MUMBAI: OTT subscription service Netflix has published a report called Long Term View. The report says that the evolution to Internet TV apps is already starting. It notes that existing networks, such as ESPN and HBO that offer amazing apps will get more viewing than in the past, and be more valuable. Existing networks that fail to develop first-class apps will lose viewing and revenue.

"Apps that provide on-demand viewing are critical because people don‘t love the linear TV experience where channels present programmes at particular times on non-portable screens with complicated remote controls. Finding good things to watch isn‘t easy or enjoyable. In addition to Netflix, most of the world‘s leading linear TV networks are moving into Internet TV," Netflix says.

It has given the examples of HBO and ESPN. ESPN, Netflix notes will keep improving their app to try to stay ahead of MLB.tv, which it says is another terrific Internet TV sports app.

"The HBO Go app makes HBO‘s films and series much more accessible than on HBO‘s linear channel. The BBC iPlayer app in the UK provides a rich and popular on-demand interface for a wide range of BBC programming. The other major linear networks are not far behind," according to Netflix.

Netflix adds that while Internet TV is only a very small per cent of video viewing today, the expectation is that it will grow every year because:

1. The Internet will get faster, more reliable and more available;
2. Smart TV sales will increase and eventually every TV will have Wifi and apps;
3. Smart TV adapters (Roku, AppleTV, etc.) will get less expensive and better;
4. Tablet and smartphone viewing will increase;
5. Tablets and smartphones will be used as touch interfaces for Internet TV;
6. Internet TV apps will rapidly improve through competition and frequent updates;
7. Streaming 4k video will happen long before linear TV supports 4k video;
8. Internet video advertising will be personalized and relevant;
9. TV Everywhere will provide a smooth economic transition for existing networks;
10. New entrants like Netflix are innovating rapidly.

Netflix goes on to note that eventually, as linear TV is viewed less, the spectrum it now uses on cable and fibre will be reallocated to expanding data transmission. Satellite TV subscribers will be fewer, and mostly be in places where high-speed Internet (cable or fibre) is not available. The importance of high-speed Internet will increase.
 
It cites examples of this transformation taking place in different nations. "In the UK, for example, the BBC is already starting to programme more for its iPlayer app than for its linear channels, given the large and growing viewing on the iPlayer. For most existing networks, this economic transition will occur through TV Everywhere. If a consumer continues to subscribe to linear TV from a multi-channel video programme distributor (MVPD), they get a password to use the Internet apps for the networks they subscribe to on linear."

The key to avoid cord cutting for networks, according to Netflix, is to keep their prime-time programming behind the authentication wall. It proposes that same consumer who today finds it worthwhile to pay for a linear TV package will likely pay for a ‘linear plus apps‘ package. Netflix further says that Internet TV apps will improve just like the mobile phone over the next 20 years.

In addition to creating opportunity for linear networks, the emergence of Internet TV also enables new apps like Netflix, YouTube, MLB.tv, and iTunes to build large scale direct-to-consumer services that are independent of the traditional MVPD bundle. Netflix notes that while it competes for entertainment time with traditional networks, the scope of such time is quite large. Consumer time devoted to web browsing and video games, for instance, has expanded hugely over the last two decades without a corresponding diminution of TV viewing.