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The Future of TV: Three Key Takeaways from the Virtual Connected TV World Summit 2020
What are the next big technology disruptions for pay TV and broadcasters? How do providers remain the first choice for consumers and win the content war? These were the questions raised on March 18, 2020 at the virtual Connected TV World Summit 2020, an online event that brought together key players from the entertainment industry to discuss the future of TV.
The overwhelming theme in most presentations on the future of TV, classical broadcast and over-the-top (OTT) was that big screen TV will remain as popular as ever and customers will continue to demand quality content on the big screen in the coming years. However, even if the big screen remains the center of the household and viewing experience, the way that content is delivered and the way people discover content relevant to them will change dramatically, both from a commercial and technical perspective.
Here are three key takeaways from the event:
The Super Aggregator Will Win the Race
The subscription video-on-demand (SVOD) market will become crowded with the emergence of more direct-to-consumer (D2C) platforms. Where Netflix and Amazon Prime were exclusively in some markets, the launch of new players like Apple TV+, Disney+, Joyn and Peacock has rapidly changed the landscape.
In the end, this overwhelming content offering provides too many options, which could lead to frustration and make consumers turn away from services. Chem Assayag, SVP TV, Video and Entertainment portfolio at Orange explained that “we need to find the super aggregator with a great user interface, wholistic content discovery and unified billing to present the abundance of content offerings in a customer-friendly way.”
“The key elements in this equation will be simplified billing, easy discovery, and clear navigation,” according to Richard Broughton, Research Director at Ampere Analysis. Operators and telcos are in a great position to claim that role, with their long-standing experience in linear content aggregation and existing end customer relationships — and many are already on the right track since the first bundling of OTT services in telco propositions in 2017.
However, according to Maria Rua Aguete, Executive Director of Omdia Research, “other big players like Amazon, Apple or Hulu might overtake them and fill this role” using their speed and customer-centric product development approach. Acting fast, achieving partnerships and delivering the right technical solution will be the decisive factor.
Solving User Experience will be Key to Success
More companies are beginning to understand that customers are not only buying a product, but what they expect is an experience.1 The larger the choice of content, the more complex the commercial model (monthly pricing, part of larger package, advertising-based, etc.) and the more scattered the content holders are, the more important it will become to present choices in a digestible way.
Today, this appears to be an almost unsurmountable barrier. However, think back a few years to the iPod and how revolutionary it was for content discovery in music – tens of thousands of titles accessible via a turning wheel and a set of buttons. Guy Bisson, Research Director at Ampere Analysis explained that “what Apple and other digital-first companies do well is making complex things work incredibly simply.” It will be crucial for everyone in this domain to think in this way in order to simplify content access and choice.
Commercial Models will Change Substantially to Advanced Advertising Using Data
The stable model of pay TV and free TV shifted dramatically in most markets several years ago, and will continue to change at greater speed in the future. “In the US, for example, SVOD subscriptions accounted for around 25% of the total pay TV revenues in 2019, but this will shift to approximately 40% by 2025 in an overall shrinking pay TV/SVOD market. In the same timeframe, US SVOD subscribers will grow by 50% to 300M,” according to Simon Murray, Principal Analyst at Digital TV Research.
Similar developments are expected for other markets but not quite as dramatically. New SVOD players are introducing new commercial models with ad-funded VOD increasingly playing a strong role. This is accompanied by a big shift away from classical TV advertising on linear channels to various forms of advanced advertising in the future. According to John Tigg, MD of Cadent, “the global TV and online advertising market spend will hit $250B by 2023, and analysts expect that around one-third ($80B) of this ad spend will leverage data and automation (programmatic or addressable ads). This will also be the case in Europe, where ad minutes will amount to 36% of different types of data-fueled technologies like Timeshift TV, addressable TV or online — up from 14% in 2016.”
For companies that are not ready for this shift, John Tigg stated that “broadcasters and platform operators are now actively seeking tech partners to enable addressable advertising.”
How Should Entertainment Companies Tackle These Challenges?
The good news is that entertainment consumption is growing in all markets. However, the market is not standing still. Most established pay TV operators, platforms or telcos have an excellent starting position, but need to act now in order to participate in the evolving market in the future. Defining strategy, assessing core values, knowing the competition and making product strategy become a reality are critical next steps.
In doing so, entertainment companies have the opportunity to shape the market, expand their value chain and create opportunities for themselves and their customers with best-in-class data-driven and customer-centric services.