Further fueling the fire is the fact that consumers don't care how they watch shows. For every millennial that's comfortable watching shows via their iPhone, a proportionate number of Baby Boomers prefer to watch on a traditional television. Despite the technological difference, they share one common trait: the content has to be good. In the "golden age of content," there has been no shortage - from AMC Networks' (AMCX) Walking Dead to Amazon's Alpha House. Still, a hit show is a formula that no one can 100% predict, so TV networks are not only competing with themselves and premium channels like Time Warner's (TWX) HBO and CBS' (CBS) Showtime, but the slew of nontraditional Web-only companies eager to get in the game.
"These companies are very, very good at analyzing data and they use it to further their businesses, but when it comes to what's going to be a hit show ... It's a very mysterious thing as to what's going to resonate with people," said Paul Verna, senior analyst at eMarketer.
The consumer may have more choice now when it comes to watching television and can even go so far as to drop their traditional cable TV package, but there are still limitations, specifically different companies gaining exclusive content deals. For instance, I don't have Amazon Prime so that means I can't watch Downton Abbey, which Amazon gained the exclusive rights to recently. But I do have Netflix and HBO, so House of Cards and Game of Thrones is viewable.
Verna says this is still a disadvantage for consumers because they're not likely to buy all the services, they will still have to pick and choose what best suits them. And that means it will be hard for one streaming service to win over them all. "The audience is there, but the audience is very fragmented."
Adgate agrees. "There no real reach vehicle online. You're not reaching a lot of viewers. This is just hyper-fragmented," he says. "There's just more and more choices meaning there is just going to be more and more programs to watch and it's going to get harder and harder for any particular program or advertiser" to dominate.This is where the original content will play an important role. "This is going to be a very competitive landscape in the coming years," Adgate noted.
It will also be "the next hot product category with advertisers. The ones who watch these shows are the ones who advertisers covet -- the 18 to 49 age group," Adgate stated. Indeed it already is. Yahoo! is hoping to woo advertisers by culling four new Web series that would rival shows on Netflix or premium cable channels, according to The Wall Street Journal.
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