The clever folks over at ScreenDigest have been doing what they do best: crunching lots of data to compile a view of what the future of TV will look like. It's worth reading the whole thing, but we've boiled down their findings to three main conclusions.
Advertising trends mean broadcasters cannot afford to ignore broadband
Online ad dollars have, in the past, represented little more than extra pocket change for big broadcasters. But going forward, TV advertising growth is forecast to be flat in most developed markets. Successful monetization of video content online will become the difference between growing revenues and watching your business stagnate. In the words of the report:
Across all media including TV, brand advertising as a share of GDP has been in decline since 2000 and is forecast to continue eroding over the next five years. Increased pressure on pricing, audience fragmentation across digital media and rising demand for more granular and timely return-on-investment metrics from the demand side is pressing TV broadcasters to diversify their advertising business model beyond linear broadcast TV . . . This poses serious questions about the economic viability of relying on brand advertising as a reliable revenue stream for TV broadcasters and other legacy media owners.
Online video doesn't mean PC only
"If personal devices such as smartphones are taken into account, there are already more connected devices than PC or TV households in developed markets."
Moreover, broadcasters that have enabled their viewers to enjoy a multi-screen experience are reaping the rewards of greater reach. French broadcaster M6 found that only 35% of their online video catch-up service was being accessed via PCs. And the shift is ongoing. The BBC in the UK found that only 57% of access to their iPlayer was on a PC, down from 67% the previous year.
A recent report by JD Power
found that video audiences are fast transitioning onto mobile devices this side of the Atlantic as well. Overall, 29% of video service customers watch paid content on a mobile device, the study found. By comparison, 39% of respondents watch paid video on their Mac/Windows PCs, down significantly from 48% in 2011.
Sophisticated 3rd-party technology partners can help with the costs
A common lament from the broadcasters: “But reaching and monetizing viewers on these fragmented devices is going to be expensive and we don't have the expertise!”
The report argues that it is time for broadcasters to ask for help:
In this new landscape of fragmented devices and consumption, media companies must look to keep costs down, protect margins and grow their businesses in a sustainable way. This requires non-entrenched solutions and a step away from the traditional broadcast economics of cutting programming and overhead costs on the one hand, and balancing inventory and pricing on the other, in order to preserve margins.
This is where third parties come in. They are able to absorb the costs associated with developing and maintaining these complex and technologically sophisticated solutions and streamline streaming media management. Traditional broadcasters know how to develop and deliver great content. In order to successfully move online and monetize online video content, they must work with technology partners that intimately understand the online media space.