Viewers are diverging while platforms are converging. What’s next in the broadcast industry?
Radical transformation has taken place over the last decade in the broadcast industry with technology now delivering content to consumers in a “whatever, whenever and wherever” experience.
The Future is Digital
Over The Top (OTT) is the delivery of film and TV via the internet without requiring users to subscribe to a traditional cable or satellite pay-TV service. OTT is central to the recent major digital disruption of the broadcasting industry. Video is now driving mainstream broadcast strategies and it’s inevitable that the future of broadcasting will be digital.
SVOD players such as Netflix, Amazon, Hulu, etc. are emerging from outside the traditional TV ecosystem and they were the pioneers of innovative business models to engage with consumers through video services.
So what’s Actually Changed?
In the digital era, broadcasting companies should strategically reinvent their offerings to move ahead of the massive shifts happening across the industry. To stay focused and competitive, it is important to understand how the digital era has changed the key process of the broadcast industry such as consumers, technology, programming and advertising.
As consumers like to view the content on-the-go and mobile continues to grow, the average consumer is watching 4 more hours of mobile video weekly than they did 4 years ago. The shift is partly because viewers prefer individually tailored content experiences, but also due to the increase in quality content created for smaller screens. Due to higher bandwidth of network and advances in technology, traditional scheduled TV watching is no longer the norm. Instead, OTT video accessible anytime and anywhere is now the mainstream. Viewers are diverging while platforms are converging. That creates challenges for the industry as it looks for new ways to meet consumer interests.
People are watching more television, consuming more videos, but the key divergence has been the viewing experience, which has expanded to multiple screens. As screens get both smaller and larger, the consumer experience is key to survival. As OTT rises, it’s no wonder that smart TV and connected TV video streaming devices continue to lure audiences back into the living room.
The impact of pay TV providers is broadband, which continues to provide higher profits than video. Broadband home growth driven by OTT gains, is helping to offset the higher programming costs and the decline in video revenue caused by cord-cutting. Mobile data traffic is increasing everywhere due to rising amounts of videos and users. In the future, broadband and wireless will continue to influence the content bundle with faster data speeds, lower device costs and more connected screens.
As Virtual Reality ( VR ) technology moves into the consumer space, the industry is extremely interested in its potential impact on storytelling, audiences and revenue. Media companies such as Paramount Pictures and Disney have applied marketing campaigns creating interactive forms of media. Content produced for VR permit the audience to view the entire environment in every scene, creating an interactive viewing experience. Live events and games will help pave the way for VR adoption.
The consumer movement across platforms has created a major change in how content is made, distributed and monetised. Hit content has become a major differentiator and an increasing source of leverage. To free-up resources to create big-budget content, networks have begun to trim selling, general and admin expenses.
Live sporting events, hit content and original, niche programming continue to generate strong viewership and rates while middle tier entertainment networks are falling behind.
The ad industry continues to be dynamic and volatile. Spending on digital media has increased in social and video formats, but the technology to deliver advertising in the online TV ecosystem lags behind usage. Consumers access content through subscription based, ad-free, video-on-demand services and as these services have become popular over the years it has led to a decrease in adverting spending.
Broadcast and cable networks have been the target for advertisers because of their capability to deliver a massive number of viewers in real-time. But advertisers can now aggregate viewers of similar size instantaneously through OTT videos. Online players are developing innovative ways to entice advertiser’s interest, to reach large and different digital viewers. And these platforms benefit from real-time bidding, with better demographic targeting at a more efficient cost.
Conclusion – Understand your Market and offer Outstanding Content
Factors such as high speed internet connectivity and broadband infrastructure, smartphones and live streaming apps, social networking and cutting-edge technology have transformed the television experience from linear to an era of “whatever, wherever and whenever experience”. As OTT becomes part of consumer’s everyday life, there are new methods and opportunities to drive growth and revenue in the broadcast industry.
To stay competitive in the digital era, broadcast companies should be strategically focused to understand market dynamics, content consumption patterns, audience interests and advertiser responses. Many new forms of multimedia services become possible with the introduction of digital delivery. One thing is undeniable – attractive content is certain to be the key factor to stay successful in the digital era.