With the convergence of broadcasting, broad-band and information technology, different networks now support all forms of communication and media, such as voice, video, computing and games. Connectivity and communication tools and devices are increasingly available and affordable for a large audience; as a result, control of communication media is shifting away from the domain of the media and communication companies and toward the more open Internet communication platform. All this has placed production of media such as images, words, video and audio in the hands of a significant fraction of the world's population. It's a fundamental shift in human communication behavior toward participating and sharing — the great switch from push to pull.
Most of the media over the last decade was produced by professionals and transmitted from a tower, distributed over a cable system, or beamed directly from satellite. It was a world in which conversations took place with just one other person, or with a group, by broadcasting the same message to everyone in the group. Those days are over, never to return.
The media landscape as we knew it, where large organizations were controlling the channels, is increasingly slipping away. This trend is related to the widespread social media phenomenon, which is a reflection in two long-term underlying trends in communication:
- A shift in the control of communication media, from the proprietary domain of the traditional providers to the open Internet; and
- A shift in communication patterns, from one-to-one and one-to-many to many-to-many, collaborative communication. This entails sharing videos, photos and other multimedia contents that substantially enrich the user experience.
Shift in communication media control
The shift in the control of communication media is the result of communication becoming increasingly digital. All media gets digitized, and the Internet increasingly becomes the mode of carriage for all media. Phone calls, magazines, movies and the like are all migrating to the Internet. Media is increasingly becoming ubiquitous and a means of coordinating information, whether it's news, opinions, thoughts, audio, images or video, because everyone can share information via the Internet.
More and more people are becoming connected. The majority of households in developed countries have Internet access, and the number of Internet users in emerging economies is growing rapidly. At the same time, data connectivity speeds have increased significantly, while the costs of connectivity and storage have declined drastically. With better, cheaper technologies and multimedia tools, availability of Web 2.0 software, and greater use of broadband and wireless networks, social media are becoming ever-more viable platforms for communication and media services, and consumers are responding eagerly.
Shift in communication patterns
Traditional broadcasting and interpersonal communication, usually via the telephone, do not provide collaborative group capabilities. The availability and convergence of mobile communication and the Internet are now creating a platform that enables group communication encompassing many participants through shared spaces in virtually any geographic location. The Internet is the first medium in history that has native support for groups and conversation at the same time and gives us the many-to-many pattern.
Media has become a mass of conversations, based on two-way communication, not on traditional one-way information push models. And the viral distribution of information is fast and on a large scale. In addition, the members of the former audience can now also be producers, not only consumers, because the same equipment — computers, phones and the like — enables everyone to both consume and produce. This is a huge change in the media landscape we are used to, and a fundamental shift in the way we communicate and organize media.
Emerging media landscape
The combination of shifts in communication control and patterns is redefining the competitive landscape, giving rise to new business models. (See Figure 1 on page 18.) In contrast with traditional models, emerging models are based on open platforms that support many-to-many and collaborative patterns.
The traditional broadcasting space, characterized by one-way information push models, has been the domain of broadcasters and cable operators. It is the largest segment in terms of revenue and subscribers, but is showing signs of slow growth, or even decline, as other models take hold. While these providers claim the largest number of subscribers, the users of open Internet platforms are growing at significantly faster rates.
Many telecom operators are also focusing on offering TV and video services. Most of them are investing in IPTV, where video content is transmitted using the Internet Protocol (IP) over the closed network of an IPTV provider who has configured it so that viewers can receive only the provider's TV channels. Until now, many operators have focused on offering the same TV channels and the same type of content as their competitors offer. But some telecom companies have taken it further, for example by competing on exclusive content, or offering ease of use by providing features such as an electronic program guide (EPG), which allows individual users in the household to set up a personalized TV guide with favorite programs and settings.
Currently, most IPTV services are based on subscriptions and video-on-demand (VOD) charge, though many telcos realize that advertising might become an increasingly important source of revenue. Still, many operators see offering TV and video services mainly as a necessity to combat the trend of losing subscribers to cable companies, which are increasingly offering VoIP as part of triple-play bundles. In 2009, IBM's Institute for Business Value (IBV) conducted a global Telecom Executives Survey. One of the questions referred to the company's revenue expectations from traditional and nontraditional services and packages, and the revenue expectations from IPTV are relatively low. (See Figure 2.) The prioritized IPTV investments suggest they are in particular critical in the defence of traditional telco services.
Open and free
This model offers alternatives to traditional broadcasting platforms such as cable and satellite, but in particular challenges IPTV. Parties in this space include Internet TV providers like Hulu, Babelgum and Joost. Variations of Internet TV include BBC's iPlayer and Apple TV.
Parties in this domain provide these services for free or at low cost and as such threaten the profitable services of traditional providers. Revenue is preliminarily based on advertising. Advertising is becoming increasingly important to fund content, as consumers do not expect to pay for all content. The results of the IBV's 2009 Digital Consumer Survey indicated that in all the countries involved, the majority of those surveyed were willing to view advertising before or after a good-quality, free video broadcast. (See Figure 3.)
Internet TV has the same look and feel as IPTV but is delivered over the public Internet; in fact, it's delivered over the top (OTT) of existing telecom networks, getting a free ride. As such, Internet TV is not a controlled environment and cannot guarantee quality of services. Obviously, Internet TV is still in the embryonic phase, and many players are attempting to create a market for themselves. In particular, when Internet TV moves to the TV screen, it can pose a big threat to IPTV.
It is all about getting Internet video onto the TV screen. The Apple TV initiative, mentioned earlier, illustrates this. Apple TV makes it possible to stream videos, music, podcasts and the like from any computer with iTunes to a widescreen high-definition TV set. Increasingly, consumer electronics manufacturers are working on developments to enable Internet access in televisions. It is only a question of time until Internet access is a standard feature.
This model is the domain of traditional providers; it is still a “walled garden” approach, but one that facilitates many-to-many communication and collaboration services that will appeal to users with a preference for the more secure and reliable communication environments.
Some telecom operators have started initiatives to move to this space, taking optimum advantage of the possibilities that IPTV offers with regard to interactivity, participation and personalization, usually by developing application stores and based on the business models depicted in Figure 4 on page 22. The three types of business models refer to the alternative approaches for application stores:
- Applications defined, developed and hosted/managed by the telecom operator. This includes TV and Web 2.0 convergence (including forums and real-time messaging), social TV (including recommendations/communication among consumers), media management and sharing (e.g. sharing family photos and videos).
- Applications defined and developed by a business partner, but hosted/managed by the telecom operator. This includes commercial partner applications, such as major brand TV presence (direct access to loyalty cards, promotions, how-to videos).
- Applications developed by the open community, using AppStores à la Apple iPhone and based on a revenue sharing model. Applications are provided by the community of developers. This model enables the concept of the pro-consumer.
Some service providers have developed TV-based widgets for Facebook, Twitter and other features to provide a more fully-integrated TV and online content experience.
Now the question remains whether telecom operators are seen as the logical providers for consumers to turn to for online video services and other entertainment content. The IBV 2009 Global Telecom Consumer Survey found that the majority of consumers are more likely to turn to Internet information providers like Google for online video services and other entertainment content, with pay TV (cable and satellite) providers as second, and telcos as third. (See Figure 5.) So far, the telcos seem to have been unable to establish themselves in the minds of consumers as key players in content and entertainment service.
Shared social space
The shared social space is the domain of players such as Facebook, YouTube, Digg and Twitter. Providers in this space encourage participation and contributions from everyone who is interested. They support collaboration and feedback over the open Internet in the form of blogs, forums, wikis, voting, social networks and other social tools. Widespread availability and connectivity, as well as communication tools/devices, enable people to create and broadcast their own content, including images, words, video and audio.
These platforms put the power of media in the hands of the people, transforming content consumers into content producers. And it continues to expand through bookmarking, crowdsourcing, video sharing, social widgets and the like. Increased involvement from consumers improves information of any kind.
We are increasingly in a landscape where media is global, social, ubiquitous and cheap. The days when most of the media that was available for public assumption was produced by professionals are over. Former consumers are now producers. And the network of relationships within the shared social space guarantees that they can talk directly with each other. They are no longer disconnected from each other.
As there are more amateurs than professionals and the network grows, the power of media is quickly shifting away from the editors, the publishers and even governments, as was clearly illustrated in the tumultuous days after the Iranian presidential election in 2009. The Iranian government was able to boycott the media elite, but not the news coming from social media such as Facebook, Twitter and YouTube. The media was produced locally, by amateurs and at such an incredible abundance that there was no way of stopping it. The news rippled like wildfire.
Broadband and broadcast convergence
Convergence of broadband and broadcast is taking place, not in devices, which appear to be proliferating, but in the network, where Internet protocols and Web technologies are increasingly prevalent. The Internet is becoming the dominant broadcasting platform of our civilization. Already 25 percent of humans are communicating and accessing information on the Web. Everyday more people are connected, both via the fixed and the mobile Internet. The use of video and other data services will grow as Internet data traffic and mobile broadband consumptions soars. The success of sites like YouTube, Facebook and Twitter brings to light the social aspect of video, which serves as a centerpiece for social interaction and as a means of expression.
Today, with the strong presence of the Internet, broadband and social software, the traditional roles of the media elite are being challenged. All the aggregation, filtering, distribution roles and the business models are changing. And social media are becoming part of all media streams. The change is well stated by Rupert Murdoch of News Corp.: “The new generation have a different set of expectations about the kind of content they will get, including when and how they will get it, where they will get it from, and who they will get it from. They want control over their media, instead of being controlled by it.”
Media and communication companies will be subject to the disruptive force of openness and changing human communication behavior. They must take bold steps to remain an integral part of a changing landscape. The combination of an old media mind-set with the new media consumer will ultimately result in disintermediation; companies have to adapt quickly to survive. The journey will not be without risks, but the option of doing nothing is a luxury few can afford.
Rob van den Dam is EMEA telecom sector leader at the IBM Institute for Business Value.