The online video space is a confusing one, to say the least. Consolidation of services, channels, content, and technologies coupled with an ever-changing playing field and a seemingly endless parade of players makes it a tad difficult to follow the market; it seems to change on a daily basis. And no wonder: we’re talking about an $85 billion dollar opportunity.
What I’ve done in this visualization is to identify who the current players are, loosely classify them by category, and casually arrange them in a “stack” where the top of the stack represents production of content and the bottom represents consumption by audiences – in other words, the companies in the value chain nearer to the top are more involved in creating content, and the companies nearer the bottom are responsible for getting it to the viewer. I’ve also simplified things slightly by excluding hardware and set-top box manufacturers; the television and hardware space is a bit too full of players, and has already long shaken out – the space is not innovating, all consumers have DVRs and TVs, and additional “over the top” set top boxes are not penetrating beyond early adopters. If / when Apple decides to manufacture a television set, the hardware side of things will become more interesting, but until then, all the action is happening in the services and software side of things.
In this image, the classifications are:
- Conglomerate – This includes corporations with multiple interests in various industries, usually with a large media division.
- Media Owner – Many of the conglomerates also tend to be program producers or media / content owners. These are the actual content makers and rightsholders.
- Content Delivery Network – A company or brand / division inside a company that delivers content from their servers.
- MVPD / ISP – A “Multichannel Video Programming Distributor” or Internet Service Provider; this is the actual pipeline the content travels over.
- Technology / Internet – A broad category, but I will elaborate on companies in this article as necessary to explain the role of the companies.
The diameter of each circle in the image directly relates to the market capitalization of the company, and the rough position of each circle may indicate relationships between companies, as I’ll explain next. For reference, Apple is the biggest market cap at approximately $360 billion, and the smallest is PBS with an estimated sub $1 billion value. So let’s take a look!
One of the most interesting relationships on the field is in the upper left corner – GE / NBC / Comcast, and their streaming service Xfinity (and part ownership of Hulu). Of all the conglomerate / media owners in the space, this group is the biggest, having the most subscribers, the biggest variety of services available, and the most money to spend. They are in essentially every category in the stack, except for technology / Internet; like most entities in this level of the stack, they are pretty far removed from the lower levels of tech (even though GE makes TVs, they are still very much an “old” technology firm, and the entire group still represents “old media”). It seems to me though that this is likely to change more and more over time, even to the point of the group making a big acquisition or merger in the tech / Internet space; they’ve consolidated every other link in the chain, so it only makes sense for them to go the final step.
We can also see that Time-Warner is trying to position itself in much the same way, though you can see the difference in size between GE / NBC / Comcast and everyone else at their level is pretty vast. On the right hand side of the top of the stack, we see Viacom’s partnership through Paramount with Lionsgate and MGM in their Epix HD video streaming venture – online, on-demand movies from their studios. We also see CBS (once owned by Viacom) partnering with Amazon and their VOD service to broadcast their streaming video content. Interestingly, Wal-Mart seems to want to compete with Amazon with their recent Vudu acquisition, though it’s not clear what interest Wal-Mart ultimately will have in the space other than playing keep up with Amazon.
Scattered around the rest of the field are the other independents, primarily specialized in their particular category with the notable exceptions of Netflix (who has now started to generate their own content), Cablevision (who own the AMC network and have formed an exclusive partnership with Netflix to broadcast their Mad Men franchise on their video streaming service), and Sony. Sony, by its look, would seem to fit in with the other players at the top of the stack, being a conglomerate and media owner all in one – but their significant difference is that they are primarily a hardware manufacturer, and have massive household penetration with their PS3 gaming console and PSN gaming network (which by the by has 77 million registered accounts). Sony is a sleeping giant in this field, but they have somehow never been able to get their act together, most likely because they can’t help getting in their own way. But gaming consoles are significant, because they represent the next biggest platform for online video viewing after desktop computers and laptops.
Sony has been the conqueror of consumer electronics for decades, today rivaled and overtaken by Apple. Of course, Microsoft, Google, and Apple take up the bottom of the field as the major technology companies, and all of them have major interest in the space, though each has approached it more from the hardware end of things. Microsoft has clearly had the most success with its Xbox gaming console, while Yahoo! Connected TV, Google TV, and Apple TV have floundered – but Apple has iTunes, which gives them a massive advantage in the content delivery space, and some would say that they will keep their lead in smartphone and tablet hardware, which could give them the “second screen” part of the space as that market grows into a real one over the next several years. Their relationships with Verizon and AT&T also give Apple the pipelines they need to deliver content.
Last, but certainly not least, we have Facebook and Twitter, who have injected themselves into the field by adding value via their social networking services. Facebook is directly engaged with Netflix, even going so far as having Netflix’s CEO on its board. Netflix has as big an audience as any of the other media owners in the space, and they are hoping to engage their audience socially with Facebook; however, it’s clear that Twitter is the media’s darling, as they have been able to increase live engagement with existing television audiences.
Thanks for reading – please reply in the comments with any feedback, questions, or suggestions for improvement!