armchair revolution


mobile device has quadrupled during the past five years, and increased more than 600% on a worldwide basis. It predicted global penetration of


households with broadband to reach 27% by the end of 2010 and 3G mobile device penetration to reach 55% by the end of this year. Ernst & Young’s also expects its index of digital media users, which is increasing by an annual rate of 32%, to reach 2.2 billion by 2011 – more than double than in 2007. Yet despite the predicted growth, whether it generated good business was not a given. In fact the survey suggested that it will be somewhat testing for the industry. “The phenomenal proliferation of digital


entertainment among consumers continues to challenge media and entertainment companies,” explained John Nendick, Global Media & Entertainment Leader for Ernst & Young. “Revenues are dropping due to the unbundling


of media and the reduction of per unit pricing, challenging CFOs to identify innovative ways to reach their financial objectives. However, as the demand for digitally delivered entertainment continues to increase significantly, CFOs feel optimistic about revenue potential.”


Unit video price


In these revolutionary times, CFOs appeared were thankfully aware of the need to formulate new business models. In fact this would be essential. Given the discrepancy between increasing consumption of digital content and falling revenues by new platform adopters who


increasingly expect content to be delivered free of charge, CFOs agreed that the industry must determine if and how much they can bundle media content and then settle on appropriate pricing.


Ernst & Young calculated that in June 2010, the average per unit


price of video content is US$6 for video yet what may alarm the industry is Ernst & Young finding that by 2012, the average per unit price of video content will likely have decreased by almost 25% compared with the per unit price of 2009. And this would be on top of a 12% decrease in the price of video between 2006 and 2009. Furthermore, the survey suggested that total home video and music end-user spending for 2010, including digital and physical products, would be US$28.5 billion compared with US$36.4 billion in 2006. As a consequence, said the CFOs, companies need to assess the business-heavy costs such as content production, acquisition and distribution, and increase shared processes for finance, IT, research, call centres and even content development, both inside and outside their companies.


Users shaping markets Truly, everything is changing:


from what platforms content will be consumed on and where these platforms will be located to the very nature of the broadcasting companies themselves. The Armchair Revolutionary sessions at this year’s IBC will set out to examine this new and


challenging landscape in greater detail, showing exactly how it will be users, and not the providers, who will set the agenda in tomorrow’s broadcast industry. It will consider the current state of the market and future trends, highlighting the core elements of the so-called ‘TV Everywhere’ environment which users have adopted, and from which providers can introduce new services which will bring about business transformation, delivering prosperity to all corners of the broadcast market. In short the talk in the TV world should not be that of recession, nor even recovery, but that of renaissance. Vive la revolution!


september 2010


9


content2mobile


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