When will the media world become less fragmented?


The world of media is fragmented and has become more and more in recent years. With so many OTT services, consumers have more choice than ever, but at the same time, access the right combination of content usually means subscribing to several video services. We start seeing some convergence between global media brands. Does this open the way for consolidation and a less fragmented market?

From convergence to divergence
Some of the major global media groups are consolidating their OTT services into a single flagship offering. WarnerMedia recently launched HBO Max, which offers a wealth of high-value content from Warner Bros, New Line Cinema, DC and more, all in one service. Disney is another example of a media group going down the same path with its Disney Plus offering. Both have been met with great enthusiasm by consumers who see the value in having more content bundled into one service.

It is likely that other major media companies will follow the same pattern. Since many of these groups have a range of sub-brands, whether as TV stations or other media entities, this will lead, at least initially, to some level of convergence. Despite this, there is no real indication of any real consolidation over the next two years. This initial consolidation will quickly be followed by divergence in the media industry, driven by the need to effectively reach different target audiences and maximize monetization opportunities.

It is clear that it will be extremely difficult to create a service that suits all target groups and markets. It’s also not the most effective way to monetize content if everything is bundled into one service for a single subscription price. These large media groups will likely start creating many spin-off services, allowing them to reach niche audiences with more personalized content and monetize the content in a number of ways.

Growth of OTT video services
According to Research and Markets, the global OTT video market is expected to reach $133.7 billion by 2026, growing at 18.7% CAGR. This is mainly fueled by an increase in video consumption, which is also giving way to an increase in the number of video services entering the market. Parks Associates estimates that there are nearly 300 OTT services in the United States alone.

We are also seeing a plethora of new entrants entering what has become a more open and accessible market. Previously, it was very expensive to provide video services. Today, a selection of new tools means it’s much easier to roll out a new offering and businesses can be up and running in days (provided they have access to the right content).

It was also difficult to reach a niche target audience, but new more targeted marketing methods now allow media companies to provide very relevant services to a very specific set of users. All this means that the economy of a niche service is much better than it was years ago. The cost of a larger distribution being marginal, it creates a lot of experimentation and innovation, finally leading to a fragmentation of new services.

Given the ease of launch and targeting and the vast consumer appetite, we are unlikely to drive the flow of new service providers from niche providers at any time, even if we end up with some consolidation of major media players.

Finding the Future in a Fragmented Media World
It is widely established that most consumers are happy to subscribe to multiple OTT services. The main challenge we see from this fragmented market is that of content discovery.

Users are increasingly frustrated with subscribing to multiple services because it means they will have to navigate between them to find the content they want to watch. Companies that succeed in solving this challenge, enabling a better cross-department experience, are highly likely to attract and retain consumers.

A recent market study commissioned by Accedo showed that 44.4% of global OTT providers are very keen on expanding their content catalogs by including content from other providers. Another 47.8% say they would consider doing so, at least to some extent. We believe that many new partnerships between various video service providers will emerge, creating both business challenges and new opportunities.

The content discovery challenge is something operators can play a major role in solving. Like 20 years ago, they can be the trusted entry point serving as a natural curator of various video services when mass market consumers want better discoverability – an exciting possibility, but with significant business and technical challenges. , is a seamless experience for consumers where they log in once and access all content from multiple providers in one central experience. While this presents considerable challenges, with both parties clearly benefiting from a partnership, we believe there are ways forward for pragmatic, business-oriented operators and video services.

Over the coming months and years, we will see new business models created between the parties that will bring mutual benefits to suppliers and a better experience for consumers. As the media landscape continues to be fragmented, it will be easier for consumers to navigate and access the content they want to watch.


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