This week we announced the launch of our first ‘Game Changer’ – ‘Forever Evolving Experience’ – one of six influential factors that we believe will drive change and build strategies for TV industry players over the next six years. Each Game Changer focuses on the core influences in consumer, business and technology trends and the way they impact upon each other. These influences are interconnected, and they all link together to shape the overall impact the Game Changer has on the TV industry.
In this instance, the ‘Forever Evolving Experience’ originates with the consumer. Today’s consumers are dictating the pace of change in the industry through their expectations and demands. So while content remains king, the TV industry now has to address the needs of individuals. New methods of discovery, delivery, access, payment and sharing of content continue to change the way services are perceived and valued. Consumers are now basing their TV schedule choices on the availability and suitability of the given situation, thanks to the accessibility of content across a plethora of mobile devices. The amount of choice will reach unprecedented levels by 2020 and the TV industry must adapt. It will no longer retain exclusivity in shaping what the ‘TV experience’ is and what the experience will entail in the future.
How will the end experience evolve?
In fact, the range of experiences will broaden, as the consumer generation of 2020 realizes opportunities for content which are integrated, accessible and tailored to their interests, devices and personal situations. Programming formats will need to adjust to incorporate social influences and consumer trends, and integrate TV, film and gaming, delivering a much wider variety of service than before.
Personalization will also be key as viewers demand and expect broader, richer services across all devices, across live, linear and on-demand, offering customized and more relevant content in a simplistic way. Successful service providers will need to offer intuitive and automated recommendation of personalized offers, catering to individuals rather than households.
In order to maintain average revenue per user (ARPU), TV service providers will not only need to cater for the desire for personalized content on-demand, but also provide aggregated and premium services which exhibit more intelligence through search and recommendation. In other words, it must be perceived to be of a higher value to the consumer. We also know that the consumer experience will need to offer the highest possible quality and ensure interoperability, whilst also enabling a seamless transition between devices and viewing scenarios in the new multi-screen environment.
The impacts and influences of the Consumer, Business and Technology
So what does the media landscape look like? In order to delve further into our Media Vision for 2020, it’s crucial to look at the three very distinct dimensions that make up a ‘Game Changer’- the consumer, business and technology.
Consumers are proactively taking control of their viewing experience and creating their own solution by picking and mixing content sources and services, while at the same time, simplifying the selection, delivery and payment processes. This is a term we refer to as ‘consumer prosumerism.’ By 2020, we will see demand for a much smaller selection of relevant and popular channels, and far greater access to a library of time-shifted and on-demand content. Nevertheless, the ‘virtual sofa’ will offer socially driven live and linear recommendations and consumers will be willing to schedule their lives around the most popular and important content. We also believe:
* In advanced markets consumers will have shifted their patterns to a 50:50 split of time spent with on-demand and time-shift vs linear and live TV.
* The roles of devices will increasingly become multimodal. The best consumer services will offer voice and textual search for content and enable browsing of personalized proposed content across all user devices. Big screen viewing will continue to be the main source for consumption.
* Consumers will demand and be offered more choice across a broad range of content, becoming highly dynamic in their expectations of how premium content is discovered, shared, recommended, interacted with and consumed.
Consumer demand for immediacy and relevancy will erode the value of the multi-hundred linear channel PayTV package. Consumer loyalty will dissipate; the arrival of new players, with new approaches will re-shape and re-position the traditional TV industry hierarchy. As many more consumers pick and mix from smaller bundles of linear and live content, this will place greater demands on the content value chain and share of revenues, as rights negotiations and content packaging need re-assessing to align with these consumer shifts. We see:
* The business models of advertising, subscription and selling expanding beyond the household to the individual. The simpler the transactional model, the greater the upsell opportunities will be.
* TV service providers will still look to increase, if not maintain the consumer spend or ARPU. Bundling of services and content will remain, yet the bundled elements will need to be different or erosion will occur.
* The content, access, discovery and rights issues will all be impacted as TV service providers aim to offer the ultimate aggregated content service.
Technology is one of the primary elements driving change in consumer behavior and the catalyst that enables TV service providers and network providers to update and invest in new platforms and networks that allow the shift towards on-demand consumption. Technology will play a very significant role in enabling TV players to stay ahead of consumer demand and deliver better services which will have an influential effect on the consumer agenda. By 2020, we predict:
* The shifts in consumption models towards on-demand and multi/mobile devices will drive the rapid adoption of IP as the dominant delivery technology for video.
* Content platforms will need to become more centralized and engineered to facilitate a continual development and deployment cycle to deliver enhancements to the user interfaces and interaction mechanisms that surround content discovery and recommendation.
* Cloud-based approaches will be needed to host user experience platforms and the content itself, centrally; to be available on-demand on any device, over any network; and to serve millions of consumers with potentially complex interaction scenarios between screens, one another and social platforms.