There was a time when broadcasters had a virtual monopoly over television viewing. Not anymore. With the availability of content on multiple devices and delivered via the Internet, the tables have turned. Today, audiences dictate the time, place and device on which they consume content. No wonder many viewers have become “cord cutters”, increasingly relying on OTT and the Internet for their entertainment fixes.
The face of the competition has changed as well. New competitors for eyeballs include Netflix, Hulu and Internet companies including Amazon and Yahoo. Most recently, additional disruptors include Aereo, a company that that has taken advantage of a legal loophole to re-transmit the broadcasters’ signals without paying re-transmission fees. All of these players pose a real threat to the existing business model of broadcasters.
Broadcasters must recognize this reality and take action before the next generation of viewers can claim to never have watched broadcast and OTA television. This article is will look more closely at the issues and some possible solutions. It is divided in two parts:
Part 1 will explore strategies that can help to differentiate a broadcast offering in today’s rapidly evolving market.
Part 2 will examine the technologies needed to drive these strategies to compete in the new marketplace. Solutions that include; adaptive streaming, and synchronization technologies for second screen integration, HbbTV and Hybrid cast standards for hybrid TV as well as UltraHD(4K and 8K).
Now, let’s first look at delivery models.
Strategy #1: The Delivery Model
In the traditional business model, the cable/satellite company is the gatekeeper of the delivery that is controlled by the network operators. All three (broadcasters, the gatekeepers, and the controller) have a stake in every dollar that is paid by the viewer. Cable/Satellite companies are compelled to take services from the broadcasters in ‘bundles’. These typically combine few popular channels with many others that are not. The viewer then has no choice but to subscribe to these bundles of services of which he might watch only 10%. The typical cost of such bundling, $100. Linear programming is a setback too, partially offset by the use of DVR time-shifting.
In addition, with the emergence of high speed Internet and mobile devices, a further major disruption is underway. By addressing the pain points of the viewers and harnessing the power and reach of the Internet, new players are rapidly eroding the eyeball monopoly previously enjoyed by traditional broadcasters. Let us see how
The new delivery pipe is the open Internet, which has no gatekeepers. That levels the playing field so much that anyone with content to share can become a broadcaster. Companies like Netflix grabbed this opportunity by ofering the viewers:
-A la carte choice, no bundling
-Low fees compared to cable bills
-On demand availability of content
-Availability on mobile devices and PCs
Table one lists some of the new players in the DTV landscape today and their strategies.
Table 1: The Competition at a glance
The pioneer of a-la-carte TV everywhere at low cost.
Original content (House of cards, arrested development) strategy
is a huge success.
Re-transmission of broadcast signals using mini antennae.
If Aereo wins the lawsuits its embroiled in, MSOs might follow the same route.
Amazon (Instant Video)
Amazon’s video service provides on demand titles as well as season passes for TV shows. Recently launched original content.
Original content pilots (Amazon originals) opened to public for polling and green-lighting.
Original Channels initiative based on the paid subscription model.
Yahoo (Yahoo TV)
Has TV listings, with options to TiVo a show as well as purchase and watch it online on other portals like Amazon or iTunes. Also offer past shows and movies.
Is also producing original web series .
Reacting to this sudden avalanche of new OTT competition, many of the pay-tv operators applied quick-fix strategies by providing on-demand and catch-up services and in come cases, TV Everywhere services. These solutions have enjoyed some, but not universal success.
Companies like Aereo and MSOs like DirecTV and Dish Network plan similar services. Broadcasters need an online strategy of their own as well. Table 2 provides a summary of the online broadcast offerings that are in force today:
Table 2: Online services launched by broadcasters
BBC One, BBC iPlayer
Broadcasters need to play to their strengths and respond with innovative services delivered directly to their viewers. That likely means leveraging the Internet for delivery. Part II of this article will examine some of the alternatives.