Is streaming eating the world?

25 Mar 2020414 Views

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Alan Costello, NDRC. Image: Shane O’Neill/SON Photographic

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As consuming media becomes more and more of an online activity, the influence of streaming on network infrastructure, Big Tech and the entertainment industry cannot be denied.

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While many would agree that the media landscape has changed dramatically since streaming became commonplace, fewer perhaps considered the networks that underpin this shift in service delivery. That is, of course, until March 2020 when streaming media became so widespread across Europe that the European Commission had to ask the likes of Netflix to dial back the quality so the networks could keep up.

As with everything right now, this happened in the context of the coronavirus crisis. With national lockdowns and physical distancing measures in place, more and more people turned to streaming for their entertainment. It was estimated that Netflix’s decision to lower its bitrate could reduce its internet traffic in Europe by as much as 25pc. And with YouTube, Amazon, Apple and Facebook following suit, it looks like our networks won’t keel over at a critical time for online connections.

But not all online media streams have been boosted by lockdowns and distancing measures. Curiously, music streaming has taken a dip. Quartz reported that Italy saw a 23pc drop in streams of Spotify’s 200 most popular songs between Tuesday 3 March and Tuesday 17 March. The country entered a national quarantine on 9 March.

In the US, figures from Alpha Data, the analytics behind Rolling Stone’s charts, show that music streaming dropped 7.6pc during the week that Americans started to self-isolate. According to the music magazine: “Drop-offs off this magnitude are rare, with the exception being the week after Christmas, as listening starts to return to normalcy after a busy streaming week.”

‘Spotify in particular, has changed the way consumers see and engage with subscription services. Before then, things were different’
– ALAN COSTELLO

For the music industry, which has now come to rely on streaming as a major source of revenue, this could spell a disaster. Coupled with cancelled shows and declining album sales (both the physical and online product), musicians are starting to feel the pinch.

The relationship between creators and streaming platforms already has its frictions, particularly in the music industry, and this current crisis has reignited musicians’ demands for greater royalties from Spotify.

The changing face of streaming

Before Europe became the epicentre of a global pandemic, we spoke to Alan Costello, venture investment leader at NDRC, about the changing media landscape in the age of streaming. As has become apparent since, the streaming industry holds significant weight and disruption can be keenly felt. But, apart from the spread of a virus, how did we get here?

Costello puts the evolution of the streaming media market down to content changes, consumer behaviour change and external factors such as devices and broadband.

“Spotify in particular, has changed the way consumers see and engage with subscription services. Before then, things were different. Now, there is a growing audience of people willing to pay, monthly, for quality content. Spotify opened this up for music, but other channels are obvious now,” he said.

“Tangible products, too, have shaped and adapted consumer behaviour. Devices are now optimised for streaming. Screens on smartphones have been adapted … making long-term viewing acceptable.”

In a way heralding the present state of affairs, Costello also pointed to “megatrends of urbanisation and workforce fluidity” as drivers of changes in consumer behaviour. He sees this even in home décor, where TVs are no longer necessarily the one-and-only for screentime, supplanted and augmented by laptops, smartphones and other alternatives.

‘Device and consumer accessibility, added to the growing world of choice, is massively augmenting and changing the media landscape’
– ALAN COSTELLO

Then we have the content itself. “Major players are devising their own content: Sky Atlantic, Netflix, now Apple, Amazon and the emergence of a Disney bundle. So device and consumer accessibility, added to the growing world of choice, is massively augmenting and changing the media landscape,” said Costello.

Citing Marc Andreessen’s famous “software is eating the world” aphorism, Costello sees the same all-consuming appetite with streaming. “Demand for data packages will increase hugely in future. It’s inevitable. 2GB per month packages, for example, soon won’t be enough.”

With this demand, the supply side will rise to the occasion. “Mobile phones may see increased need for storage space, allowing people to download to view, rather than stream. Live, collaborative communities will prosper. Massive online multiplayer games like Minecraft or Call of Duty and platforms like Twitch are all driving content consumption,” said Costello.

In a way, he was foretelling a near future as we are already seeing demands for online media heightened under unprecedented circumstances. And this is a market of powerful players set to get more powerful, according to Costello.

The mass market streaming war will be fought by existing players: Netflix, Disney, Amazon, Apple. No one else has both the budget for production or the distribution to the user,” he said. “Some niche players will exist, usually within a content vertical. An example of this would be Twitch for gaming (since acquired by Amazon).”

Elaine Burke is the editor of Siliconrepublic.com

editorial@siliconrepublic.com