Netflix and Amazon invest in higher resolution technologies

Subscription video on demand (SVoD) services have among the lowest revenue per hour of content viewed and of paid content services, making premium content a greater investment.

Return on investment

While films comprise the largest number of UHD titles, TV series offer a better return on hours of content viewed per dollar invested, the IHS Markit white paper said.

On what the appeal of higher resolution technologies like UHD is, and whether viewers actually understand what they are looking at, ‎IHS Markit Senior Manager for Digital Media Irina Kornilova said: “Overall, the answer to consumer awareness on UHD is no, not really. Consumers don’t really understand UHD, because what we’re looking at here is a family of technological improvements, with varying degrees of applicability depending on the viewing scenario.

“We have higher resolution standard, also known as 4K, and we have UHD, with the definition generally used to describe a combination of technological enhancements to picture quality – higher dynamic range (HDR), wide colour gamut, and high frame rate,” she explained. “Each of those enhancements improve picture quality and realism. HDR provides brighter whites and deeper black, WCG provide broader range of primary colour, enabling true to life colour reproduction, while HFR providing sharper moving images.

Continued Kornilova: “These technological advances can offer benefits to various type of content: scripted content from broader colour palette; live sports coverage from both HDR and high frame rate that makes movements sharper; while documentaries benefit from wide colour gamut, providing true to life colour and HDR, providing sharper contrasts.”

4K and UHD are much misused words that can mean a lot of different things depending on who you ask, noted IHS Markit.

New technologies

They cover a range of new technologies that go beyond conventional HD (high definition) video and are set to transform the global TV and transmitted video industry.

This transformation is already under way, the research report stated.

The number of households with a 4K TV will grow from 28 million in 2015 to 335 million in 2020 and in 2016 the number of 4K households more than doubled from 2015, to 66 million.

In the UK, Netflix offers 63 UHD titles. Amazon Prime and Amazon Instant have 28 and Sky has 26. “Online video producers generally offer a broader range of UHD genres than traditional pay TV platforms,” said IHS Markit Senior Home Entertainment has 26. “Online video producers generally offer a broader range of UHD genres than traditional pay TV platforms,” said IHS Markit Senior Home Entertainment Analyst Jonathan Broughton. “To compete, the budgets have grown dramatically to fulfil their ‘blockbuster’ needs. We are now seeing TV drama budgets around the same levels as major theatrical releases. This means that more expensive production methods involved in UHD make up a smaller proportion of the total budget.”

Premium experience

Kornilova added: “Consumers will be becoming aware of quality 4K and UHD cinematic productions. For many, the cinema is the first location in which they will experience UHD technologies as a premium experience, at premium price. Subscription services are using UHD brand to market their content offerings, differentiating them from traditional TV.”

As to why Netflix and Amazon are investing in UHD and if the reason is to compete more with traditional pay TV platforms, Kornilova said: “At this point of time, Amazon and Netflix UHD investment is about marketing against each other and traditional TV.”