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What will the Television watching experience be like in 5 years?

April 28, 2012 Leave a comment

I posted an answer on Quora.com recently in response to the following question:

Q. What will the Television watching experience be like in 5 years?
I sit on my couch with my phone in my hand and remote in the other, but still watch tv in the same way I did 15 years ago. With smart TV’s and users on the couch having smart phones, I imagine there is a lot of disruption and changes that will take place in this market.

A. “The passive lean-back experience at the heart of television watching has resisted many attempts to change it. It will remain at the core of watching and will not be replaced by viewers selecting the next video file every five minutes in the next five years. Even as digital video rises in advanced markets, television viewing is rising alongside it. The most evident support for this is that web players like Youtube and Yahoo are changing themselves to organize content into “channels” (sounds familiar?).

These days five years is too far out in tech terms to predict! However, there are trends that are influencing the mainstream television watching.

1) TV will continue to extend to multiple platforms: Tablets, consoles, web and mobile. This will make TV a more personal and portable experience since it will increase individual viewing rather than family-unit viewing. In Western markets this is already the norm, but in developing markets this will be a stronger influence.

2) Rise of the second screen and social communities: Consumers continue to multi-task while watching TV, but increasingly they will be looking at additional info to support their TV viewing. This will build communities around content in a new way that extends beyond broadcaster borders. TV has always been social and the subject of conversation. However, technology now means that the scale and reach of the conversation changes (from a few friends/colleagues to global discussions) and the speed of the discussion accelerates (from next-day to immediate).

3) Time-shifted viewing will dominate and begin to influence the broadcaster scheduling model and advertising formats. DVRs/ Network playback/ catch-up viewing online will encourage advertisers to focus on integration of brands within content rather than relying only on spots (but those will still be there in five years time).

4) New younger talent: New talent (actors/ writers) will reach the TV screen through discovery on the web (e.g. Youtube etc). Barriers to entry into the TV business for individuals will be lower. Some programs will be “hits” at a TV scale before they reach the TV screen.

The barriers to massive change in television watching are not technological but commercial and social. The technologies to change our tv viewing experience are already available but the entrenched advertising and subscription business models in markets like the US will continue to be a large hurdle against revolutionary change. On the social level, viewers still want to have a predominantly passive viewing experience rather than on-demand viewing. This may change as younger generations grow up without the habit of watching broadcast channels but five years is too soon for it to become mainstream.

TV watching will drastically change when someone figures out the perfect recommendation engine to line up programs selected from sources all over the web and at the same time untangles the complicated rights and window-release systems currently in place to free-up content while still able to finance its creation. But that’s a separate discussion altogether!

In summary, the TV watching experience will be more social, more suited to the viewer’s time, more integrated with advertising, more personal, more portable and will feature more on-screen talent.”

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In Search of A Sustainable Business Model

April 12, 2012 3 comments

(This is a copy of an article written for BroadcastPro)

On the surface, the free-to-air television sector in the Middle East is thriving. Viewing time is one of the highest in the world. Even in the turbulent political environment of 2011, research indicates that the advertising market has continued to grow. Hundreds of channels exist yet satellite operators can’t keep up with demand and continue to launch new satellites. International players such as Newscorp and Turner have made investments in Middle East media. The region’s population is growing rapidly and is very young by global standards, thus making it attractive for advertisers. The large number of broadcasters supports an eco-system of profitable entities ranging from international and regional production houses to infrastructure providers and media professionals.

In reality, a minuscule number of broadcasters are profitable. Ad figures are inflated by rate card monitoring that does not take into account regular heavy discounting. On a net basis, ad spend per capita is lower than global benchmarks. In the absence of a single regulatory body with authority over the many countries in the region, the advertising and broadcasting sectors are practically unregulated. In advertising, this has led to aggressive but not always transparent sales practices. In broadcasting, the lack of regulation has led to large discrepancies in the quality of content. Audience measurement is either non-existent or relies on antiquated methodologies.

The rapid development of satellite Direct-to-Home distribution, while a necessity in the past to avoid strict government control of the television sector, has come at a cost. Broadcasters and advertisers cannot target individual markets and therefore larger countries tend to get the lion’s share of television spend while local TV advertising budgets are diverted to newspapers.
Despite the lack of profits, new channels continue to launch, at times as misguided commercial ventures but mostly in pursuit of non-commercial goals. This is fine in a normal free market scenario, but with the lack of audience measurement and no regulation of the claims channels can make or how their advertising inventory is sold, the market becomes distorted. Its overall value is diminished as too many players are left chasing an undervalued advertising spend.

There is no short term solution or quick fix for the various issues afflicting the TV sector in the Middle East. Many are regulatory and related to the multi-country footprint of the sector and therefore cannot be easily resolved. Ultimately, the current key players in the Middle East’s television industry including broadcasters, advertisers, media buyers and sales representatives, are best positioned to improve its prospects by taking pragmatic steps to increase revenues, reduce costs, and support transparency.

Key actions include:

All parties should support the introduction of audience measurement tools. The UAE is the only major Middle East market that is close to launching people meters.

Broadcasters can increase their revenues if they work closely with advertisers. The evolved advertisers need to expand their arsenal beyond the 30-second spot to cut through the clutter. Yet currently the content development process at broadcasters barely involves their ultimate clients. If more budgets are to be allocated to TV, broadcasters must reach out to advertisers and seek to develop content that entertains audiences while integrating brands in a seamless non-intrusive manner.

Broadcasters should begin to shift their mindset to that of content owners and capitalise on new platforms to increase revenues: IPTV platforms are emerging in Saudi and other countries. OTT is a nascent but promising sector. Satellite operators are considering spot beams. YouTube viewing on mobile is one of the highest in the world. Broadband penetration is growing rapidly in key markets. All these platforms provide opportunities for content owners to create more relevant localised content, extend television brands onto the web and mobile, generate syndication and licensing revenues, or explore new advertising mechanisms.

Broadcasters can reduce content costs by sharing productions across markets or acquiring rights for smaller geographic territories. The pan-Arab channel is a convenient myth and very few channels can be both popular with audiences across all countries and be able to generate revenues from those countries.

Advertisers too must play a role in rewarding broadcasters that create premium content with verified audiences. In too many instances, the short term focus on reducing spot rates has led to a negative ripple effect across the advertising value chain.
The TV sector in the Middle East must repair its business model if it wants to sustain itself in the long term and attract investment on a commercially viable basis. Eventually, internal voluntary reform, if not exercised, will be replaced by externally imposed regulatory reform.