Tug-of-war over TV industry

Mark Little, Principal Analyst at Ovum, has looked at different scenarios that will affect the development of the TV industry and says there are two main factors.

“There will always be a need for linear TV – that means TV with a set programming schedule – because of live shows, events and telephone contests. But there is also very strong demand for on-demand programming,” he says.

Little says that unless broadcasters and content providers supply more on-demand TV, consumers will turn to the internet to find it.

“People want to watch anything they want to watch, whenever they want to watch it. And if they cannot get on-demand programming on their TV sets, they will use their computers,” he says.

There are already examples of this struggle for the supremacy of TV content in the industry. Boxee – software that provides a simplified interface for video, audio and pictures – gave audiences free access to the US online video service Hulu on their TV sets. The software essentially undercut any paid business model for TV and threatened to eat up traditional TV revenue that broadcasters normally get from subscriptions and advertising. Consequently, content providers asked Hulu to turn off access to their content via Boxee, which they did.

“In the end, the contest is between traditional TV programming and on-demand content,” Little says. “While internet providers on TV are operating in a grey area in terms of rights, content providers and broadcasters are facing a challenge to their revenues. They need to manage the transfer from linear to on-demand TV in a way that optimizes their revenues.”

Little says that, in the near future, TV business models will still appear as pay models, where the content is funded by subscriptions, pay-per-view and advertising.

“These models can also be mixed and matched,” he says. “Sky, for example, has a pay system based on viewer subscription, but they also have a pay-per-view option for content.”

Ericsson, thanks to its TANDBERG Television assets, has the technologies needed to support the TV industry’s future transformation.

“To manage the transition to on-demand viewing, broadcasters need the right technologies to help them handle this development in a successful way,” Little says.