers’ hands to watch whenever, wherever and on whatever device.”

It was, indeed, a very good year for on-demand services. Premium services HBO, Showtime and Starz took the direct-to-consumer OTT route. Amazon, which expanded the reach of its video offering, made it easier for channels to launch OTT services with its Streaming Partners Program. New platforms popped up across the globe, some competing directly with Netflix’s broad multi-genre offering, many others going niche (kids, factual, Bollywood, etc.). For traditional pay TV, it was a more challenging year as cord-cutting fears came true in the U.S. and elsewhere. Of note, Disney made headlines when it revealed, just before the Thanksgiving break, that ESPN’s U.S. subscriber count fell by 7 million in the last two years—news that weighed on its stock price.

The shifting nature of content consumption reignited the à la carte debate in the U.S., with some operators, among them Cablevision and Verizon, lining up personalized packages, and Comcast unveiling a standalone OTT service. While cord-cutting fears are taking hold in Western Europe, pay TV continued to expand in much of the rest of the world last year.

The pay-TV segment saw a fair bit of M&A activity in 2015. Following the collapse of Comcast’s Time Warner Cable bid, Charter struck a $55 billion deal for the pay-TV platform. And European telco giant Altice reached a deal to buy Cablevision in the U.S. However, acquisition activity was largely in the content and digital sectors in 2015, with much smaller deals than the mega consolidation we saw in 2014. Whether investing in MCNs or top-notch production companies, content creation and distribution outfits everywhere were ready and willing to spend cash last year to expand their businesses and prepare for the changes still to come in the media sector.

2015 was also marked by some significant management shakeups. Most notably, James Murdoch ascended to the CEO post of 21st Century Fox. Vivendi and CANAL+ both saw major boardroom changes. And Pier Silvio Berlusconi took the reins at Mediaset.

For many, the most memorable event of 2015 may well have been the torrential downpours that pummeled Cannes the weekend before MIPCOM, leaving everyone with stories of flooded apartments, soggy socks and ruined shoes. In the end, the market proceeded with minimal disruption and plenty of deal volume. While it’s clear that digital has transformed the business, the consensus was that consumers will always want good content. As PwC stated today in its new report, Industry Perspective: 2016 Entertainment & Media Industry Trends: “The E&M industry is quickly transitioning to a direct-to-consumer world, where most content will remain the same—at first, at least—but the packaging and distribution will change significantly. Specifically, the expansion of digital technology, manifested by more ubiquitous fixed and wireless network connectivity enabling growing numbers of connected devices and new routes to the user, is altering the industry’s structure, driving new ways to produce, distribute and monetize content across its landscape. Creators can more readily pursue opportunities outside of traditional studios and distribution channels. Consumers have more to snack and binge on as well as more delivery options and devices to choose from. In every corner of E&M, empowered users are gravitating to brands, experiences and platforms differentiated as much by the quality of their curation, customization and convenience as by the quality of their content.”

So what do media executives have to do to survive and thrive amid these rapidly changing dynamics? Make sure you’re creating and distributing content that audiences deeply want—that they will go out and look for and engage with. As PwC says: “No longer is it enough solely to attract eyeballs, seeking the largest audiences possible for advertising and subscription revenues. Now, you must create fans: active users united by shared ideas, interests and experiences, who will return every day to your brands and properties. As a fan-centric business, buoyed by the loyalty of passionate users, you will command substantial strategic advantages. You will know more about who your users are, what they want, and how to deliver it to them. This will enable you to more effectively monetize your products and experiences. Current fans recruit new fans. Best of all, fans spend more per capita and are less likely to churn…. Any companies hoping to join the fray will need to be better than the competition in locking up fan engagement, loyalty, spending, and in investing in efforts that drive fan value.”