The continued evolution of “traditional television”: what next for content distributors?

This article was  first published in the Technology, Media and Telecommunications Guide 2017.

Introduction

Each week we seem to read a new press release about the launch of an OTT platform, an investment in a cloud-based transmission services provider or a prospective complementary virtual reality experience for avid fans of a particular genre.  Much has been said about declining linear viewing figures, “cord-cutting” and how one addresses the highly sought after millennial (and post-millennial) market but the number of high value output and platform distribution deals which Wiggin has worked on in the last 24 months demonstrate that scheduled television viewing and the traditional platform model are still very much alive and kicking.  At least for now.

In this article I examine five areas which commercial and legal teams will have at the forefront of their minds when formulating their approach over the next twelve months.

What is a pay “platform” (in the traditional sense) in 2017?

In 2012, the UK considered the predominant players to be Sky (the DTH platform) and Virgin Media (the cable platform) with BT Vision (as it then was – the hybrid DTT/IPTV platform), Talk Talk and, to stretch a point, Top Up TV (the pay digital terrestrial platform) making up the numbers.

Apart from Top Up TV, which ceased trading in 2015, each of the other platforms have evolved from offering simple television viewing to multi-channel, multi-function “TV Everywhere” models which are fully internet connected and can also provide your fixed line and mobile telephony.  Sky Q’s homepage is not even the linear EPG anymore.

If we are defining a platform as “connected and converged”, you can add Amazon into the mix with its Amazon Drive cloud storage, Alexa and Echo dots and Amazon Fire TV but then where do you stop?  Outside of the audio-visual space, you could add Sonos (controlling your music), Hive (controlling your utilities) and Samsung SmartThings (potentially controlling everything else).

This draws two conclusions: firstly, you could have a huge number of “hubs” in your home and secondly, traditional platforms are facing greater competition and more pressure to innovate (even outside of their historical service lines) in order to keep up and win the battle for the home.  In turn, this leads to more complex contracts with broadcasters and content providers and more pressure on linear broadcasting viewing figures – add to this the spiralling licence fees for premium sports and high-value entertainment content – and you can see why the basic channel providers claim that they are suffering at the hands of the distributors.

Refocusing the core linear offering

This segways nicely into the second theme.  The shift to non-linear viewing has not been the rapid change which many predicted back in 2012 – Thinkbox reported in 2015 that live linear television still accounted for 61.6% of all UK individuals’ (and 43.5% of 16-24s’)[1] viewing.

The producers and broadcasters have to take some credit for this.  Care has been taken to create great storylines with an ongoing narrative, get social media and marketing strategies more focussed to deliver compelling hype, innovate with technology such as 4K distribution and VR/AR and launch companion functionality (such as apps with specific functionality or bonus content).

This sharp focus will have to continue in order to stave off the threat of instant gratification from on-demand offerings.

Social media as a broadcaster

Social media is also no longer simply a complementary tool for broadcasters or a provider of clunky apps for connected TVs.  In the last five years we have seen an evolution from simple social media platforms to Twitter companions with Comcast and EE to content integrations by Vevo and YouTube with a number of platforms.

Now Twitter and Facebook are acquiring audio-visual rights (particularly in live sports) and are challenging the Googles, Apples and Amazons of this world – arguably so much so that Amazon felt compelled to reportedly pay the NFL five times more for Thursday Night Football for the 2017/18 season than Twitter has paid for the previous season.  Next social networks will start commissioning their own content and then where does it stop?  Could a Facebook channel appear on the EPG in the next 18 months?

Whether social media is a viable platform for linear television remains to be seen but a combination of UGC, short-form Facebook Live contributions from other content providers, exclusive commissions and some premium sports rights makes a compelling proposition for a customised, consumed-assembled channel.  This is something that broadcasters and platforms will be all too wary of when negotiating their content restrictions and free-to-air protections.

When will the cloud take-off?

Like the move to non-linear, due in part to the legal uncertainty, the initial excitement over network or remote PVRs (at least in the UK) does not seem to have crystallised but cloud services do now play a crucial role in D2C models.  Everyone from programme makers and sports clubs and leagues offering “Season Pass” products to broadcasters and platforms offering OTT services and pay-lite models is benefitting from the lower costs of delivery and myriad of devices available to the viewer.

In the same way as video killed the radio star, the initial concern was that nPVR would cannibalise VOD sales but where the biggest impact seems to be is enabling greater choice for the consumer and enhanced functionality (such as start over or replay TV).  These two corollaries appear to be linked with the content owners responding to the anticipated challenge of nPVR by embracing the technology behind the threat and diversifying the range of rights they are offering to platforms and generating other D2C revenue streams.

Data

Within the confines of data protection laws, platforms have always built careful viewer profiles and held prized customer account information – this has been significantly enhanced by the addition of PVR and other non-linear viewing data – and the launch of Sky AdSmart is testament to that.  Despite online advertising still being a relatively nascent market, the agencies and adtech providers have also diligently been gathering detailed data and analysis.  Add the publically available scheduling data and BARB figures, third party data and social media trends to this and you have incredibly rich data-sets which drive not only advertising revenues but targeted commercial opportunities for new content services.

The challenge is that this convergence of the various data sources is taking place in a fragmented fashion without standardised technology models and coordination between content distributors and broadcasters.  Aside from BARB, there is also no universally accepted measure of viewing so non-linear activity and online, ad-supported viewing is not accurately captured in one place.  All of this means that it is still a battlefield rather than an open forum for rich data-sets which maintains the value and importance of detailed information and analytics for individual content providers, social media networks and platforms.

[1] Thinkbox Annual Report 2015 – based on average video time per day of 4hrs 35mins for all individuals and 3hrs 25mins for 16-24s.