TV industry primed for huge disruption as consumers shift to online videoTuesday, September 12th, 2017
Ahead of IBC 2017, CCS Insight sets out what the industry has to offer over the next 12 months
LONDON — As the global broadcasting industry heads to Amsterdam for the forthcoming IBC 2017, CCS Insight reveals the main themes shaping the sector.
Paolo Pescatore, vice president of multiplay and media at CCS Insight, comments, “We are not expecting major announcements at IBC this year. One of the key themes is likely to be more major partnerships being struck between providers. The industry is facing a period of disruption that underlines the importance of content and connectivity and emphasises that the future is all about Internet-based delivery, the cloud and mobility”.
He continues, “Innovation is becoming increasingly hard to achieve, but the industry continues to embrace change”.
Although no significant news headlines are expected to emerge at IBC, the TV industry is seeing some exciting advances.
Audiences are flocking to watch video on the Internet, as shown by Netflix’s phenomenal growth
Pescatore explains, “All providers are seeking to jump on Netflix’s bandwagon. It’s the first truly global online video service, an accolade that it’s achieved within a short period. It’s done a remarkable job of not only investing in original programming on a global scale, but also catering for local tastes. In my opinion, it’s still the benchmark for other video services. It’s moving closer to a position where it can dictate terms to its content partners. Netflix is quickly becoming an indispensable part of any content owner’s distribution strategy”.
All providers are strengthening their video offerings and pushing the boundaries
Commenting, Pescatore says, “With so many companies piling into video and TV services it’s becoming harder to differentiate. It’s all about the content and creating the next blockbuster”.
However, CCS Insight believes there are plenty of opportunities to be novel: with content (such as premium, user-generated and original shows), with user interfaces and with new features. The past few months have offered evidence of such initiatives, as AT&T has developed its DirecTV Now service, Amazon has launched its Channels offering and Facebook revealed its Watch video platform.
Huge battles lie ahead in the online video space
Pescatore comments, “Other content and media owners will follow Disney in pulling their programming from Netflix to differentiate their offerings. This will place greater significance on Netflix’s investment in original content”.
In addition, CCS Insight expect billions to be spent over the next few years as online giants move keenly into the market for video services. This will force the likes of Apple to step up their efforts. Pescatore notes, “It’s a great time to be a content and media owner, as the value firmly lies in great storytelling”.
Video providers will rely more on artificial intelligence
As competition intensifies, artificial intelligence will become a prominent theme. We expect it not only to support the search for the next blockbuster, but also to help companies evaluate the potential revenue of new content, identify gaps in their portfolios and guide them in promoting the right shows to individual audiences and markets.
Changes in the way content is produced, created and distributed are opening up opportunities for new parties to move into video and TV services. Pescatore explains, “Beyond helping providers tap into new revenue streams, the explosion in video platforms is being driven by their desire to learn more about people’s viewing habits. This gives companies the confidence to invest in content areas that will prove most appealing to their customers”.
CCS Insight also reveals its top predictions on what the future holds for the TV industry.
Traditional TV broadcasters in developed markets drop linear programming by 2025.
We believe that audiences sitting down to an evening of scheduled programmes will become an outdated concept. The shift in consumers’ preference to watch programmes when and where they like will lead to heavily blurred distinctions between live, recorded, on-demand and online content.
The move to Internet delivery of TV programming will see a return to large bundles of content.
There’s been a rush toward online video services and so-called “skinny” bundles, accompanied by a proliferation of separate apps for each provider. But in reality, CCS Insight believes customers will not want to sign up to numerous services, receive more bills and be forced to open several apps to find the content they want. In our view, the disparate and disjointed nature of these apps will lead frustrated customers to reengage with big content bundles delivered over Internet connections.
At least one European pay-TV provider will position itself as a content aggregator.
CCS Insight believes there is an opportunity for companies to offer their subscribers access to programming from a wide variety of sources, but more importantly integrate search and payment within their own systems. This would enable viewers to use a single electronic programme guide and billing system to access a broad range of third-party material.
Operators will wake up to the commercial value of their customer data.
We expect operators to turn to high-profile brands and other advertisers in the next 12 months in an effort to generate revenue from their deep knowledge of consumers’ behaviour and demographics.