Profound changes in TV broadcasting
December 2017
Challenges
The TV sector has been experiencing profound changes.
New technologies and consumer behaviours are the roots of this revolution:
Whilst video viewing time is growing, its mix has changed and its growth comes from digital video, and in particular mobile, tablets, and connected TVs
Consumers, especially Millennials and Gen Xers, increasingly watch TV in a non-linear fashion through streaming services, thanks to mobile devices, the internet, and fixed and wireless broadband
TV programmes can be consumed over a multitude of channels, platforms, and devices (game consoles, smart TVs, video streaming devices, set-top boxes, tablets and smartphones, laptops and desktops)
Data is growing exponentially
Viewers do not really care about the distribution platform, as long as they get tailored content of quality, a customised experience, flexibility, reliability, responsiveness, and reasonable pricing
The video audience nowadays has a shorter attention span, and is multi-tasking
The distribution competition is intense amongst digital terrestrial, cable, satellite, IPTV, and vMVPD providers:
It is cheaper to produce and distribute content, and new entrants have appeared
OTT players have disrupted the value chain, gained direct access to consumers, and taken market share away from traditional Pay TV and FTA broadcasters
vMVPDs, who provide ’skinny bundles’ over the internet, appeal to the younger digital generations and have acquired a substantial share of the US subscribers
Video streaming companies are spending on content nearly as much as traditional networks in the US
Telecom operators and ISPs are offering IPTV services over set top boxes, and are acquiring content companies
The audience fragmentation creates promotion and monetisation challenges:
With the advent of video streaming and the shortening of SVOD windows, media firms have been unable to monetise through content scarcity
‘Cord-cutters’ and ‘cord-nevers are leaving or staying away from traditional pay-TV providers, especially in the US where subscription packages are expensive
As exclusive content is being divided across numerous platforms, viewers may find it bothersome and expensive to subscribe to different providers
It is difficult to promote content, gain visibility, reach and engage viewers across numerous screens and channels
Ad blocking is also disrupting advertising revenues in digital media
Besides, new regulations have been created or are pending, in areas such as net neutrality, FCC decisions in the US, and portability of online content and services in the EU.
The above are general trends, and each country has its own characteristics based on its society, technology and broadband development, regulation, competitive landscapes made of cable, satellite, ISP and OTT providers, as well as their acquisition history.
SOLUTIONS
Business and Content Strategy:
TV service providers should:
Leverage their strengths, and analyse and formulate their business and content strategies by market, territory, demographics, and customer segment
Provide high-quality content
Offer programmes appealing to global fans, but also content tailored to local tastes, and niche content for specific communities or verticals
Keep abreast of evolving consumption behaviours, and adjust their content offerings accordingly
Tailor their offering, content format, programming, and pricing by platform, consumer segment and demand, and even by their mood
e.g. OTT short-form video over mobile devices for younger generations, and longer series programmes for binge watchers
Be nimble when addressing the needs of cord-shavers, and offer them ‘skinny bundles’
Better engage viewers across platforms through social media, targeted content discovery, personalisation, and recommendations
Consider playing the role of platform of platforms, curating content, and offering an aggregation service for people who cannot afford combining various TV packages
Explore opportunities in the areas of esports, live video, and social video
Partnerships/Acquisitions
Media firms should consider:
Creating more exclusive content and acquiring other content providers in order to strengthen their bargaining power with advertisers and with digital and telecom companies
Creating their own distribution platform in order to offer their excusive content through streaming services, gain direct access to their end-consumers, and build up their data
Signing partnerships with telecom operators who require content for differentiation, notably in emerging markets, but cannot compete on content creation with Netflix and Amazon
Partnering with ‘FANGs’ in specific areas, after analysing them, understanding their motivations, and pre-empting their next competitive move
Technologies
Media companies should invest in upcoming technologies, and research the most appropriate type of content and mode of distribution for each of them:
With the introduction of UHD technologies, viewers’ quality expectations will rise
Passengers of autonomous cars will have the opportunity to enjoy infotainment
5G will also enable more advanced media applications on mobile devices
VR/AR will bring a more interactive media experience
Organisation and culture
Traditional media and telecom companies must continue to manage their core business but also evolve fast and become digital and flexible. This requires cultural change.
Operations
Media companies should:
Provide the scale of broadcast with all the advantages of OTT services
Provide a seamless viewing experience across platforms and devices
Become expert at AI, especially machine learning, in order to adopt richer clustering (rather than just genre), offer more advanced personalisation, and predict the programmes to broadcast and the content to produce
Adapt their payment technology and process to the local market
Digitise their content, and build metadata for current programmes and archives
Deploy data analytics and CRM, acquire a good understanding of their viewers, and cross fertilise data and content
Deploy Cloud and Edge computing
Develop cost-effective and secure storage and distribution platform
Create their own mobile application
Ensure data security and privacy
Make their operations and marketing function agile using DevOps
Integrate and manage holistically and rights, advertising sales, social media, marketing, and data analytics
In the meantime, OTT TV providers have to scale and ensure the robustness of their operations, notably when covering live sport events.
Regulation
All TV players need to monitor and anticipate changes in regulation, and adjust their strategy accordingly.
Should telecom operators favour their own content over those of other programmes, they would risk a customer backlash for not respecting net neutrality.
Lanai Consulting can help you assess the impact of competitor moves or regulatory changes on your TV markets and consumer segments, formulate your strategy, evaluate your corporate acquisitions and operations investments, and shape your change programme.