2017 Trends in Media & Entertainment: What Do They Mean for the Future?

11 December 2017
By Sergey Bludov, SVP Media & Entertainment

2017 Trends in Media & Entertainment What Do They Mean for the Future

Part 1. Streaming Drives Music and Video Revenue

While looking back at the past year, one thing becomes crystal clear: streaming has grown massively in 2017 and will continue to expand rapidly in 2018 and beyond. In fact, streaming has become the primary revenue driver for both music and video, thereby radically changing the way people consume content and profoundly altering the manner in which the industry and artists deliver media to fans.

Digital music downloads are quickly declining and being replaced by streaming, and it’s easy to understand why this is occurring. For the price of a single digital album download, consumers can gain access to tens of millions of songs via streaming services. And a growing number of music fans are making this switch, with over 100 million people now subscribed to such services around the world. According to the RIAA’s 2017 mid-year report, the U.S. recorded music industry experienced a 17% revenue increase in the first half of this year in comparison to 2016, and the primary driver of that growth is streaming. While total digital revenue accounted for $3.2 billion, or 84% of the total industry value, an impressive 62% came from streaming, equaling $2.5 billion.

Video streaming revenue is also growing at a staggering rate with no signs of slowing down. According to a report by Research and Markets, video streaming revenue is forecast to increase from $30.29 billion in 2016 to an incredible $70.05 billion by 2021, as consumers continue to embrace pay TV and OTT solutions for streaming videos. Moving forward, it’s expected that OTT will experience the most substantial market growth rate based on the increasing use of digital platforms for the branding and marketing of products.

Among other things, streaming powers the growth of digital distribution, creating more opportunities for independent artists. The world of independent music distribution has also expanded greatly over the past year, as a growing number of artists move away from major label deals to harness the personalized attention that indies can provide. UK-born company Ditto Music recently opened 12 new offices worldwide to serve its flourishing roster, while digital distribution and services company FUGA has signed a deal with London-based Ignition Records, following its expanding partnerships with a multitude of labels, including Epitaph Records and Ultra Records. Even Google is getting into the music industry with a big investment in the new US-based digital music distribution startup UnitedMasters, which was founded by the one-time President of Urban Music at Interscope Records, Steve Stoute.

Not surprisingly, the competition for streaming dollars has been growing exponentially. One of the biggest recent stories was Disney’s announcement that it is severing its distribution deal with Netflix in favor of launching its own streaming service in 2019. Additionally, reports indicate that Disney is considering buying some of 21st Century Fox’s entertainment assets, including the Fox movie and television studio and a share of Hulu, which would allow Disney to increase its television production to provide exclusive content on its forthcoming streaming offering.

Although some are still skeptical about the long-time inflow of streaming dollars, the streaming war is already fierce, and the battle is indeed just beginning. As companies attempt to secure dominance, technology will prove to be the best weapon in the streaming arsenal, thereby separating the leaders from the pack in the coming year.

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