Technology is transforming how the world consumes content, specifically in the area of video. The ubiquity of portable smart devices, ultra-high definition viewing formats, and the sheer volume of choice are ensuring that today’s consumer has more choice than ever before. With their smartphones, tablets, laptops, 2-in-1’s, and Smart TVs, consumers can now watch content from across the globe when they want. The fierce competition for user attention has seen brands pump billions of dollars into licensing and original content resulting in an industry that is more consumer-centric today than it has ever been.
Reports suggest that by 2021 video will make up for 80% of global internet traffic. While this implies that video consumption and distribution will move to the Internet, but the fact is that this only serves to show viewers are consuming more content than before. The trend points to an intricate, challenging, and exciting video content landscape where consumption is on the rise.
In an increasingly competitive market where it’s make or break for some players, one thing remains consistent – a laser focus on consumer needs. So what are the trends that will influence the proliferation of video next year? Here are my top five.
Customer experience leads in race ahead
Today’s customers are spoilt for choice but is also equally conscientious of the quality of their experience. The exponential fragmentation of the content market is resulting in a fierce war for user attention. On-demand content combined with high-definition devices and superfast broadband in well-connected cities has put the viewer firmly in the driver’s seat. This shift in balance of power has resulted in the development of a multi-screen ecosystem where users are consuming content from a variety of sources across multiple screens. With choice and speed on the verge of being commoditised, it is the quality of customer experience that will set content providers apart. The leading content players will combine this experience with quality of access and scalability.
Substantial linear TV growth drives new opportunities
Asia and Oceania record the lowest daily linear viewing times in the world at 2 hours 25 minutes and 2 hours 44 minutes respectively, below the global average of 2 hours 56 minutes. While those figures may suggest a dominance of mobile and OTT content viewing, one should remember that the region, especially India and China, is adding a staggering 170.1 million homes for linear TV with another 188 million set to move from analogue. This shows that there is huge potential for linear TV growth in the market. Furthermore, with demand for highest picture quality content set to grow, this region is primed for rapid expansion in the segment. Businesses that can meet this demand with attractive new offerings will occupy pole position in this high potential market.
OTT owns growth, but linear holds revenue
With 1.8 billion unique subscribers and 3.8 billion connections, OTT is the fastest growing content delivery format in the region. The revenue, however, tells a different story. Linear viewing still owns a majority of the earnings pie with 85% of TV revenues set to be accrued by the medium in 2023, and this is not set to change anytime soon. While standalone players are unable to generate significant cash from the OTT model in the medium-term, integrated giants and large TV players are subsidising its losses to retain and grow their consumer base. Infrastructure is another slowing factor. The cost of delivering OTT increases with a larger subscriber base. This financial outlay is in contrast to satellite delivery methods where a high fixed cost is massively reduced with a growing viewership.
From a consumer standpoint, while single OTT subscriptions are accessible, stacking becomes prohibitively expensive. Pay TV combined with SVOD is a more viable option for consumers looking to augment viewing options while keeping costs low.
As Pay TV providers cotton on to the consumer’s evolving viewing habits, they are layering existing TV bouquets with attractive SVOD offerings. Pay TV provider’s ability to generate revenue will allow them to be more innovative and focus on customer delight. Furthermore, the growth of UHD channel uptake has not grown in line with HD and UHD screen penetration will and encourage the rise of this space alongside IPTV.
Diversification of broadcast and Pay TV businesses
Innovation is one way to earn market share in the broadcast and Pay TV business, but this comes at a very high expense. In addition to creating branded OTT and IPTV offerings, broadcasters and providers must consider diversifying their businesses to offer products that meld well together and with their consumers’ behaviour. Online payments, e-commerce, and mobile services are among the options to consider. Technology, infrastructure, monetisation, and sustainability are business concerns, but the consumer focus will always be on experience. Companies that are able to create better high-quality experiences that consistently deliver customer delight will win in the long run.
Co-opting segments of the digital value chain
It is an exciting time to be in this sector, the best yet in my opinion. The opportunities for innovation and the consumer appetite for change make the segment an ideal breeding ground for new technology and creativity. Broadcasters, content owners, and pay TV operator are now moving into the online sphere while OTT providers are experimenting with linear TV streaming. There is a significant crossover and it is crucial for business to differentiate without losing focus on what they do best. It is with this intent that companies such as SES are providing value-added services to customer like traditional content operators. With world-class managed infrastructure and content delivery in place, these content operators can concentrate their efforts delivering the best viewing experience for their most important stakeholder – the consumer.
Each of these trends will make an impact on the industry over the next year and several to come. One, however, remains consistent – a laser focus on consumer needs. The ability to anticipate these needs and pivot accordingly will be the sole differentiator between the businesses who win and the rest.