The following post is part four of Ooyala's exclusive Internet television SWOT analysis for broadcasters, networks, and content providers. Part three is here.
Watch Your Back: 5 Threats Traditional Media Companies Face from Internet TV
Media companies hold a hot hand when it comes to online video: popular content, deep relationships with advertisers and consumers, and a business model already driven by monetizing premium content.
But Internet Television is no ordinary market. It’s the frontier of media, and a number of threats face even the most successful traditional media companies.
Here, then, are the five biggest threats facing networks and broadcasters from IPTV.
1. Things change fast
This isn’t your grandma’s TV. Low barriers to entry make the IPTV space particularly volatile compared to the broadcast TV business. Uncertainty and risk are huge factors: new devices, new providers, and new content abounds. You need the right data and the right partners to help you minimize risk and navigate a world that seems to spin faster every day.
2. The competition is a click away
The new screens—tablets, smartphones, gaming consoles, and PCs—are all-purpose distraction machines. Consumers can watch your show—or they can shoot zombies, IM their sweetheart, or heck, make their own stuff. Your content had better be irresistible, engaging, and easy to access.
3. Here be pirates
Piracy is still a big threat to media company revenues. Securing your content across platforms and devices is critical. The challenge is to foil the bad guys without annoying paying customers. Ooyala supports leading DRM technologies while delivering a seamless experience for consumers.
4. Content will never be cheap again
Opportunity in the online video space is massive—and so is competition. Content costs are going up. Studios and other content producers stand to benefit, but it’s a double-edged sword. Just about everyone licenses content these days. Starz split with Netflix because Netflix wouldn’t pony up a tenfold higher license payment. Fox is limiting next-day streaming access to its programs.
Verizon teamed up with Redbox. And Google and Amazon are just starting to flex their content muscles. Brace yourself and your company for some choppy waters and rising prices.
5. Cord-cutters and ‘cord nevers’
Evidence suggests that younger consumers—that coveted 18-34 demo—are embracing IPTV in droves. They’re watching the same shows as their parents—except on computers, phones, and Xboxes instead of cable or satellite TV.
The death of cable has been greatly exaggerated, but online video is maturing at an incredible rate. For media companies married to traditional distribution models, cord-cutting—or never cording up in the first place—is a genuine threat. The answer? Reach your viewers with top-quality video on the devices and platforms they use most.
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© 2013 Ooyala, Inc. •
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