Home News Featured News Challenging the digital media giants: Achieving broadcast success in the Netflix age

Challenging the digital media giants: Achieving broadcast success in the Netflix age




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ConnecTechAsia Summit speaker, John-Paul O’Sullivan, Research Analyst – S&P Global Market Intelligence, highlights why the next twelve months will be crucial for over the top (OTT) opportunities.  

2017 was a year that SVOD services – led by Netflix and Amazon’s mass market propositions – shook up traditional TV and video dynamics.

Netflix delivered strong financial results driven by popular original commissions and rapid global subscriber growth, with its members watching more than 140 million hours per day.1

Both services now spend billions of dollars on content – Netflix (which started a F1 documentary) earmarked $16 billion in 2017, while Amazon’s aggressive premium video push meant joining its counterpart in surpassing 50 million video subscribers in the U.S. alone, according to Kagan estimates for Q4 2017.

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One of the key challenges for broadcasters’ in 2018 will be the transformation of legacy infrastructure and services to cater for new viewing habits, brought about by advances in technology and consumer connectivity.

Even as legacy media companies face more competition and audience fragmentation from digital platforms providing vast video content slates, opportunities still exist for them to offer broader, more targeted distribution direct to consumers.

This can be achieved through technology and content production partnerships, and understanding market demographics, in particular, younger viewers on mobile devices.

Key Trends in 2018

For broadcasters, it is important to look beyond the numbers in this period of change as tech firms grow their influence. Investment in technology and production assets provide new distribution opportunities and a stronger, more flexible content engine.

These are essential tools for a digital horizon, and the broadcasters that make the smartest moves will be the ones reaping the benefits in the longer term.

Over-the-top provides content owners with a means to further monetize their content, either by partnering and aggregating with video-on-demand services or launching their own direct-to-consumer offering.

For example, 2018 should be the year we finally see Disney launch both an entertainment and a sports subscription service outside of a traditional pay TV bundle.

Addressable TV advertising is another major growth opportunity, as the emphasis shifts from audience volume to efficiency.

Better pricing for smaller but more distinctive audiences is the name of the game. Broadcaster video-on-demand or TV Everywhere services can profit from the greater availability and more precise nature of digital data, increasing value for advertising partners and distributors.

Consolidation and convergence are the overriding industry themes with scale increasingly key to challenging the digital media giants.

Multichannel service providers, digital heavyweights and major brands are driving vertical and horizontal merger and acquisition (M&A) alignment to expand into new markets and cement their competitive standing in the content space.

The theme is best demonstrated by motivations behind the potential acquisition of Sky – Europe’s leading pay-TV service – with offers from legacy U.S. media giants Comcast and Disney, or the merger between international programmers’ Discovery and Scripps.

Consolidation in the production sector has also rocketed, bringing with it the risk of a negative impact on creativity. In film, we continue to see a focus on building franchised titles to lower marketing and production costs due to existing fandom. There is no sign of this slowing down, which could mean less risk-taking with costly script ideas, so a strong voice for the independent producers has never been more important.

Looking ahead

For broadcasters, it is important to play to its strengths. Global viewing time in terms of linear television is still strong, and broadcast delivers uncomplicated mass reach. The traditional broadcasters have an illustrious history of producing quality and memorable content, but now editorial decisions need to be made in the context of a more competitive environment.

It has never been more difficult to monetize traditional TV with the emergence of SVOD players, following on from other disruptive influences in the form of time shifting, cording cutting and viewing declines in younger audiences. To ensure traditional players are not left behind they must innovative and become agiler. Broadcast heritage can only account for some much, so embracing the I.P. environment is an effective way to improve the distribution and presentation of content libraries both old and new.

JP O’Sullivan will be speaking on Tuesday the 26th of June on the company’s 2018 market outlook on the Broadcasting and media industry at ConnecTechAsia 2018.

More information on ConnecTechAsia here: https://www.connectechasia.com/

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