The broadcasting industry is in the midst of a digital revolution. Online video seems to have spread like wildfire, empowering viewers to watch anytime, anywhere, sometimes cutting television out of the equation altogether. People are increasingly turning to smartphones, tablets, and other mobile and Internet-connected devices to watch video. They are using mobile broadband where wi-fi is not widely available.
Networks are fighting to stay relevant. Cable and satellite companies have seen their traditional bundles come under attack from a slew of streaming from à la carte offerings. Content producers are scrambling to develop hit shows that can help networks and digital aggregators differentiate themselves and capitalize on evolving consumer preferences.
Until recently, changes in industry dynamics have been evolutionary rather than revolutionary. However, the new online ecosystem is threatening the roles and relationships among key companies in the ecosystem that have been consistent up to this point.
The robust fixed–broadband infrastructure that is needed to meet the demand for online video is now available. Streaming video has advanced to the point that it is now viewed as a direct threat to traditional TV.
Traditional studios have begun to invest in online productions, allowing viewers to access a wealth of excellent programming when and where they want it. Netflix, Hulu, YouTube, Disney, HBO, Showtime, Amazon, Apple, and Google have launched online-streaming devices to supplement their video-streaming services, and most have commissioned original content as well. The abundance of high-quality online content has attracted consumers and encouraged the shift from linear viewing to on-demand, time-shifted viewing.
Digital studios and content creators are challenging the belief that high-quality content must be expensive. With low costs, and a growing ecosystem of digital aggregators, online and mobile content creators are challenging the long-held belief that producing hit entertainment content must be a very expensive proposition available only to those with deep pockets.
Broadcasters need to be in the driving seat
Broadcasters, who find themselves at the wheel of a changing business, need to become leaders of change by guiding their entire organizations through the adoption and implementation of the technologies that will mark the future of TV.
From abandoning manual processes for automated cloud-based options for buying and selling inventory, to implementing ATSC 3.0 across various channels, it is key for broadcasting executives to be aware of how these changes might affect and be perceived by the company’s different constituents. Broadcasters must leverage their leadership and communication skills to translate change across different generational and operational groups within the organization.
Successful companies will need to disrupt their own business models, implement the cognitive and personalized paradigm, change their own bundle for distribution, reinvent their production factory, offload non-core processes, and use the released capital to secure new footholds in a changing strategic landscape and an altering industry hegemony.
As companies move deeper into the online and mobile landscape, the mindset should not be that they are making a transition from physical to digital. They will have to understand where the business provides unique value and build new business models that deliver on this value. This may well mean that some aspects of the business will contract and die, and it may mean that companies will actively cannibalize themselves. But online, mobile, and nonlinear viewing is here to stay, and companies that can successfully restructure their business models to keep pace with evolving viewer preferences have much to gain. And, if history is any indicator, the many that do not restructure will face the consequences of value destruction.
Ranking the Most Commercially Important Trends in Broadcast and Media Technology
Findings from Devoncroft’s 2017 Big Broadcast Survey, an annual global study of broadcast industry trends, technology purchasing plans, and benchmarking of broadcast technology vendor brands are valuable.
Several thousand broadcast professionals in 100+ countries take part every year, making the Broadcast Industry Global Trend Index the largest and most comprehensive market study ever conducted in the broadcast industry.
Multi-platform content delivery (MPCD) is cited by a wide margin as the most important trend commercially to respondent businesses. This is not surprising, given the continued rise of new distribution mediums and devices. However, discussions with broadcasters, content owners, and technology vendors indicate that despite the obvious fact that the way content is delivered and consumed has changed forever, this is only now beginning to translate into profitable revenue streams for end users.
Over the past decade and a half, the transition to HDTV operations has been a major driver of end-user technology budgets, and therefore technology product sales. The first BBS Broadcast Industry Global Trend Index, published in 2009, ranked the transition to HD as the #1 trend globally. In the almost decade since, the transition to HD operations has drifted lower in the rankings based on the continued adoption of HD technology infrastructure globally. For the first time in 2014, the transition to HD operations was not ranked among the top five trends by respondents, instead ranking #6. In 2017, the transition to HD operations declined further, now ranking #15.
A trend also showing maturity in the 2017 BBS Broadcast Industry Global Trend Index is file-based/tapeless workflows. While the trend ranked #4 in the 2016 BBS Broadcast Industry Global Trend index, it declined to #11 in the 2017 index.
Over the past decade, pattern has been observed whereby broadcasters, who have invested considerable time, effort, and money into transitioning their operations to HD, next shifted their focus toward increasing the efficiency of their operations. As a result, efficiency became a key driver of broadcast technology purchasing. The results of the 2017 index suggest file-based workflow penetration has passed a milestone of maturity.
A trend that has increased in importance over the past several years is IP networking & content delivery, which is ranked as the #2 most important trend in the BBS Broadcast Industry Global Trend Index.
The move to IP-based infrastructure has increased in importance in response to several market developments. End-user motivations for moving to IP-based infrastructure are more nuanced than simply generating operational efficiencies, though this goal is an important component. Rather, end-user responses to the Big Broadcast Survey are consistent with a more encompassing goal of moving to fundamentally different technology infrastructures to better support evolving media business models.
The #3 ranked trend is 4K/UHD. Many in the industry believe 4K/UHD is the next major driver of infrastructure upgrades – similar to the transition to HD over a decade ago.
Cloud computing/virtualization is the #4 ranked trend in 2017. It is not surprising cloud computing/virtualization is highly rated, given the broader excitement in the technology sector for leveraging cloud infrastructure. The industry’s plans for cloud have evolved considerably over the past several years.
Improvements in compression efficiency, which is ranked #5, is consistent with the desire for increased efficiency. With content distribution models having migrated from single linear broadcast channels, to multi-channel Pay TV playout, to a totally on-demand environment, high quality compression is a critical success factor for broadcasters and content playout platforms.
A plethora of new channels, and the desire for simultaneous bandwidth saving and increased image quality for MPCD services have driven an increasing focus on high quality compression systems.