the future of broadcasting business today
Elia conceded that he understood why content owners would be reluctant to kill their existing lines of business while digital rises; the classic trading in analogue dollars for digital cents. Niall Duffy also cautioned that some basic issues needed to be ironed out before anyone could bank on revenues. He suggested: “While the trend towards a multi-platform strategy is emerging, there are still some key issues around the workflow for content dissemination and defining the metrics for success. These need to be addressed before any broadcaster can hope to have long- term success across these new and evolving platforms.”
The new ways of delivery are lending themselves to not only new models but also new descriptors. One is ‘bendable content’ for multiple access and delivery. Simon Kay, joint MD of JCA, explained what this could mean: “We’ll move away from broadcasting schedules, except for news, events and sport, and into a multiple access environment. TVs may soon be replaced by monitors with wireless media hubs held in personal clouds. Consumers will access content from their hub on any device they desire anytime... In the US, American Idol bought the ‘space’ from the broadcaster as opposed to winning a transmission slot and it managed its own revenues and production values. This could see traditional broadcasters move to selling time and content owners effectively piloting a new series before reverting to a pay TV delivery for future episodes.”
Changes in business models across the entire ecosystem, from selling content to using data, are inevitable. But just how much change is likely? Jerome de Vitry, CEO of Miniweb, believes that the fundamental business models of broadcasting are not under a short term threat of seismic change, but rather will slowly evolve to a new paradigm which will finally integrate the broadcast (linear) and broadband (on demand) delivery models into a single viewing experience on TV. He said: “Hulu and the BBC iPlayer have been successful because of the shareholder support of the key content owners - so content remains king. Viewers are willing to pay for a good quality TV experience. The majority of countries in the world support a ‘pay for TV’ subscription model, with penetration varying from 10 to 85% depending on the culture. Instead of hefty monthly cable subscriptions, containing a wide range of premium content, many viewers will opt for a more ‘a-la-carte’ collection of micro subscriptions. These micro subscriptions will be available with lower delivery costs and less ‘middlemen’ than traditional TV distribution, and therefore seem to be great value to viewers.” A range of business models was something that Brightcove’s Elia concurred with. He predicted the emergence of a number of transactional models - such as rental, subscription or download - with a mix of content ownership or rental from the cloud. He also predicted that
The rollout of high speed networks... is the cornerstone of broadcasting in 2011 and, truth be told, has been for about 12 months or so. The key thing is that such networks are now more or less
ubiquitous in the major markets of North
America and Europe at least, with Asia catching up fast.
where people pay for individual items of particular interest they will also be able to have free or ad supported TV akin to radio programming, a LastFM type of model.
There will also likely be a knock-on effect down the entire video production chain. Howard Twine, product manager at Software Generation (SGL), a provider of content archive and storage management software for media and entertainment, has witnessed changes in his area’s models as companies are pressed to do more with less. “People are now providing storage as a service and if the architecture of the system that you are providing is expandable then you can provide an archive as a service as a business expands accordingly,” he said. Yet there are crucial elements to consider in this area. Twine highlighted that even though, as one would expect, the archiving cost model is generally based on a cost per byte basis, there is usually additional pricing based on bytes per second of data transfer. This may have serious ramifications as more content is not only accessed but also distributed in more and more places.
And that is exactly what is going to happen: more devices, more services, more content. Whilst the initial figures showing cord-cutting or cord-shaving are nothing to worry traditional broadcasters about right now, the OTT genie is definitely out of the bottle and is something that the major content owners will have to engage with. The future may be unwritten but it is certainly going to be very different.
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