We are currently in the midst of the biggest transformation in video and TV/broadcasting that we’ve seen for some time. This upheaval is being driven by a number of significant factors that have come together to cause a reshaping of the market. Before considering predictions for 2015 it’s worth taking stock of the changes we are seeing and what impact they have made already.
User viewing behaviors are undergoing dramatic change, with audiences becoming increasingly fragmented across the various channels, devices and platforms that have entered the market. At the same time the way that content is being produced is affecting audience behaviour. Those companies we previously classed as content producers are simultaneously becoming content distributors (e.g HBO) and vice versa. We can see the latter clearly from the likes of Netflix and Amazon Instant Video, with both already investing in developing their own exclusive content as well as being a platform to watch other content.
Underpinning this are the technological developments in connectivity, content resolution compression and encoding, and the adoption of cloud and virtualisation, allowing services to be launched at a rate much faster than before. This is provoking discussion around the migration of traditional broadcast to IP that will allow broadcasters to respond to competitive challenges (e.g. from OTT providers) much quicker and more cost effectively.
Finally, over the past year we have seen the development of programmatic technologies and techniques that offer the potential to change the long established model of buying and selling TV advertising.
When considered cumulatively, it becomes very clear that the digital media industry is facing the combined challenge of working out how content is viewed, produced and monetised in a new age of modern broadcasting.
So what can we expect in the industry over the next 12 months? My predictions include:
1. Consolidation’ and ‘innovation’ in the European Broadcast Market
In 2014 we saw a number of changes in the broadcast market with mergers and acquisitions taking place that will continue to drive change and increased competition well into 2015. I predict that we’ll see major consolidations in Europe and major content distributors getting back into content production and ownership.This year we will continue to see a period of acquisitions in the broadcast/operator space in Europe, mirroring what we have seen in the US in recent years. From this, a number of new services will emerge as competition begins to heat up.
In addition we are likely to see more content providers follow HBO’s move into the testing of OTT offerings while at the same time continuing to provide their content for the bundled offerings provided by the operators/MSOs. The increase in ‘cord shaving’ or even cutting by consumers will likely raise the value of content curation as a service and we may well see new entrants in this area or services from the big search companies.
2. Tech giants will wage a war for our eyeballs
The way we consume content in 2015 is set to continue diversifying. We will see Facebook start to position itself as a contender to the likes of YouTube as a content distribution hub. In addition there’s a new startup Vessel that’s promising to further ignite the fight for the top YouTube talent that bring millions of loyal subscribers with them. At the same time Amazon will continue to innovate as it will seek to capitalise upon its recent acquisition of Twitch. What will be interesting to see is how Google and even Apple respond to such a move, particularly in relation to premium content. While it’s uncertain what they will do, one has to believe that they will respond in some form, continuing to change the content landscape.
3. There will be a fierce debate as programmatic techniques enter TV advertising
We’ve already started seeing early signs of automated, machine-based (programmatic) buying and selling techniques moving into the agency-dominated TV advertising market but there are huge commercial, cultural and technical barriers to work through before adoption of any material nature occurs. The discussion and development around this technology and approach will continue apace in 2015 and I fully expect this to drive a lot of debate and greater transparency around issues such as viewability, fraud, brand protection and how to overcome these challenges.
4. Virtual reality will enter the mainstream
Ok so this is more of a leap than the others but there are signs that 2015 might be the year that VR really hits the public consciousness. It may not be in time for the CES or GDC game conferences but I think we’ll hear something game changing from Magic Leap, Oculus and possibly Sony/Morpheus before the year is out. Here’s hoping…
Underlying the above predictions is the certainty that in 2015 traditional broadcast viewing through a TV is going to decline. Without doubt it will continue to remain dominant for a number of years to come, and this is supported in recent research in the UK by Ofcom which highlighted that on average adults watched 244 minutes of TV a day but only consumed 26 minutes of media via tablets. However over time the way we consume content will change. As we become more and more dependent on the internet, this will have significant impact on our expectations of the quality of connections.
Next year will certainly see some interesting developments in the digital media market, with disruption and innovation continuing to be the name of the game alongside continued questions around IP infrastructure. The Internet was never designed to be a network supporting widespread video and TV distribution. More on that another time…