After reading a news feed that commented on a statistic that physical media sales have declined by 19% over the last 5 years and I just had to add my view and comments. Please don’t be under the illusion I am a media mogul or media pundit, in this post I will hopefully add some Infrastructure focussed insightful provocative thoughts that focus on why this decline in sales might not be as dramatic when they run the same comparative reports in the next Five years.
So firstly, I do know why this decline is as its a tad obvious. Hopefully you have got the reason for the decline? Well yes its rise of Internet streaming and the on demand availability of films, TV programmes and video games all via a multitude of devices within the home and on the road. Scaremongers will say the decline is a lot to do with piracy and avoiding buying physical media but I’m not so sure that piracy dented buying figures that much in comparison to the VHS era when the video recorder was in full flow pirating films.
Netflix, Lovefilm, Apple are the new house hold names who are delivering what consumers of the current generation want to view, all on demand, on fancy new devices and without the expense or inconvenience of physical media. And of course with 19% decrease profits and the capability to innovate further with this profit they are certainly currently quashing competition, with the likes of Blockbuster, HMV and any other shop who has a primary business based on selling/renting good old physical discs being consigned to history if they don’t change their strategy in this area.
Wind this clock forward and what will the future look like when they run this report in Five years, will the streaming companies be able to keep up with demand?, who and what will be the dependencies for streaming companies to be able to succeed? Will we see a new innovative wave of technology that will eat into the streaming media businesses market share? Time to go into each of these and add my view and prediction.
As we all know, with popularity comes more demand and the publicity surrounding the Netflix outage that happened over Christmas just gone shows how much people really want and demand streaming services like they do normal TV. So will the likes of Netflix be able to meet this constant future growth demand? Infrastructure wise we know they use EC2, I think with streaming we may begin to see a point in time where this on demand any device scenario just isn’t sustainable from a cost/profit margin perspective, and I think that the popularity for streaming services will mean that we could begin to see more stringent policies around how much each user can download in a same fashion that I can’t use more than Two registered devices for SkyGo. If i’ve got say 4-6 devices all connecting to say Lovefilm at home that places a hell of a lot of demand on the backend compute delivering this and places load on networking connectivity both at the egress and my ingress points.
I have mentioned compute and networking as a key part of this future, and the question has to be asked whether when we even get to double the decline of Physical media sales at 40% we would be able to use the existing current home broadband backbone for on demand streaming in the same way that Digital replaced analog to give us more channels and better quality high definition broadcasting. I’d think that Telcos therefore will be both a winner in this and a dependency of the streaming media companies, and I don’t particular think they can afford to ignore this, both will need to work in tandem to deliver quality services, especially telcos who deliver other services into the home, that is of course if they’ll want to work in tandem, which leads me onto my other rambling.
So today we have Netflix who charge comparatively the same amount as my satellite provider, how long will it be before we start to see customers moving away from satellite television film offerings across to streaming services? I think we may begin to see more aggressive approaches by the TV companies that also provide broadband services under their portfolio like Virgin Media and Sky by blocking network access to Streaming services like Netflix on the all in one broadband/media package in order to either keep you on there core offerings or buy there own internet streaming services, and also lastly to be able to protect against delivering quality of service elsewhere via broadband.
Another winner in this will be of course the cloud infrastructure providers who have to both store the grand amounts of media and then deliver it to customers using infrastructure compute power. Netflix must have to strike deals with media companies on licensing agreements to succeed and deliver the much more up to date and rich content that consumers demand, and so in the same way they will need to strike deals with cloud providers like Amazon if they want to both deliver, and meet the demand to continually eat away at the physical media market.
So it will be an interesting time to see how the large media companies begin to unfold as they are certainly not going to fade away as the figures quite clearly show, and It will also be interesting to see if this aggressive decline we have seen over the last Five years will slow down and be replaced by a more dominant force due to the potential root causes and limitations highlighted in this post.