Introduction:
A market on the move
“On-demand-services will disrupt the TV and video industry”,
“New market players such as Netflix or Amazon will soon replace traditional broadcasters”,
“Consumers’ demand for TV and video consumption is fundamentally
changing”: established players are being increasingly confronted with horror
news about their own positioning within the future TV and video landscape
But will these dramatic predictions really
come true? TV and video are indeed
facing much uncertainty, and the extent
of change in the sector is hard to foresee.
Streaming services no longer serve as just
a platform for movies and TV shows, they
are also investing in producing and licensing
their own content. This places them in
direct competition with the traditional TV
and video industry. At the same time, TV
channels and media organizations are
starting their own on-demand offerings.
Also, large content producers are setting up
their own streaming services.
India to overtake US in digital video consumption by 2020
India’s sudden rise of short-video consumption from its smaller cities,
coupled with a similar viewership increase from metropolitan cities for
long video content on platforms such as Netflix, Hotstar, and Amazon Prime,
have put the country on top in the global ranking for consuming around 7.69 gigabytes per month.
A forecast by digital trends research firm eMarketer claims that by 2020
India is likely to overtake US in terms of time spent on watching digital videos.
This year, an average Indian adult spends two hours and six minutes daily watching
digital videos majorly through mobile devices. By 2020, this figure is set to
touch 2 hours and 21 minutes. The spike in the viewership of short videos is a
key driver with the usage of popular apps like YouTube that has 265 million
users in India, and TikTok with 200 million users and 120 million daily
active users in the country.
In a scenario where the US market seems to have reached a saturation point
in the subscription video on demand (SVOD) market, countries like India have taken up the ante,
and that too in landslide numbers. By 2020 India will have 159.7 million SVOD users up from
140.2 million in 2019, while there were 182 million SVOD users in the US as of 2019 according to eMarketer.
It comes as no surprise that the big over-the-top (OTT) streaming services—Netflix,
Amazon Prime, and Hotstar—are finding their moolah in the evolving Indian OTT market and thus pushing their stakes aggressively.
A report by Leichtman Research Group says that the US market has matured with 74%
of all US households having a SVOD service in 2019 from either Netflix, Amazon Prime or Hulu—up from 64% in 2017.
Just two years ago, the number of SVOD users in India was a mere 28.7 million.
The explosive growth was because of the ‘Jio Effect’. In September 2016, the
Indian wireless telecom space was disrupted by the launch of Reliance Jio that offered 4G services at dirt cheap rates.
The result: 50 million subscribers signed up to Jio within 83 days of launch at that time.
The growth of SVOD in India is also attributed to low-priced subscription rates by top players
like Hotstar and Netflix. Walt Disney-owned Hotstar tops the OTT market in India with a 70% share,
and offers an annual subscription service for just USD 5.34 (Rs 365). While Netflix recently launched
a low-priced mobile-only monthly subscription plan for India,
starting from USD 2.78 (Rs 199).
The lucrative OTT space in India now has 34 players comprising American platforms such as Netflix
and Amazon Prime as well as local Indian services like ZEE5, VOOT, Eros Now and ALTBalaji.
With the boom of SVOD platforms, video viewers in India can watch popular TV shows and movies online
at a cheap rate and at their own convenience. This has led to the decline of the number of pay TV users
in the country. According to the Telecom Regulatory Authority of India,there were 170 million pay TV users
in India in 2018, which dropped to 116.3 million by the the end of 2019.
1) Latest estimates show that since entering the Indian market in 2016,
Netflix will have 10.2 million viewership by 2020.Netflix viewership in India
makes up less than 5% of all digital video viewers in the country
2) Likewise in the UK, streaming
video services have gained in importance,
already 41% of all consumers purchased
such a service in the UK.
3) Even in the more
conservative German TV market, 44% of the
population make use of subscription-based
videos-on-demand (SVoD) at least once a
week.
4) With the success of VoD, consumers
increasingly expect relevant content
accessible at any time, in any place, and in
the format that best fits their needs.
This rapidly changing market landscape
makes future predictions difficult, if not
impossible.Therefore adopting a more
holistic approach – I now invite you
to travel with me to the year 2030 to take a
glimpse into four scenarios of the future of
TV and video. This scenario approach does
not aim to predict the most likely outcome,
but to illustrate what could plausibly happen
in the world of TV and video and how
today’s market players might adapt to deal
with the many changes and uncertainties
along the way.
In what ways are digitalisation and VoD providers such as Netflix changing the market of the future?
the TV and video market is highly dynamic and is characterised by a great number of drivers:
digitalisation, new market offers, and disruption by digital players ensure rapid change.
Moreover, consumer expectations and usage habits are changing rapidly in the age of video-on-demand
and mobile media consumption. This webinar focuses on future scenarios for the TV and video industry by
2030 demonstrates what market players need to be ready for.
Six statements outline the key future developments in the TV and video
industry which can be clearly foreseen:
1) Digitalization will change content
production, distribution, and
recommendation functionalities.
All-IP becomes the standard for TV and
video distribution. Fiber infrastructure
and 5G networks will handle the massive
increase in digital traffic caused by an
increasingly flexible and mobile use of
media offerings. Beyond that, they will
strongly drive the digitalization level of
video production processes. Artificial
Intelligence (AI) and analytics become key
elements of smart content discovery with
intelligent recommendation functionalities.
2) Traditional TV and non-linear content
offerings will coexist.
Linear and on-demand content will
be equally important and will coexist
peacefully. Video-on-demand will soon
become mainstream in all population
groups, at the same time linear TV remains
significant. Especially live content such
as sports and major events will preserve
the high importance of traditional, linear
television
3) Advertising becomes targeted.
TV and video advertising will adapt to
new formats and increasingly focus on
personalized ads. Leveraging consumer
data will enable stakeholders to hypertarget their ads and content, and thus
maximize customer experience and value.
However, the extent of targeted advertising
still depends on regulation and consumers’
willingness to share their data. Advertising
marketing will be something between a
fully automated process and individual
sales negotiations.
4) There will be moderate market
regulation overall.
Market regulation will be more moderate
compared to the highly regulated media
industry today. The lower level of regulation
for online and mobile offerings leads to
a reduction of the regulatory pressure
for all market players, especially for the
traditional media companies. In particular,
lower regulatory pressure will lead to a
higher level of freedom when it comes to
cooperation between market players and
concentration of media ownership. Net
neutrality will continue to exis
5)Advertising and direct revenues will
remain most relevant.
Generating new revenue streams is rather
difficult for the protagonists in the TV and
video market. Innovative offers such as
demand-based-pricing for content will
not prevail to a major extent. In addition,
consumer data has been only partly used
to monetize. There are only a few new datadriven revenue streams for broadcasters,
as consumers show only a moderate
willingness to pay with their data.
6) New and existing players will
reposition along the value chain in a
partly consolidated market.
The global media industry will be partly
consolidated. Stakeholders will make use
of strategic mergers, acquisitions, and
alliances to strengthen their content quality
and distribution capability. Moreover,
numerous market players will shift
along the value chain by expanding their
businesses. Broadcasters will focus on
their core competencies but also occupy
some other positions in the value chain.
OTTs become more important in the future
TV and video market, whereas tech players
play a minor role. Looking at content
production, both traditional studios and
non-traditional providers will be part of it
Four future scenarios for 2030:
As a result of an analysis, the following four future scenarios for the TV and video industry by 2030 have been developed;
Scenario 1: Universal Supermarket
Scenario 2: Content Endgame
Scenario 3: Revenge of the Broadcasters
Scenario 4: Lost in Diversity
Scenario 1
Universal Supermarket
In this scenario, a few global digital platform
companies have taken over the leading role in
aggregation and distribution from national broadcasters.
They control the TV and video market and have entered
all steps along the value chain, including creation,
aggregation, and distribution of content and the direct
customer relationship. Like large supermarkets, each of
the digital platform companies offers an extensive range
of global and national content, only differentiated by
some exclusive productions and sports rights.
Broadcasting as we know it today has
disappeared. Since video content is
distributed in all-IP and mainly online
over the internet, broadcasters have
been through a painful process of change
and evolved into pure creators of largely
national or specialized content, without
any stakes in distribution or customer
relationship. They are now a supplier of their
own channels and streams to the digital
platform companies’ universal supermarket.
However, broadcasters remain a relevant
part of the video landscape. Consumer
demand for relevant content such as news
or local(ized) formats has saved their
existence.
At the beginning of the market
transformation process, consumers were
overwhelmed by the quantity of content
available and the proliferation of content
providers. That confusion quickly evolved
into frustration. Subsequently, global
digital platform companies exploited their
technological capabilities to develop smart
selection and recommendation, supported
by artificial intelligence.
In addition, they initiated the consolidation
of the vendor landscape: The financial
capabilities of the global digital platform
companies allowed them to acquire
exclusive sports rights and produce
global blockbuster content, displacing
comparatively smaller players such as
broadcasters and content creators from
important stages of the value chain.Advertising, as well as consumer
relationships, has also shifted to the digital
platforms. Broadcasters are dependent on
the revenue shares from digital platform
companies and cut off from direct paid
content and advertising revenues.
Advertising agencies and traders have
disappeared, rendered irrelevant by digital
platforms’ direct models of ad trading.
Beyond that, their technological prowess
helped in implementing new, personalized,
and interactive forms of advertising.
In this scenario, regulators did not take
significant steps to monitor and control the
digital platform companies’ market strength.
Though the market is consolidated,
access to local content is widely regarded
as guaranteed. From the regulator’s
perspective, the digital platforms are doing
a decent job in catering for different cultural
tastes and providing local quality content.
Scenario 2
Content Endgame
In the ‘Content Endgame’ scenario, large global content
owners are the winners of the market transition. They
have integrated vertically along the entire value chain
and started to withdraw and withhold content from
digital platform companies and distribute via their own
channels, bypassing the platforms and establishing
direct customer relationships
Content has become the main
differentiating factor in the video market,
while technologies such as distribution,
search, and recommendation are
considered a commodity.
Big content owners with strong program
brands and global reach target a global
audience with costly blockbuster
productions and benefit strongly from
economies of scale. Smaller producers have
been pushed out of the market. The variety
of content has decreased, but the quality
of global productions has reached new
dimensions.
Broadcasters have survived by shifting their
focus solely to the creation of strong local
formats. They have evolved into suppliers to
the big global content owners and benefit
from the protection of national regulators
Digital platform companies have retreated
to becoming pure distribution channels,
focused purely on technical delivery. The
digital platform companies’ business
model has changed fundamentally, since
consumers are no longer paying for a
specific platform, but directly for their
preferred content. Apart from advertising,
freemium services have become a relevant
source of revenue for digital platform
companies.
As content really is king in this scenario,
global content owners negotiate directly
with advertisers. New ad models on a
global scale have proved to be beneficial for
content owners and international consumer
brands. Finally, advertising partnerships
have been established in the market, with
sponsoring and content marketing being the
most important examples.
Scenario 3
Revenge of the Broadcasters
In this scenario, national broadcasters have successfully
accomplished thetheir digital transformation and
secured a strong position in the TV and video ecosystem.
Broadcasters have evolved into digital platforms
established direct customer relationships and deliver
on-demand content. During the transformation process,
broadcasters developed excellent digital capabilities. They
have entered new services such as targeted advertising
and recommendation functions, which had previously
been dominated by the digital platform companies.
Furthermore, the high relevance of content for a national
audience puts broadcasters in a superior market position,
supported by regulatory measures such as content quotas.
National broadcasters and global digital
platform companies coexist in the market.
This guarantees a great richness of content.
While national broadcasters focus on local
quality content, digital platform companies
supply global productions and blockbusters.
Viewers can chose whether they want to
watch linear or non-linear content from
global or national sources.
Apart from several content partnerships,
technological alliances have also shaped
the market. All-IP network operators helped
broadcasters during the transformation
process with their expertise in digital media
distribution and by leveraging customer
data. With their national footprints,
network operators and broadcasters are
ideal partners serving the same regional
markets. The alliance resulted in an efficient
distribution of content via high-performance
platforms with smart access to customer
data.
In this technologically advanced scenario,
broadcasters are gaining valuable customer
insights that are highly relevant to
advertisers. The collected user data would
be an effective enabler for fully personalized
advertisement, but advertising is part of a
strong regulatory framework with strict data
privacy rules. Advertising agencies have
remained in the market and are helping
broadcasters implement innovative ads
within the legal guidelines.
Broadcasters also benefit from strong
media regulation at a national level as
local content production enjoys firm
regulatory support. The strict national and
European regulatory regime is the answer
to the threat of globally dominant digital
media companies. With corresponding
measurement systems, broadcast industry
bodies have secured a strong national
media industry.
Scenario 4
Lost in Diversity
In our fourth and final scenario, the TV and video market
has evolved into a diverse ecosystem with no dominant
players. Instead, consumers are served by numerous
distribution platforms, a great richness of content, and
a steady turnover of players in the market. Demand
for national content remains strong, so partnerships
between global and local players are widespread. The clear
distinction between content production and distribution is
another key characteristic of this scenario.
Everyone does everything in this scenario:
Global digital platform companies have
established direct customer relationships.
Telecommunications providers,
broadcasters, and content producers have
also successfully created their own digital
platforms. Digital platform companies
contribute global formats such as highprofile series. To provide relevant local
content they also forge alliances with local
producers. Network operators act as
super-aggregators. They provide access to
content and structure the market from the
customer’s perspective by offering guidance
across platforms. Consumers are only
interested in content and therefore tend not
to be loyal to any one platform.
National broadcasters capitalize on the
consumers’ huge appetite for local news,
sports, movies, and series. Broadcasters
who started their digital transformation at
an early stage are using their own platforms
for content distribution. Others have
established partnerships with platform
providers, with the general trend towards
co-productions between broadcasters and
global digital platform companies. All in all,
national broadcasters remain independent
and maintain their livelihood by various
revenue streams.
In this vivid and dynamic market, advertising
agencies continue to have a high relevance.
They systematically allocate advertising
budgets and provide guidance within
the complex TV and video ecosystem. As
digital platforms facilitate personalized
advertisement, agencies had to acquire
comprehensive data analytics skills. In this
way, they became indispensable advisors for
advertisers.
The primary concern of regulators in this
scenario is the preservation of local content
and media companies. With their regulatory
decisions, they have strongly protected
national broadcasters and put them in a
position to compete against the digital and
financial muscle of the large global digital
platform companies.
Taking a closer look
Looking at the final set of scenarios, we see digital platform companies (DPCs)
being the major disruptors in the future TV and video market. By contrast,
broadcasters and content producers face the greatest pressure for change.
We will therefore take a closer look at the strategic options for those two
stakeholder groups.
Even though our four scenarios are highly
divergent, a few overarching implications
are highly relevant for all of them. Firstly,
broadcasters and content producers can
no longer rely on their current market
positions. To safeguard their business
models and future revenue streams,
they need to be open to cooperation and
alliances, even with their direct competitors.
Joint production, distribution or even
platforms are appropriate measures for
countering the threat posed by the DPCs.
In parallel, regulators need to become
less restrictive when it comes to alliances
between equally positioned players within
the TV and video value chain. Broadcasters
and content producers must work towards
convincing regulators to permit such
cooperative models.
Beyond that, established broadcasters and
content producers must continuously invest
in their technological skills. Technology has
become a core element of their business processes, and mastering them is a
prerequisite to being well-positioned in an
increasingly digital video market landscape.
As a result, traditional players must become
attractive enough for digital talents as well
as for creative minds, because in addition to
technology, attractive and creative content
certainly remains king.
Next to these overall implications, we
have different distinguishing factors in
each of the four scenarios, which affect
the actual options for broadcasters and
content producers. Depending on the
respective scenario, stakeholders must
draw appropriate fundamental conclusions.
However, the risk potential for each market
player must be analyzed separately in order
to develop individual strategic options.
Universal Supermarkets
In the Universal Supermarket scenario, broadcasters und content producers
need to focus on the implementation and positioning of strong content brands.
This branded content must be used to improve bargaining positions when
negotiating partnerships with content distributors. Also, content brands
should seek more international licensing and levereage. To secure additional
revenue streams, broadcasters and content producers must extend their
business models beyond the TV and video market into other fields, such
as merchandising.
Content Endgame
Larger content producers need to invest more strongly in international content
production directly or via subsidiaries to keep pace with their big global
counterparts. Besides this focus on content, larger producers must strengthen
the fields of customer relationship and advertising marketing in the Content
Endgame scenario.
Smaller broadcasters and content producers need to position themselves as
inimitable national partners for global players through unique, local, and
strongly branded content. Furthermore, they must explore alternative
distribution channels through strategic alliances with DPCs or IP network
operators.
Lost in Diversity
In the Lost in Diversity scenario, broadcasters and content producers must
clearly place the emphasis on their own strengths. In a world in which
everyone does everything, only a strong focusing strategy and appropriate
investments secure the future market existence of broadcasters and
content producers.
Revenge of the Broadcasters
In this scenario, broadcasters must keep an eye on the general conditions
of the video market. They need to be aware of their political role and must
exert influence to prevent adjustments in the the regulatory framework
towards a less strict regime.
A market on the move
“On-demand-services will disrupt the TV and video industry”,
“New market players such as Netflix or Amazon will soon replace traditional broadcasters”,
“Consumers’ demand for TV and video consumption is fundamentally
changing”: established players are being increasingly confronted with horror
news about their own positioning within the future TV and video landscape
But will these dramatic predictions really
come true? TV and video are indeed
facing much uncertainty, and the extent
of change in the sector is hard to foresee.
Streaming services no longer serve as just
a platform for movies and TV shows, they
are also investing in producing and licensing
their own content. This places them in
direct competition with the traditional TV
and video industry. At the same time, TV
channels and media organizations are
starting their own on-demand offerings.
Also, large content producers are setting up
their own streaming services.
India to overtake US in digital video consumption by 2020
India’s sudden rise of short-video consumption from its smaller cities,
coupled with a similar viewership increase from metropolitan cities for
long video content on platforms such as Netflix, Hotstar, and Amazon Prime,
have put the country on top in the global ranking for consuming around 7.69 gigabytes per month.
A forecast by digital trends research firm eMarketer claims that by 2020
India is likely to overtake US in terms of time spent on watching digital videos.
This year, an average Indian adult spends two hours and six minutes daily watching
digital videos majorly through mobile devices. By 2020, this figure is set to
touch 2 hours and 21 minutes. The spike in the viewership of short videos is a
key driver with the usage of popular apps like YouTube that has 265 million
users in India, and TikTok with 200 million users and 120 million daily
active users in the country.
In a scenario where the US market seems to have reached a saturation point
in the subscription video on demand (SVOD) market, countries like India have taken up the ante,
and that too in landslide numbers. By 2020 India will have 159.7 million SVOD users up from
140.2 million in 2019, while there were 182 million SVOD users in the US as of 2019 according to eMarketer.
It comes as no surprise that the big over-the-top (OTT) streaming services—Netflix,
Amazon Prime, and Hotstar—are finding their moolah in the evolving Indian OTT market and thus pushing their stakes aggressively.
A report by Leichtman Research Group says that the US market has matured with 74%
of all US households having a SVOD service in 2019 from either Netflix, Amazon Prime or Hulu—up from 64% in 2017.
Just two years ago, the number of SVOD users in India was a mere 28.7 million.
The explosive growth was because of the ‘Jio Effect’. In September 2016, the
Indian wireless telecom space was disrupted by the launch of Reliance Jio that offered 4G services at dirt cheap rates.
The result: 50 million subscribers signed up to Jio within 83 days of launch at that time.
The growth of SVOD in India is also attributed to low-priced subscription rates by top players
like Hotstar and Netflix. Walt Disney-owned Hotstar tops the OTT market in India with a 70% share,
and offers an annual subscription service for just USD 5.34 (Rs 365). While Netflix recently launched
a low-priced mobile-only monthly subscription plan for India,
starting from USD 2.78 (Rs 199).
The lucrative OTT space in India now has 34 players comprising American platforms such as Netflix
and Amazon Prime as well as local Indian services like ZEE5, VOOT, Eros Now and ALTBalaji.
With the boom of SVOD platforms, video viewers in India can watch popular TV shows and movies online
at a cheap rate and at their own convenience. This has led to the decline of the number of pay TV users
in the country. According to the Telecom Regulatory Authority of India,there were 170 million pay TV users
in India in 2018, which dropped to 116.3 million by the the end of 2019.
1) Latest estimates show that since entering the Indian market in 2016,
Netflix will have 10.2 million viewership by 2020.Netflix viewership in India
makes up less than 5% of all digital video viewers in the country
2) Likewise in the UK, streaming
video services have gained in importance,
already 41% of all consumers purchased
such a service in the UK.
3) Even in the more
conservative German TV market, 44% of the
population make use of subscription-based
videos-on-demand (SVoD) at least once a
week.
4) With the success of VoD, consumers
increasingly expect relevant content
accessible at any time, in any place, and in
the format that best fits their needs.
This rapidly changing market landscape
makes future predictions difficult, if not
impossible.Therefore adopting a more
holistic approach – I now invite you
to travel with me to the year 2030 to take a
glimpse into four scenarios of the future of
TV and video. This scenario approach does
not aim to predict the most likely outcome,
but to illustrate what could plausibly happen
in the world of TV and video and how
today’s market players might adapt to deal
with the many changes and uncertainties
along the way.
In what ways are digitalisation and VoD providers such as Netflix changing the market of the future?
the TV and video market is highly dynamic and is characterised by a great number of drivers:
digitalisation, new market offers, and disruption by digital players ensure rapid change.
Moreover, consumer expectations and usage habits are changing rapidly in the age of video-on-demand
and mobile media consumption. This webinar focuses on future scenarios for the TV and video industry by
2030 demonstrates what market players need to be ready for.
Six statements outline the key future developments in the TV and video
industry which can be clearly foreseen:
1) Digitalization will change content
production, distribution, and
recommendation functionalities.
All-IP becomes the standard for TV and
video distribution. Fiber infrastructure
and 5G networks will handle the massive
increase in digital traffic caused by an
increasingly flexible and mobile use of
media offerings. Beyond that, they will
strongly drive the digitalization level of
video production processes. Artificial
Intelligence (AI) and analytics become key
elements of smart content discovery with
intelligent recommendation functionalities.
2) Traditional TV and non-linear content
offerings will coexist.
Linear and on-demand content will
be equally important and will coexist
peacefully. Video-on-demand will soon
become mainstream in all population
groups, at the same time linear TV remains
significant. Especially live content such
as sports and major events will preserve
the high importance of traditional, linear
television
3) Advertising becomes targeted.
TV and video advertising will adapt to
new formats and increasingly focus on
personalized ads. Leveraging consumer
data will enable stakeholders to hypertarget their ads and content, and thus
maximize customer experience and value.
However, the extent of targeted advertising
still depends on regulation and consumers’
willingness to share their data. Advertising
marketing will be something between a
fully automated process and individual
sales negotiations.
4) There will be moderate market
regulation overall.
Market regulation will be more moderate
compared to the highly regulated media
industry today. The lower level of regulation
for online and mobile offerings leads to
a reduction of the regulatory pressure
for all market players, especially for the
traditional media companies. In particular,
lower regulatory pressure will lead to a
higher level of freedom when it comes to
cooperation between market players and
concentration of media ownership. Net
neutrality will continue to exis
5)Advertising and direct revenues will
remain most relevant.
Generating new revenue streams is rather
difficult for the protagonists in the TV and
video market. Innovative offers such as
demand-based-pricing for content will
not prevail to a major extent. In addition,
consumer data has been only partly used
to monetize. There are only a few new datadriven revenue streams for broadcasters,
as consumers show only a moderate
willingness to pay with their data.
6) New and existing players will
reposition along the value chain in a
partly consolidated market.
The global media industry will be partly
consolidated. Stakeholders will make use
of strategic mergers, acquisitions, and
alliances to strengthen their content quality
and distribution capability. Moreover,
numerous market players will shift
along the value chain by expanding their
businesses. Broadcasters will focus on
their core competencies but also occupy
some other positions in the value chain.
OTTs become more important in the future
TV and video market, whereas tech players
play a minor role. Looking at content
production, both traditional studios and
non-traditional providers will be part of it
Four future scenarios for 2030:
As a result of an analysis, the following four future scenarios for the TV and video industry by 2030 have been developed;
Scenario 1: Universal Supermarket
Scenario 2: Content Endgame
Scenario 3: Revenge of the Broadcasters
Scenario 4: Lost in Diversity
Scenario 1
Universal Supermarket
In this scenario, a few global digital platform
companies have taken over the leading role in
aggregation and distribution from national broadcasters.
They control the TV and video market and have entered
all steps along the value chain, including creation,
aggregation, and distribution of content and the direct
customer relationship. Like large supermarkets, each of
the digital platform companies offers an extensive range
of global and national content, only differentiated by
some exclusive productions and sports rights.
Broadcasting as we know it today has
disappeared. Since video content is
distributed in all-IP and mainly online
over the internet, broadcasters have
been through a painful process of change
and evolved into pure creators of largely
national or specialized content, without
any stakes in distribution or customer
relationship. They are now a supplier of their
own channels and streams to the digital
platform companies’ universal supermarket.
However, broadcasters remain a relevant
part of the video landscape. Consumer
demand for relevant content such as news
or local(ized) formats has saved their
existence.
At the beginning of the market
transformation process, consumers were
overwhelmed by the quantity of content
available and the proliferation of content
providers. That confusion quickly evolved
into frustration. Subsequently, global
digital platform companies exploited their
technological capabilities to develop smart
selection and recommendation, supported
by artificial intelligence.
In addition, they initiated the consolidation
of the vendor landscape: The financial
capabilities of the global digital platform
companies allowed them to acquire
exclusive sports rights and produce
global blockbuster content, displacing
comparatively smaller players such as
broadcasters and content creators from
important stages of the value chain.Advertising, as well as consumer
relationships, has also shifted to the digital
platforms. Broadcasters are dependent on
the revenue shares from digital platform
companies and cut off from direct paid
content and advertising revenues.
Advertising agencies and traders have
disappeared, rendered irrelevant by digital
platforms’ direct models of ad trading.
Beyond that, their technological prowess
helped in implementing new, personalized,
and interactive forms of advertising.
In this scenario, regulators did not take
significant steps to monitor and control the
digital platform companies’ market strength.
Though the market is consolidated,
access to local content is widely regarded
as guaranteed. From the regulator’s
perspective, the digital platforms are doing
a decent job in catering for different cultural
tastes and providing local quality content.
Scenario 2
Content Endgame
In the ‘Content Endgame’ scenario, large global content
owners are the winners of the market transition. They
have integrated vertically along the entire value chain
and started to withdraw and withhold content from
digital platform companies and distribute via their own
channels, bypassing the platforms and establishing
direct customer relationships
Content has become the main
differentiating factor in the video market,
while technologies such as distribution,
search, and recommendation are
considered a commodity.
Big content owners with strong program
brands and global reach target a global
audience with costly blockbuster
productions and benefit strongly from
economies of scale. Smaller producers have
been pushed out of the market. The variety
of content has decreased, but the quality
of global productions has reached new
dimensions.
Broadcasters have survived by shifting their
focus solely to the creation of strong local
formats. They have evolved into suppliers to
the big global content owners and benefit
from the protection of national regulators
Digital platform companies have retreated
to becoming pure distribution channels,
focused purely on technical delivery. The
digital platform companies’ business
model has changed fundamentally, since
consumers are no longer paying for a
specific platform, but directly for their
preferred content. Apart from advertising,
freemium services have become a relevant
source of revenue for digital platform
companies.
As content really is king in this scenario,
global content owners negotiate directly
with advertisers. New ad models on a
global scale have proved to be beneficial for
content owners and international consumer
brands. Finally, advertising partnerships
have been established in the market, with
sponsoring and content marketing being the
most important examples.
Scenario 3
Revenge of the Broadcasters
In this scenario, national broadcasters have successfully
accomplished thetheir digital transformation and
secured a strong position in the TV and video ecosystem.
Broadcasters have evolved into digital platforms
established direct customer relationships and deliver
on-demand content. During the transformation process,
broadcasters developed excellent digital capabilities. They
have entered new services such as targeted advertising
and recommendation functions, which had previously
been dominated by the digital platform companies.
Furthermore, the high relevance of content for a national
audience puts broadcasters in a superior market position,
supported by regulatory measures such as content quotas.
National broadcasters and global digital
platform companies coexist in the market.
This guarantees a great richness of content.
While national broadcasters focus on local
quality content, digital platform companies
supply global productions and blockbusters.
Viewers can chose whether they want to
watch linear or non-linear content from
global or national sources.
Apart from several content partnerships,
technological alliances have also shaped
the market. All-IP network operators helped
broadcasters during the transformation
process with their expertise in digital media
distribution and by leveraging customer
data. With their national footprints,
network operators and broadcasters are
ideal partners serving the same regional
markets. The alliance resulted in an efficient
distribution of content via high-performance
platforms with smart access to customer
data.
In this technologically advanced scenario,
broadcasters are gaining valuable customer
insights that are highly relevant to
advertisers. The collected user data would
be an effective enabler for fully personalized
advertisement, but advertising is part of a
strong regulatory framework with strict data
privacy rules. Advertising agencies have
remained in the market and are helping
broadcasters implement innovative ads
within the legal guidelines.
Broadcasters also benefit from strong
media regulation at a national level as
local content production enjoys firm
regulatory support. The strict national and
European regulatory regime is the answer
to the threat of globally dominant digital
media companies. With corresponding
measurement systems, broadcast industry
bodies have secured a strong national
media industry.
Scenario 4
Lost in Diversity
In our fourth and final scenario, the TV and video market
has evolved into a diverse ecosystem with no dominant
players. Instead, consumers are served by numerous
distribution platforms, a great richness of content, and
a steady turnover of players in the market. Demand
for national content remains strong, so partnerships
between global and local players are widespread. The clear
distinction between content production and distribution is
another key characteristic of this scenario.
Everyone does everything in this scenario:
Global digital platform companies have
established direct customer relationships.
Telecommunications providers,
broadcasters, and content producers have
also successfully created their own digital
platforms. Digital platform companies
contribute global formats such as highprofile series. To provide relevant local
content they also forge alliances with local
producers. Network operators act as
super-aggregators. They provide access to
content and structure the market from the
customer’s perspective by offering guidance
across platforms. Consumers are only
interested in content and therefore tend not
to be loyal to any one platform.
National broadcasters capitalize on the
consumers’ huge appetite for local news,
sports, movies, and series. Broadcasters
who started their digital transformation at
an early stage are using their own platforms
for content distribution. Others have
established partnerships with platform
providers, with the general trend towards
co-productions between broadcasters and
global digital platform companies. All in all,
national broadcasters remain independent
and maintain their livelihood by various
revenue streams.
In this vivid and dynamic market, advertising
agencies continue to have a high relevance.
They systematically allocate advertising
budgets and provide guidance within
the complex TV and video ecosystem. As
digital platforms facilitate personalized
advertisement, agencies had to acquire
comprehensive data analytics skills. In this
way, they became indispensable advisors for
advertisers.
The primary concern of regulators in this
scenario is the preservation of local content
and media companies. With their regulatory
decisions, they have strongly protected
national broadcasters and put them in a
position to compete against the digital and
financial muscle of the large global digital
platform companies.
Taking a closer look
Looking at the final set of scenarios, we see digital platform companies (DPCs)
being the major disruptors in the future TV and video market. By contrast,
broadcasters and content producers face the greatest pressure for change.
We will therefore take a closer look at the strategic options for those two
stakeholder groups.
Even though our four scenarios are highly
divergent, a few overarching implications
are highly relevant for all of them. Firstly,
broadcasters and content producers can
no longer rely on their current market
positions. To safeguard their business
models and future revenue streams,
they need to be open to cooperation and
alliances, even with their direct competitors.
Joint production, distribution or even
platforms are appropriate measures for
countering the threat posed by the DPCs.
In parallel, regulators need to become
less restrictive when it comes to alliances
between equally positioned players within
the TV and video value chain. Broadcasters
and content producers must work towards
convincing regulators to permit such
cooperative models.
Beyond that, established broadcasters and
content producers must continuously invest
in their technological skills. Technology has
become a core element of their business processes, and mastering them is a
prerequisite to being well-positioned in an
increasingly digital video market landscape.
As a result, traditional players must become
attractive enough for digital talents as well
as for creative minds, because in addition to
technology, attractive and creative content
certainly remains king.
Next to these overall implications, we
have different distinguishing factors in
each of the four scenarios, which affect
the actual options for broadcasters and
content producers. Depending on the
respective scenario, stakeholders must
draw appropriate fundamental conclusions.
However, the risk potential for each market
player must be analyzed separately in order
to develop individual strategic options.
Universal Supermarkets
In the Universal Supermarket scenario, broadcasters und content producers
need to focus on the implementation and positioning of strong content brands.
This branded content must be used to improve bargaining positions when
negotiating partnerships with content distributors. Also, content brands
should seek more international licensing and levereage. To secure additional
revenue streams, broadcasters and content producers must extend their
business models beyond the TV and video market into other fields, such
as merchandising.
Content Endgame
Larger content producers need to invest more strongly in international content
production directly or via subsidiaries to keep pace with their big global
counterparts. Besides this focus on content, larger producers must strengthen
the fields of customer relationship and advertising marketing in the Content
Endgame scenario.
Smaller broadcasters and content producers need to position themselves as
inimitable national partners for global players through unique, local, and
strongly branded content. Furthermore, they must explore alternative
distribution channels through strategic alliances with DPCs or IP network
operators.
Lost in Diversity
In the Lost in Diversity scenario, broadcasters and content producers must
clearly place the emphasis on their own strengths. In a world in which
everyone does everything, only a strong focusing strategy and appropriate
investments secure the future market existence of broadcasters and
content producers.
Revenge of the Broadcasters
In this scenario, broadcasters must keep an eye on the general conditions
of the video market. They need to be aware of their political role and must
exert influence to prevent adjustments in the the regulatory framework
towards a less strict regime.
