armchair revolution


Talking about a revolution


The concept of multi-platform content delivery is undoubtedly with us and it is being defined by the users and not the technology suppliers. Yet even though content is being delivered to a variety of platforms, just how can the industry go about making a profit from this revolution in video consumption. By Joe O’Halloran.


As we move into the second half of the first year of a new decade, the TV industry may not be aware of the cultural revolution that is happening in its midst. Without doubt, the industry has been hit hard by the full and deep extent of the global economic downturn. A general reigning in of leisure spending in homes across the world has been accompanied by a crisis in the advertising industry driving plummeting prices for TV spots.


And yet given all of that—and some pretty savage but essential cost cutting in media


organisations— the industry has not only survived, it has come out inspired. Service bouquets are now capable of delivering TV content in new and exciting forms—encompassing SD, HD and increasingly 3D—and delivered to platforms that transcend the traditional small screen. And even if the number of deals in the industry has shrunk compared with traditional levels, the average value of the deal has skyrocketed, perhaps higher than during the boom days of the mid part of the last decade, due mainly to a number of very large deals that drove that large dollar value per deal.


Enabled by the mass availability of high bandwidth content2mobile


network infrastructures— including satellite and cable as well as DSL, fibre and 3G/wireless networks—TV and video content is now being consumed everywhere around the home, delivered to set top boxes and other receivers and delivered at acceptable levels of quality to state of the art TVs, PCs, laptops, netbooks, media tablets (such as the iPad), mobile phones, games platforms and portable media players of all description.


Enhanced content delivery Homes, particularly those in Western Europe, are enjoying not only the mass availability of such exciting platforms (at mass market acceptable prices let’s not forget) but also the mass availability of high bandwidth TV network infrastructures—of which, in definition, one should say now encompasses satellite and cable as well as the relatively new DSL, fibre and 3G/wireless networks— that are capable of supporting the delivery of the enhanced and enriched TV content. Yet despite the best efforts of the industry to fashion a business model according to their needs, the consumers are firmly in the driving seat of this armchair revolution. Nobody told the millions of teenagers who had


been bought laptops and netbooks on which to do their homework that they should, could, or even would use them to watch TV anywhere around their homes where they could get an internet connection. Nobody told iPhone users in 2006 that they had to side-load video content onto their new devices in order to watch content wherever and whenever they wanted to. They all just did.


Reshaping the industry Although times of severe market disruption and dislocation are fraught with challenges, these also present opportunities to breakaway from the pack. Historically, the best in innovation has taken place in distressed times. There is no reason to believe it will be any different this time around. Technology advances,


regulatory changes, demographic shifts, and digital lifestyles and work style revolutions are likely to reshape significantly the broadcast industry over the coming decade. Yet despite the optimism that currently exists and which will almost certainly persist, there are a number of considerable challenges that the industry faces before any company can turn promise into profits.


But just how worried is the industry in their brave new world? Well, not very much so according to ‘Poised for digital growth: Preserving profitability in today’s digital world’ Ernst & Young’s 2010 global media and entertainment chief financial officer (CFO) study released in June.


In the study of CFOs from 75 of the world’s largest media and


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entertainment companies, the head bean counters are optimistic about revenue potential from the Internet and mobile devices in spite of declining revenues. Explicitly, almost three quarters (73%) of global media and entertainment CFOs say digital and mobile content form the greatest future revenue opportunities despite current profit pressures. In addition, and in what can be considered an indication of the business that the new revolution could generate, two thirds (66%) of CFOs considered disruptive business models, such as ebooks and mobile content, to have the greatest impact on the media and entertainment industry during the next two to three years.


Home distribution The new model for video distribution around the home actually is its own driver for growth: more people using more platforms in more places will likely equal more opportunity. “CFO’s see growth in new distribution channels, products and services,” revealed Howard Bass, Senior Partner, Global Media & Entertainment Advisory Services, Ernst & Young. “Publishers and similar content companies are embracing the fact there are almost 2 billion digital media users to leverage their content and core products and services to the web, mobile devices and electronic gaming globally.”


The survey indicated that digital media consumption across the home will continue at a rapid pace. For example, said the report, the number of US households with both broadband connectivity and at least one 3G


september 2010


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