Porus C. Malaowala,Head - Projects (Energy & Utilities, Media & Broadcasting), CMS Computers Ltd.
The disruption of the TV industry is coming, and – as we have seen in other media industries – it will be deeply rooted in the changing role of distribution as a critical driver of value. As the industry shifts from a model based on incentives that are aligned across the value chain to one in which disintermediation is not only possible but probable, the stakes are higher than ever. Already, some companies formerly bound to a specific industry function – content creation, aggregation, or distribution – are now filling all three roles at once.
The M&B industry is undergoing a seismic shift. The global broadcasting industry has gone through major technological advances in the recent past, with features such as IPTV, VOD (video on demand), mobile TV, and DVRs (digital video recorders), etc., becoming increasingly common. The pace of technology change is accelerating so quickly that finding the right balance between addressing today's daily operational challenges and planning for the next big thing can be a struggle.
The digital disruption of the cable television industry is at hand. Streaming video is changing every existing relationship in the TV value chain. The very neat and structured relationships of the past, with studios and rights holders relying on broadcast and cable networks to air their content and networks relying on pay-TV distributors to deliver their content into people's homes are no longer intact. Powerful digital attackers are emerging from outside the traditional TV ecosystem, and they are armed with fundamentally different business models and motivations to engage with consumers via video services.
For many years, streaming video did not threaten traditional TV – the files involved were extremely large, and they required significant bandwidth and network capacity. But the network has caught up, and the infrastructure needed to deliver long-form and live linear television content online to mass audiences is in place. Now that the streaming-video infrastructure (both landline and mobile) has matured, traditional TV distribution is at risk. Digital OTT companies are gaining ground. The Internet-based digital over-the-top (OTT) players have matured rapidly – and they are stealing a meaningful share of business from traditional cable and satellite TV companies. These scenarios clearly illustrate the changing landscape with regard to how content reaches consumers.
Broadcast and cable networks have long been the go-to destination for advertisers because of their ability to deliver a massive number of viewers at one sitting in real time. Events, such as the Filmfare and the Oscars, provide singular opportunities for companies to advertise their message to millions of viewers at once – and the power of these live formats is increasing. But advertisers can now aggregate audiences of similar size in real time via OTT entertainment programming. And these platforms benefit from real-time bidding, with better demographic targeting, at more efficient cost. These incremental differentiators (vis--vis traditional TV) offer advertisers new opportunities.
Getting to initiatives, the government of India too has paved the way for media and entertainment industry's growth by taking various initiatives such as digitizing the cable distribution sector to attract greater institutional funding, increasing FDI limit from 74 to 100 percent in cable and DTH satellite platforms, and granting industry status to the film industry for easy access to institutional finance. TV business is going through a fundamental metamorphosis worldwide. The art of storytelling in video continues to be a dominant form of entertainment. It is the underlying business models, technology, and operating methods that are changing to adapt to the new world of globalized content distribution and our changing behavior of watching video on our mobile devices. TV ad tech is expanding in three dimensions – (i) geographic and demographic targeting on pan-regional TV; (ii) personalized targeting on live and on-demand TV content on connected devices; and (iii) data-driven programmatic buying.
Now, although the shift to digital is happening, the TV ratings system will further accelerate the drive of differentiated content to digital, but the key to the speed of change is the speed at which broadband grows in the country. Also with the increasing number of smart phones in the country, the focus of the digital space should be mobile as it is soon expected to be the primary device of media consumption. However, people tend to have a high switching habit on mobile platforms given that minimum effort is involved. Hence, the challenge lies in providing content that keeps the audience hooked to the app and website.
Media companies need to strategically reinvent their portfolios to get ahead of the massive shifts happening across the industry. To stay competitive in the digital era, it is important to understand how the online ecosystem has changed three fundamental components of the television industry – consumer services, advertising, and content development and distribution – which will shape their company's future.