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Streaming Entertainment Skyrockets, Authentication On The Rise

Some compelling evidence for the value of in-stream and preroll marketing. Streaming entertainment is strongly on the rise, according to DEG: The Digital Entertainment Group. As Hollywood Reporter describes, consumer spending on home entertainment rose in Q1 by 2.5% to $4.45 billion—largely due to the strength of streaming video.

Subscription streaming rose an estimated 545.5% to $548.6 million, largely due to Netflix’s successful conversion of disc renters to streamers (tragically non-ad supported). But ad-supported video-on-demand posted a gain of 6.8%, rising to $505.3 million. Total rental spending, consisting of disc rentals as well as VOD and streaming, rose 4.4% to $2.23 billion from $2.13 billion in the first quarter of 2011. The non-ad-supported UltraViolet (a studio-backed, cloud-based “digital locker” service) grew to 2 million accounts in Q1. UltraViolet allows a buyer to download a video and play it on any device, including a tablet or mobile phone.

Something had to give and as the New York Times described, that is in disc rentals. Total rentals excluding video-on-demand fell 18% in Q1, to about $1.8 billion, and from roughly $2 billion for the same quarter a year ago. Rentals from stores fell more than 39%, and from subscription services like Netflix by 48%. A surprise winner, as Deadline Hollywood describes: kiosk services led by Redbox, which “rocketed” 30.1%. Kiosk rentals are less expensive (as low as $1 per day) for consumers than, for example, the $4.99 to $7.99 consumers spend through Xfinity.

Stay Tuned for Authentication
Streaming content being as popular as it is, the content providers are discovering they can put restrictions on it (and share in the ad revenues). In fact, Hulu and Hulu Plus subscribers will soon discover that the “free ride is not so free,” as the New York Post describes. Hulu attracted 31 million unique users in March under its free-for-all model, but is taking steps to change to a TV Anywhere model, by which viewers must prove they are pay-TV customers to watch current hits. Viewers would need a cable or satellite account number to log into Hulu, and that shift was supposedly behind Providence Equity Partners divesting from Hulu after five years, sources told the Post.

Fox Network too is expected to require authentication from Comcast on-demand users, and Comcast is expected to require authentication to watch Olympic Games coverage this summer.

Likely, they’ll both survive authentication just fine, but after an initial dip. Turner Sports lost some digital traffic in March with its streaming NCAA coverage. Between paid subscriptions and the trials of TV Everywhere authentication, Turner Sports traffic to and March Madness Live broadband and mobile services declined 6% from the 2011 basketball tourney, to a still colossal 51.6 million visits between March 11 and the April 2 title game. On a daily basis, and March Madness Live averaged 1.1 million daily unique visitors, which was down 10% from 2011, and averaged 473,000 daily uniques on mobile, down 1%.


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