In September, our team attended IBC 2016 in Amsterdam. IBC is the key industry conference for the Media and Entertainment sector. The focus for this year’s event was around the accelerated changes in both the technology required to produce and distribute television, and also the business models used to monetize content. Jean-Marc Racine shares his thoughts on changes in the M&E space.
While the IBC conference track was organized into seven themes, our biggest takeaway was the power of accelerating technology on transforming businesses and creating a new frontier of players that are primed to capitalise on new opportunities.
1. The OTT market is due for consolidation
The Over-the-Top (OTT) market is overcrowded, making it a ripe area for consolidation - there are over 100 OTT video services in North America alone. The driving factor in this is the significant R&D required for an end-to-end OTT platform that can handle live On-Demand content. There are only so many companies that can afford it. The pure players with limited market share are likely to struggle, but the integrated players who are selling other services may have a chance given their relatively bigger R&D budgets.
2. The Pay-TV and OTT relationship is more intertwined
Nowadays, you cannot be a Pay-TV operator without an OTT platform. Behind this symbiosis is the start of the migration towards next-generation architecture. The Pay-TV platform used to be very siloed, with different platforms added for each new function; newer technologies are now based on more integrated solutions. These additional efficiencies are a win-win, as the operator has reduced complexities and costs alongside the consumer’s improved user experience.
3. Content creation workflows will be software-centric
Whether it is content preparation, post-production or play-out, software technologies and cloud solutions will be more integrated in this part of the media value chain. There are two disruptions resulting from this: incumbent service providers need to embark on a new R&D cycle and secondly, vendors need to develop expertise with such technologies. At IBC 2016, there was a noticeable difference in vendors who had embraced these new methods and those that had not.
“Our biggest takeaway [from IBC 2016] was the power of accelerating technology on transforming business and creating a new frontier of players that are primed to capitalise on new opportunities”
4. Picture resolution is increasing, but so is consumer confusion
Advances in HD, UHD and HDR – among others – are moving slowly with their standardisation processes are towards increasing resolution. However, the new picture formats are creating confusion in consumers’ minds, thus slowing the roll-out of such technology. It is easy to imagine the fatigue from navigating the alphabet soup of choices when buying a TV.
5. Video analytics is still in its infancy
Most analytical propositions have grown and remains fairly simple and centred around that product’s functionalities. The actual value in performing analytics, for any reason - for example, technical troubleshooting, and customer experience - is in taking a holistic view over a dataset and monetizing it across the board. Having an advisor that takes a systematic end-to-end approach over the technical side is better than a vendor’s perspective, which typically does not have such a comprehensive overview.
6. Virtual reality remains a fascinating theme, but monetizing it remains a problem
Undoubtedly, virtual reality is now a buzzword that has replaced 3D video when it comes to pioneering immersive entertainment. Where virtual reality and 360° videos score highly in impressiveness, it remains to be seen whether the typical consumer can be incentivized to purchase the whole set-up in the household.
7. The Free-to-Air TV and Pay-TV models are going to be severely challenged in years to come
These models are being challenged by consumers and these industries will have to evolve and/or reinvent themselves. There may be different methods to achieve this, but the goal remains the same: ensure the advertisement model is relevant for advertisers if you are a commercial TV operator or provide a full entertainment experience if you are a Pay-TV operator, for example, as seen with Sky and SkyQ). Commercial TV models have seen mobile and internet advertising gaining market share at their expense, while Pay-TV models are confronted by the increasing ubiquity of accessing content and piracy.