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Straight Talk Media & Entertainment

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The annual International Broadcasting Convention (IBC) in Amsterdam always offers a good opportunity to take the pulse of the television industry and related sectors. Below I have highlighted three of the many important developments identified by Ovum's team of TV & Video analysts at IBC 2016.

Three key takeaways from IBC 2016

Technology innovations are bridging the OTT/pay-TV divide

One of the crucial technological challenges facing the industry is to bring together the OTT apps and services that have become increasingly popular with the public, with the traditional, conditional access-based component upon which operators still rely for monetization. Creating a unified software and hardware environment is key to achieving this. Therefore, Ericsson's plans to integrate MediaFirst – its cloud-based service delivery platform – with Google's Android TV caught our eye at IBC. While other operators have also recognized the flexibility and service agility associated with Android TV, the majority remain tied to the service options and user experiences dictated by traditional set-top-box (STB) software vendors, which creates fragmentation. The partnership between Ericsson and Google seeks to address this fragmentation by combining their respective TV software platforms within a single device. Importantly for operators, it also extends the integrated pay-TV/OTT environment to an ever-growing range of STB configurations, allowing them a greater choice of hardware partners.

Niche interests offer strong top-up potential for mainstream SVOD

OTT video's leading subscription-based video on demand (SVOD) players, such as Netflix, Amazon, and Sky's Now TV, all have subscriber numbers in the millions. However, there are a growing number of high-profile services that have launched to cater for niche audiences. An important addition to this trend came at IBC 2016 when NBCUniversal confirmed that Hayu, its reality-TV-specific SVOD service, will soon be available for offline viewing, and that it will be available through Apple TVs in 4Q16.

As a niche player, Hayu's subscriber base will remain relatively limited – particularly in comparison to the big players. Ovum expects Hayu to have up to 200,000 subscribers across its three markets (UK, Ireland, and Australia) in five years' time, putting it at the lower end of SVOD services in terms of the number of subscribers.

However, for NBCU, Hayu – along with NBC's other genre-specific SVOD service, Seeso, which focuses on comedy content – is clearly more about testing the market for genre-specific SVOD services and learning more about OTT TV consumption. In the short-to-medium term, Ovum expects more genre-specific SVOD services to be launched across the world, catering to the top-up-viewing needs of a growing base of consumers who already subscribe to Netflix and/or other big generalist SVOD services, but also need something extra to cater for their specific additional viewing tastes.

New audience measurement techniques are making progress

Traditional TV measurement systems, which extrapolate the size of a TV audience from a limited number of panel households, are quickly being seen as outdated. Better and more granular data is available and advertisers are unable to make full use of emerging platforms until they are provided with reliable data to base their purchasing decisions on.

Therefore, it was very interesting to hear the experience of the UK network Channel 4 at IBC 2016. The broadcaster admitted that data from the Broadcasters' Audience Research Board (BARB), a panel-based ratings agency, is still very important to its audience insights. However, the network is now also increasingly obtaining data from other sources. In particular, Channel 4 has made significant efforts to promote public engagement via registered viewers. This means that when people are logged in, their viewing patterns can be tracked across different platforms in real time. This provides valuable data on when people are watching, how long they watch for, and what type of device they use – all of which can be used in areas such as scheduling, commissioning, and advertising. If, for example, a program is particularly skewed to one audience that is valuable to advertisers, the data gleaned from registered viewers can be used to target their commercial impacts against that advertiser.

The Channel 4 experience is another example of an initiative that demonstrates that both TV and digital platforms can improve their respective advertising efforts by learning from each other and innovating accordingly.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.

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