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Five Key Takeaways from 2015: The TV Industry in Flux

Posted by Paul Molinier

Mon, Dec 21, 2015

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It has been a busy six months! I joined Viaccess-Orca in June after a period heading up Orange Business Services’ business unit on Unified Communications. I’ve spent over 25 years working in the IT and telecom industries and know them very well, but the degree of change that is currently reshaping the TV and media environment and the many shifts and trends in the market during 2015 is unlike anything I’ve seen before.

Debates about the future of the internet, and net neutrality in particular, have lit up legislative chambers on two continents while the major OTT players that have caused all the fuss have moved from strength to strength. Ultra HD broadcasts have started, and Virtual Reality teeters on the cusp of mass market adoption. Piracy has become steadily more sophisticated and increasingly adept at targeting live broadcasts, and operators and audiences have embraced TV Everywhere with a passion.

As our own Alain Nochimowski, EVP Innovation at Viaccess-Orca, put it over the summer, television in 2015 is “a revolution happening before our eyes”.

What further change is coming? It’s always difficult to know for sure, but for me the conversations and discussions at the OTT TV World Summit held in London in mid-November both summed up many of the events and much of the thinking of the previous year and laid down some markers for the coming year ahead. Here are our key takeaways at Viaccess-Orca:

  1. Ads Are Getting Smart

The industry has talked about serving targeted ads to consumers for some time now, but with the first generation systems up and running we have solid figures to go on to prove the effectiveness of such an approach. In the UK, Sky’s targeted AdSmart, for instance, has been running since January 2014 and reports that channel switching during AdSmart spots is 48% lower than for standard ads in the first three break positions.

That is a very significant increase proportion of the audience that stays on the channel.

  1. Big Data - Consumers Are Getting Smarter

IBM pointed out during the Summit that there will be a time when users won’t give their information up for free anymore, recognizing it as a valuable commodity that can be traded. Ernst & Young’s influential report on this subject, Big Data Backlash, actually dates back to 2013, and the information there suggested that consumers are increasingly skeptical about sharing their data: 55% said they had already become less willing, 48% said that they will become even less so over the next five years.

This is a bird that may soon be coming home to roost for the broadcast industry. As E&Y said in Ready for Takeoff (2014) “Today’s organizations are used to operating in a golden age of free customer data…However, consumers are becoming more and more selective and careful about who they share their data with.” Food-for-thought for our service provider customers rushing towards the new opportunities offered by the internet-of-things…

  1. Audience Attention is Shrinking

According to research undertaken by Microsoft in Canada, the average human attention span shrunk from 12 seconds in 2000 to a mere 8 seconds by 2013. In contrast, it is widely believed that goldfish can retain focus for 9 seconds.

Microsoft’s solution for broadcasters in trying to grab some of that shortened attention is to provide new services and experiences. At the OTT Summit it presented what amounted to a five-point plan:

  • Reach totally new audiences
  • Unlock new niche markets
  • Grow existing broadcast/linear revenues
  • Create better viewing experiences
  • Establish a closer connection to your audience

Of course, the devil is, as always in the details. But it’s good advice, as you would expect, and certainly utilizing the power of the cloud (in terms of flexibility, time-to-market, ability to streamline, trial/correction cycles etc.) is by far the best way — indeed, the only way in places —  of achieving this. We’re going to be talking a lot more about this at the start of 2016. Head to www.tvaas.com to find out more.

  1. Content is Still King

A very interesting chart from Strategy Analytics showed the relative importance of factors in OTT services as far as the consumer was concerned. A mere 8% of issues were related to usage and quality, 39% were price-related, while the majority, 52%, were all about content: what was available and when, with full TV series, full-length movies and the size of the content library the standout considerations.

The problem is, of course, that content costs. NRK said that it has tripled its content consumption since launching multiscreen TV, and protecting that investment against piracy is going to become one of the standout battles of 2016.

  1. The only Constant is Change

Heraclitus’ famous observation is probably the key takeaway from 2015, as it is from every year. As we’ve written recently though one of the issues the industry faces is that a) the pace of technological change is accelerating and b) it is throwing down the walls of what was previously a walled garden. Change for broadcasters and operators is much more sudden and extreme as a consequence.

What will we be talking about at the end of 2016? We have some ideas, and we look forward to sharing them with you during the course of the year.

Wishing you and your families happy holidays and a wonderful 2016!

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Topics: OTT, TV Everywhere, Big Data, Cable TV, Content, Content Discovery, Content Piracy, Content service providers, Events, Industry, IPTV, OTTtv World Summit, Pay TV

 

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