2016 was a year flush with innovation in the digital media industries. The launch of SkyQ set the pace for mainstream TV platforms. Amazon’s launch of GrandTour on Amazon Prime, Twitter buying NFL rights, and Facebook Live streaming election coverage from the US laid down a calling card from recent entrants into the TV market. Most of these innovations weren’t immediately game-changing but hint at further sweeping changes to hit media markets in 2017. Our consultants have put together our list of the changes we anticipate for the coming year. We will be examining these trends, innovations and commercial changes in more detail at conferences like CES and IBC through the year and reporting back to you our thoughts and insights. As we head towards CES 2017 we start the thinking with these five forecasts:
In 2017 we redefine what we mean by a ‘platform’
In recent years, we have got used to the idea of describing companies as ‘platforms’ or ‘platform operators’. This has normally meant a company that gives us some form of digital device, backed up by some form of distribution network, and which sold us services or content to use on that device. We have used this term to describe TV companies, mobile phone companies and broadband companies.
Our understanding of what was a ‘TV platform’ used to be so simple. If someone gave you a set top box and unlocked TV services for you, they were a TV platform. This definition was challenged by the merging-in of the telcos who added phone and broadband into the service mix to create a new ‘triple-play’ definition of a platform; and then again with the addition of mobile companies/services into the mix to create the most recent ‘quad-play’ platform definition. Most recently, the merging of mobile into the mix marked the death of the idea that ‘mobile’ is a separate or unique market.
In 2017 these definitions will be challenged again with the arrival of Amazon and Google into the group we define as ‘platforms’. The emergence of Amazon Echo (and soon Google Home) as companies that ‘put devices into our homes and sell us media services’ has been shockingly quick. These companies don’t yet deliver linear broadcast, or fixed line broadband/phone, but there are ways to achieve that very quickly. Google’s experiment with selling super fast broadband in the US shows they are preparing to take this step.
We therefore have a new class of ‘connected home platform operator’ to consider, offering an ever expanding list of services, now including voice commands and home automation. The arrival of these companies into the ‘platform’ mix left us at the end of 2016 with some interesting questions. Will they compete or collaborate (Dish in the US is already incorporating Amazon Echo commands)? Is Amazon Echo a re-definition of the humble ‘set top box’? Do I need a network of Sky MiniQ boxes attached to a main SkyQ box, if I also have a network of Amazon Dots and Firesticks attached to an Amazon Echo? And most importantly, why can’t we turn our Xmas lights off with a SkyQ voice control system?
We clearly have a group of companies who, from different starting points, are heading towards the same end-point which is to be the main provider of media devices, services and content in our homes. Working out who might win and why will be part of our focus for the next year
Key issue for main players – Beyond working out which existing services are fundamental and which are nice to have, existing platforms need to innovate quickly to meet the threat of the new entrants. They need innovation that truly exploits all elements of quad-play and the connected home, and they need to match the data and AI innovation being pioneered by the new entrants.
Crazy prediction – Amazon bids for Fox (inc Sky)
In 2017 cloud services move into the consumer arena in TV
While we have all been talking about ‘cloud services’ for a few years now, the cloud revolution has mainly been a back-office phenomenon for the TV industry, with massive changes to how streaming, catch-up and metadata infrastructure and services are managed. For the consumer, apart from broadcaster catch-up players, the impact of cloud has been limited and largely invisible. 2017 however, is the year when cloud services will burst into the open. One strange impact will be that we lose sight of the difference between PVR and catch-up.
When catch-up first arrived it was assumed by many industry players that we would no longer need PVRs in the TV service mix. There was a clear distinction between PVR recordings and catch-up on-demand, but the problem was that consumers still liked the PVR model. They liked the sense of control and ownership, and the relative speed of access (compared to on-demand).
Recently, there has been a host of innovation that challenges this old model. These include pushVOD (platforms using PVR hard-drives to host VOD services); network or cloud-based PVRs (where recordings are held in a Dropbox-like remote hard-drive), true start-over (where a consumer can play an on-demand version of a programme that is still only halfway through its first broadcast) and the recent innovation (seen on the EE TV set-top boxes) of recording programmes off-air to deliver a PVR/catch-up hybrid. All of these innovations blur the lines between broadcast, PVR and on-demand and create the idea that a broadcast channels output should be fully controllable by the viewer.
Our research into all these models in 2016 has shown that that consumers don’t know or care where their programmes are stored, or how they get to screen, as long as their list is manageable by them. We have come to realise that a PVR recordings list is really just a ‘favourites’ list and could link equally to cloud-based recordings or to on-demand content.
However, what is increasingly clear is that the choice of how to manage these choices is best managed by platforms not broadcasters and, if we are to reach the optimum model, it is likely that broadcasters will have to slowly give up control of catch-up to the platforms delivering broadcast. Cloud capability means that catch-up content becomes just another functionality that your platform arranges for you.
Key issue for main players – For both broadcasters and the platforms they work through, the key issue will be finding a new commercial model for recording and catch-up that protects the rights of broadcasters while delivering customer functionality and a balanced commercial return. Broadcasters will have to find a new role for their online players, as their original rationale – delivering catch-up – moves elsewhere.
Crazy prediction – A UK television platform launches cloud PVR as a commercial service without having resolved the tortuous rights issues (this is not so crazy- it is what KPN have done in Holland).
In 2017 Social media works out what ‘media’ means
In 2017 we will see the video aspirations of the main social media players become clearer with the establishment of well-funded TV content strategies that include acquisition of unique content. Along with these content strategies, will be new distribution strategies that reflect the continued importance of mainstream TV platforms. Social media giants will be launch TV channels and the TV EPG will re-invent itself in a bid to stay pre-eminent.
This will be the first obvious step towards the emergence of a new class of broadcaster/publisher which will include the strong survivors from the old pure broadcast model and the new entrants from the social media arena. All these players will have a mix of live linear and on-demand in main TV platforms, as well as their own online video and web content plays. In this model ITV goes head to head with Facebook Live and MTV goes head to head with Vevo.
As with the current broadcast model, this new competitive group will break down into sub-genres where the role of linear, catch-up, clip content and box sets differs depending on the underlying model (e.g. HBO and Netflix will occupy the same competitive set within this group, where linear channels in the EPG are used as a barker channels for a mainly VOD business case).
The difficult challenge for the social media players will be to clarify which interface they are going to deliver mainstream TV content through, when not in mainstream TV systems. In 2016 Twitter launched their first Smart TV app and we expect Facebook Live to do the same in 2017. Whether they will launch separate video apps for other smart devices, or add new ‘TV mode’ to their existing apps will vary by publisher.
Key issue for main players – In this heady new competitive mix the established broadcast players will have to re-define the role of their online operations and re-assess their use of social media to drive awareness and capture audiences.
Crazy prediction – Facebook bids for World Cup and Olympic rights and secures a linear EPG slot for Facebook Live.
In 2017 we re-evaluate the role of broadcast
If 2016 taught us anything, it is that sneering cosmopolitan elites can misunderstand the interests and intentions of mainstream audiences. The TV industry has been particularly prey to this, with comments on the future of TV frequently made by ‘box-set only’ TV commentators who don’t watch soaps or reality TV, and make no attempt to understand the mass of the TV audience that do.
Not only do these commentators not understand the appeal of these programmes, more seriously they don’t understand the appeal of the schedule to people who work and live highly regular, regimented family lives. In 2017 we will re-evaluate the role of linear scheduled broadcasting in its viewers lives, re-learning how to define and quantify the value that a ‘linear schedule of regular programmes under a familiar channel brand’ offers to the main audience groups that make up the market.
In 2017 not only can we declare the linear, scheduled TV channel alive and healthy but more interestingly, we can declare the role of the linear, scheduled electronic programme guide (EPG) to be vibrant as well. Three years ago Decipher predicted that Netflix would launch a TV channel, and we end 2016 year with them appearing on the Virgin EPG (Channel no. 204) alongside other entertainment channels. Other online giants that have joined them (at least on some pay EPGs) include Vice and Vevo. As we predict in the previous paragraph, they will be joined by other familiar names from social media. It is likely that many of these new channels are IP streamed or even pseudo-linear channels (a VOD/linear combo pioneered by Homechoice) but they will be linear channels nonetheless.
So, in 2017 we will re-evalauate the role of linear scheduled broadcasting and the EPG in creating national audiences, delivering new programming, creating awareness of new programme brands, and driving people to VOD. This is not to assume that there won’t be significant changes and even closures in the current line up of existing channels as competition intensifies. But this will be offset by a wave of presentational innovation around the EPG that will support and enhance the central role of linear.
Key issue for main players – For mainstream broadcasters there are a range of challenges, from competing with global players for programme funding & talent, to creating rounded brands that can play in this more complicated world. However, the biggest challenge will still be in the potential relationship with the major platforms who control so much of how linear channels are presented to the world.
Crazy prediction – BBC3 returns to the EPG as a pseudo-linear VOD barker channel for the online proposition.
In 2017 TV and Online Ad-Tech Finally Converge
TV advertising and its online competitor have been shadow boxing for 5 years while, behind the scenes, the two underlying technology platforms have been converging. Making claims that one side was going to take over the other misses the point – which is that it’s actually been increasingly hard to tell the two apart. The launch of Sky AdSmart, and its multi-device ad product Sky Advance, shows that the TV platforms have the capability to build ad-tech infrastructure that could rival the two supposed market leaders – Google and Facebook.
In 2017 we will be examining the potential for each of the main European TV platforms to build pan-regional advertising and data infrastructure, and evaluating their competitive advantage over the social or agency owned players. At the same time we will be looking at the question of what advantages these news converged, data-rich systems offer advertisers and how they will potentially be using them.
Key issue for main players – For platforms, defining the new advertising product-set that makes best use of the new data infrastructure available will be key. They will need to define how and when data, targeting and interactivity are relevant for linear broadcast advertising, and show how advertising products can map onto their new connected home infrastructure. They will need to balance the ‘we and me’ conundrum, mapping advertising functionality designed for ‘users’ (‘me’) onto media designed for audiences (‘we’) and show its relevance to brand, product and sales campaigns.
Crazy prediction – Google launch a competitor to BARB.
And so the Decipher team are off to CES to begin the first stage of identifying and evaluating the new innovations that are going to shape our market. Over the next five weeks, we will investigate the five forecasts we have identified above in research, blogs and with client presentations. If you would like to spend some time with Decipher discussing these ideas please contact Nigel Walley or Matt Walters.