As we continue to look ahead at the evolving landscape of video streaming, the rapid pace of innovation and the sheer number of companies involved across the value chain are both exciting and, at times, overwhelming. To truly grasp the potential future of streaming, however, it's insightful to examine the historical journeys of other industries that have navigated similar periods of fragmentation.
Take, for instance, the seemingly simple act of paying with a credit card. Today, the near-ubiquitous acceptance of Visa and Mastercard (alongside American Express) feels like a fundamental aspect of modern commerce. But the path to this streamlined reality was far from linear, marked by decades of competition, regionalism, and a gradual, but ultimately transformative, consolidation.
In the early to mid-20th century, the credit card landscape was a patchwork of localized and often limited-use systems. Department stores, hotel chains, and even individual banks issued their own proprietary cards, primarily for use within their own establishments or specific geographic areas. Imagine traveling across the United States in the 1950s and needing a different card for every major retailer or hotel you encountered! This created significant friction for consumers and limited the potential for widespread credit adoption.
The first attempts at broader credit card systems emerged in the 1950s. The Diners Club card, founded in 1950, is often credited as the first modern charge card, initially accepted at a limited number of restaurants. American Express, with its roots in express delivery since 1850, launched its own charge card in 1958, leveraging its established brand recognition and travel-related services. These early cards, however, still operated more as charge accounts with a physical card, requiring full payment at the end of each month.
A pivotal moment arrived in 1958 with Bank of America's launch of the BankAmericard in Fresno, California. This card pioneered the concept of revolving credit, where users could carry a balance and pay it off over time, revolutionizing consumer finance. This innovation sparked competition, and in 1966, a group of banks formed the Interbank Card Association to create a rival system, which eventually became Mastercard.
The subsequent decades witnessed intense competition between these emerging national and international networks, along with various smaller players. Banks licensed the technology and issued cards under these banners, gradually building merchant acceptance networks. This expansion wasn't immediate or uniform. It took years for Visa (renamed from BankAmericard) and Mastercard to achieve the widespread acceptance we see today.
Several factors drove this gradual consolidation. The increasing mobility of the population demanded payment methods that transcended regional boundaries. The growing complexity of managing numerous individual credit relationships, both for consumers and merchants, created a natural pressure for simplification. Furthermore, the economies of scale inherent in building and operating large, interconnected payment networks favored the growth of these major players.
While American Express carved out a strong niche with its focus on travel and entertainment and a direct issuing model, Visa and Mastercard's bank-led licensing approach facilitated a more rapid expansion of acceptance points. The introduction of technologies like magnetic stripes in the late 1960s further standardized card usage and facilitated electronic processing, making the systems more efficient and scalable.
The result of this decades-long process was a significant consolidation, leaving a landscape dominated by Visa and Mastercard. This simplification dramatically benefited consumers by offering a convenient and widely accepted payment method, reducing the need to carry multiple cards and navigate complex acceptance rules. It also streamlined operations for businesses, allowing them to accept a few key cards and access a vast pool of potential customers.
We see parallels between this historical evolution and the current state of the streaming industry. Today, we have a proliferation of streaming services, each often employing a unique set of underlying technologies for various aspects of their operations:
- Back-end systems: Multiple vendors offer solutions for managing subscribers, billing, and rights management, potentially leading to data silos and integration headaches.
- Encoders: Different streaming services might utilize various encoding technologies and formats, sometimes creating playback inconsistencies across devices.
- Players: The market is saturated with video players for different platforms, leading to fragmentation in feature support and user experience.
- Content Management Systems (CMS): Numerous CMS platforms cater to video, potentially creating complexities in content distribution and metadata management across different services.
- Advertising platforms: A variety of ad tech providers exist, which can complicate ad serving and measurement for content owners.
- Analytics providers: Different analytics solutions can lead to inconsistent data reporting and a fragmented understanding of audience behavior.
Just as the fragmented credit card landscape caused confusion and inefficiency, the current diversity in streaming technology can lead to interoperability issues and a less seamless experience for viewers. Imagine a future where your preferred streaming services seamlessly integrate across your devices, regardless of the underlying technology powering them. This is the promise of consolidation.
We believe that, similar to the credit card industry, the streaming technology stack will inevitably undergo a period of consolidation towards fewer, more integrated providers. This won't necessarily erase specialization, but we expect to see a trend towards larger players offering more comprehensive and interoperable solutions. This can manifest as:
- The rise of integrated platform providers: Companies offering a suite of services covering multiple layers of the tech stack, from ingestion to playback, simplifying workflows for streaming services. One can say this is the re-birth of the systems integrator with added intelligence and added value on top, or the new birth of the systems aggregator.
- Standardization of core technologies: Greater adoption of common encoding formats, DRM systems, and API standards to facilitate seamless interoperability between different components.
- Consolidation through mergers and acquisitions: We may see larger technology companies acquiring specialized vendors to build out more holistic offerings.
- The emergence of dominant platform technologies: Just as Visa and Mastercard became the de facto networks for payments, we will see a few key technology platforms gaining widespread adoption across the streaming ecosystem.
This journey towards consolidation, while potentially taking time, ultimately aims to create a more streamlined and user-friendly streaming environment. By reducing the complexity behind the scenes, the industry can focus on what truly matters: delivering exceptional content and engaging experiences that are simple and enjoyable for everyone. Just as we no longer think twice about swiping a Visa or Mastercard almost anywhere, the future of streaming promises a similarly effortless and unified experience.
Join us next time as we delve deeper into the potential models of consolidation and what the landscape of streaming might look like in the not-so-distant future.
