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Straight Talk Media & Entertainment

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Ovum's TV & Video analysts were out in force at TV Connect 2016. Here's my pick of the many trends we picked up from the conference stage and the show floor.

Multiscreen, no longer a subset of TV, is rapidly becoming the norm

Jonathan Doran, Principal Analyst, TV

From listening to the conference presentations as well as speaking with both delegates and exhibitors at TV Connect 2016, it becomes clear that multiscreen delivery has become integral to the concept of TV rather than remaining the value-added subcategory it was previously. While TV Connect no longer hosts conference streams specifically dedicated to multiscreen, it is now a dimension of video consumption and delivery that permeates virtually every aspect of the broadcast and TV industries. A panel session during the Millennial Monetization section of the event (itself heavily informed by the growing prevalence of multiscreen usage among 16–35 year-olds) touched on the potentially far greater challenge of how the TV and video industries should address the post-millennial generation that comprises an audience that was effectively born into a multiscreen environment.

Ovum recommends the following:

  • As audiences move further toward a multi-device environment, content producers and broadcasters should be thinking in terms of cross-platform content rather than TV programming. This shift must cater to future demand for differential, device-specific content.

  • Broadcasters and pay-TV distributors will have to rethink both their distribution and business models, as consumption of professional video entertainment content gravitates inevitably toward multi-device – and in many cases mobile-first – TV.

  • Both traditional and next-generation infrastructure and consumer tech (e.g. set-top box) vendors will need to work across any silos that exist between them to ensure that there is seamless delivery and a seamless user experience (UX) across both regular TV and mobile/multiscreen delivery channels.

Related research:

Availability Analyzer: Operator Multiscreen TV Services in Western Europe, March 2016, ME0003-000665 (April 2016)

Greater content personalization to impact TV value chain

Adam Thomas, Lead Analyst, TV

One of the most frequent conversations that I have had over the course of all three days of TV Connect 2016 has been centered on how the visual entertainment proposition will look, and change, over the next few years. There seems to be a general acceptance that the long-established channel-bundling model will continue to come under pressure. In its place – fueled by the gathering and analysis of more granular data on audience consumption patterns – there will increasingly be a new, much more personalized way of dealing with content aggregation. This will create an ability to target individuals with content that is specific to their interests rather than the interests of their household. As this emerging capability is rolled out, there will be some significant impacts across the TV value chain.

Ovum recommends the following:

  • Pay-TV operators need to invest in online/mobile audience-tracking and advertising expertise. This will enable them to effectively aggregate audiences and target content and advertising across all distribution platforms and media types.

  • Broadcasters should position themselves to ensure that they have (either direct or indirect) access to audience consumption metrics and reap the benefits in terms of content commissioning and the targeting of advertising.

  • For technology companies, it is important that their solutions can easily understand the new types of data becoming available and how to utilize this data for content targeting and its related advertising benefits.

Related research:

2016 Trends to Watch: TV and Video, ME0003-000639 (January 2016)

Digital Economy 2025: TV, ME0003-000606 (November 2015)

Growing sports rights fees are driving cutting-edge user experience

Ismail Patel, Analyst, TV

The ongoing growth in rights fees for major national sports is driven by their incredibly popular local demand. The massive investments required to acquire the rights makes sports a very sticky proposition for operators. The favored premium format is the live, linear broadcast. BT Sport's launch of its 4K channel in September 2015 was a by-product of its large investment into soccer rights, as it sought to differentiate itself from its rivals. In addition, it assisted the NBA to become the first sports broadcaster of 4K in North America. BT has broadcast more 4K live events than any other TV provider in Europe. Maintaining its newly found reputation as a pioneer in user experience, BT also trialed virtual reality (VR) technology with a hundred users, who were able to "virtually" place themselves at the heart of the action from various camera angles in the stadium. Such initiatives are expected to form part of the next generation of user experience in the long term, as outlined by BT Sport panelists at TV Connect 2016. Soon, the industry will see premium, second-tier, and tertiary offerings differentiated not only by the portfolio of sports on offer, but also by the user experience promised within the packages. Ovum expects that there will be no shortage of consumer demand and therefore opportunities will be created in all parts of the value chain.

Ovum recommends the following:

  • Sports viewers around the world rarely experience the arena in person, with their access to sports often digital only. The NBA's experience is that 98% of its viewers have never been to a basketball arena to watch a game live, and therefore its focus is on enhancing and investing in the experience of the 98%, through digital, next-generation viewing and social media. Other operators should also invest in this absent majority.

  • There is sizeable value below the top premium sports investments: highlights and second screenings, mobile TV and TV everywhere, over-the-top (OTT) content, and instant shorts (popularized in the UK by the BBC during the recent Twenty20 Cricket World Cup). Operators can realize returns in proportion to the size of their investments, which is where new operators such as Vodafone UK are keen to make entry-level investments.

  • The enhancement of the user experience will be coupled with ongoing adjustments, optimizations, and restructuring of packages. Operators should constantly evaluate and update their premium propositions to identify where the value lies and pivot their businesses around those centers of value.

Related research:

4K UHD Technology: Go-to-Market Strategies and Future Outlook,TE0004-001074 (April 2016)

UHD is the way forward but is still several years from mass market

Ismail Patel, Analyst, TV

A TV Connect panel of UHD technology experts agreed that UHD has many obstacles ahead before it becomes mainstream. Typical challenges include format standardization, bandwidth issues, and reticence vis-a-vis upfront investment from traditional broadcasters. Many consumers in mature markets have become early adopters of UHD TV sets and expect an influx of 4K channels on their screens in a similar fashion to the current portfolio of HD channels. However, only a few channels have launched in the short term, which for many consumers won’t justify the investment UHD devices demand. The expectation is that, for now, UHD will be driven by non-traditional players – namely Netflix and Amazon Prime. With this in mind, Ovum recommends the following:

  • Traditional pay-TV operators need to start collaborating more closely to push the industry towards UHD standardization.

  • Encouraging the consumer market towards UHD can be achieved by single channels or one-off shows, enabling early adopters who do not watch 4K to enjoy the technology on traditional TV.

  • Set-top box manufacturers can facilitate operator migration to UHD with customized solutions.

  • Content producers should make productions in UHD. These can be streamed in UHD on demand, even though linear broadcast might not be at this stage yet. Ovum estimates that the full list of 4K-native content available in English barely exceeds 400 titles.

Related research:

UHD Ecosystem Tracker,ME0003-000564 (June 2015)

4K UHD Technology: Go-to-Market Strategies and Future Outlook,TE0004-001074 (April 2016)

Low income and broadband availability limit OTT in emerging markets

Jonathan Doran, Principal Analyst, TV

Monetization and bandwidth/infrastructure limitations are among the multiple challenges facing service providers in emerging markets, as outlined in one of the final TV Connect 2016 panel sessions. SVOD provider iROKOtv has abandoned its streaming service in Nigeria, where mobile networks proved too unreliable even for WhatsApp. It has relaunched as a download-only service via an Android app (bypassing the more upmarket iOS consumer) – with most activity now occurring via Wi-Fi rather than cellular networks. In India, 3G has finally started to make an impact over the last two years, leading to an explosion in mobile video consumption. India's Shemaroo highlights the need to “slice and dice” video content for an overwhelmingly mobile and low-income audience. It also points to the importance of innovative content packaging in markets where cost control is a priority. In South Asia, “sachet pricing” works perfectly for those on low wages, presenting a more manageable pay-as-you-go alternative to subscription TV. In Nigeria, iROKOtv is targeting the low-end market with unlimited access to long-form Nollywood content at $1.50 per month (compared to $7.99 for Netflix). It delivers drama series with new episodes coming out two or three times weekly. Both iROKOtv and Shemaroo stress the need to frequently refresh content to keep viewers interested and pirates at bay.

Related research:

Digital Media Opportunity Index: Sub-Saharan Africa, ME0002-000587 (July 2015)

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