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The Six Most Important Video Industry Trends From IBC
BY JIM O’NEILL, PRINCIPAL ANALYST AND VIDEOMIND EDITOR, OOYALA
If IBC 2016 showed anything, it’s that too many broadcasters, operators and content owners still have their heads stuck in the sand when it comes to consumer needs, desires and demands. Much of the industry — especially pay-TV operators — maintain an unrealistic hope that consumers will “come to their senses,” return to the fold and that they’ll essentially step back in time. In discussions at IBC, it was painfully obvious that as the industry’s disruption demanding more collaboration to keep pace with accelerating change, too many companies are looking to maintain the status quo.
I’ve long said that content’s reign as king of the industry’s food chain is over, that the consumer has taken control, prompting major changes in how content is distributed, monetized and consumed. Nothing proves that point more than the rush by major media companies in the past 18-months into the highly lucrative — for those companies that find the right balance between content and consumers — SVOD space, even as it looks for ways to evolve its traditional ad-based online model (more on that later).
As NBCUniversal CEO Stephen Burke has said, “Our relationship with Netflix has never been better. They’re a huge purchaser of our content (and) we talk to them all the
time. (SVOD) is a good thing for Comcast Cable and it’ll be a good thing for NBCUniversal.”
MAINTAINING HEALTH AMID DISRUPTION
IN THE INDUSTRY
Global media properties remain profitable, but increasingly are accepting — after initial reluctance — that the industry is undergoing a seismic shift that already is generating a new
landscape. Among the biggest players, EBITDA margins remain high, with companies like Liberty Global, Scripps Networks, Discovery Communications, Televisa, TVB,
Comcast, Disney and SBG all reporting percentages in the 30-44% range. To maintain that earnings health, more media companies — from broadcasters to publishers
to brands — are experimenting with how they connect with consumers and are looking for opportunities to expand their footprint to a more global one, rather than a regional one.
Many have aggressively moved toward direct delivery in an effort to disintermediate much of the traditional supply chain. Numerous panels and presentations talked about direct-to-consumer options that focused on the public’s increased predilection toward mobile screens, both smartphones and tablets, especially among today’s primary audience (Millennials) and tomorrow’s (Gen Edge).Short-form content, live news, sports and music, more originals from new content producers like Netflix, Hulu and Amazon Prime and other non-traditional content suppliers also had significant roles in the show. Augmented and
virtual reality, the benefits of ultra-high definition content versus the less costly (in terms of production and bandwidth needs) high-dynamic range content and, of course,
the increasing demand for accurate measurement on all platforms were high-volume issues.
There were nearly 56,000 visitors to IBC this year, the largest number the show has seen. Here’s a look at some of the trends they were most interested in and what that
means for the future.
Over the top is no longer an “us and them” theme, but, rather a confluence of interests among broadcasters, operators and content owners.
OVER THE TOP IS NOW MAINSTREAM, FOR THE MOST PART
Over the top is no longer an “us and them” theme, but, rather a confluence of interests among broadcasters, operators and content owners. After all, much of the traditional
audience has gone over the top — it’s estimated nearly three-quarters of U.S. TV homes, for example, subscribe to at least one video on-demand service. The industry has no
choice but to follow. As Ricky Sutton, CEO of Oovvuu, an ad-funded video on-demand and ad tech company, said, the majority of broadcasters have accepted — and even
embraced — digital disruption.Increasingly, subscription-based services, ad-based servic-
es and transaction-based services have gone from money-losing experiments to businesses that generate substantial revenue streams.But Dominique Delport, MD Havas Media/Chairman of Vivendi Content, warns that while he is certain OTT will
become ubiquitous, he estimates it could be a $15 billion global business by 2018, some media companies will face significant travails as the transformation occurs.
“SVOD and OTT is the equation but you need to be backed by pay TV and you need to leverage content production and ad deals,” he said. “Mass marketing has been a winning formula for 50 years — but the party’s over.
In the advertising and retail world we are moving to a direct to consumer model and this is exactly what the media and technology world is facing — go direct or trust
the middle man.”
Delport predicts that familiar media brands will disappear — as many as 75% of them — in coming years as larger companies scoop up smaller ones.“It is winner takes all. You can’t win alone,” he said. “There is a revolution in media. Everyone will buy everyone else.
It will be ugly and only the giants will survive.”
SOFTWARE AS A SERVICE
Evident in the various halls at IBC this year was an increasing focus on software supported networks and SaaS models, which vendors are rapidly introducing as they move away from more traditional hardware solutions.Vendors like Cisco, Ericsson, Imagine Communications
and others are moving full speed into offering software supported networks, promoting the flexibility that comes from not having to manage multiple racks of hardware.
Imagine Communications CEO Charlie Vogt said the industry is rapidly transforming into one based on “defined by software and one that’s defined by IP,” something he
calls the “next phase of this industry.”The reason? As companies virtualize some part or all of
their network functions, change becomes easier.The conference saw far less hype related to the technology than in years past, with more vendors able to highlight
implementations and share demonstrations about what’s
Change in the media industry, Vogt said, “is being driven by the Internet.” It’s changing business models, the go-to market models for companies and allowed OTT platforms to be huge disruptors in the space. “It’s changing the way our traditional (broadcast and operator) customers think about going to market.”
At NAB, Vogt said he thought “customers are terrified” at how they would monetize their business in the future.
“They are looking out two, three, four, five years and they are looking at companies who have taken advantage of the Internet... (It’s) changing and the underlying technology
that’s required for them to participate is going to change.”
It’s a familiar theme.
Three years ago, during a panel at IBC that maintained that content owners would never want to — or be able to easily and economically — go directly to consumers, Vogt asked
“Today, they’re all going direct to consumer because today the consumer is — for the first time — the ones that are really driving the consumption of the content and in control
of how they want to consume it.”
That’s produced a major change in itself. Content owners are changing the game because they can be in direct competition with traditional delivery systems by going direct to consumers.
That’s also creating more opportunities for video platforms.
Where media companies in the past sometimes had been reluctant to move to software-based delivery partners, they are more frequently looking to the cloud, and the
companies that live there, as they try to innovate in the space, launching new business models and iterations of their content play quickly. Being able to offer rapid time-to-
market quickly is becoming a killer app in the video delivery segment.
Where media companies in the past sometimes had been reluctant to move to software-based delivery partners, they are more frequently looking to the cloud, and the companies that live there, as they try to innovate in the space.
USER INTERFACE AND USER EXPERIENCE
User interfaces and the user experience remain huge pain points for consumers — and for services looking for ways to reduce customer churn and increase consumer engagement. UI and UX were used interchangeably as vendors talked about the need to make sure users came first... no matter what; consider it another manifestation of the consumers seizing the high ground that used to
belong to content.
UI took center stage during IBC, with numerous companies sharing their visions of future trends. Look to see more graphical interfaces, as the text-heavy tiles that originally defined apps are retired and search and discovery move up the ladder.
“TV is reinventing itself over and over,” said Sacha Prueter, head of Android TV at Google, who notes that it’s becoming harder to keep a content grazing consumer engaged as the
content universe expands. “Companies will have to learn how to innovate quickly and leverage device types to fit specific viewer expectations and experiences,” he adds.
Along with more immersive graphical experiences, voice also is coming to the forefront.
“(Comcast’s) Xfinity is spending an obscene amount of money to get the consumer to talk to his box,” Michael Hawkey, SVP & GM for TiVo’s discovery business group, said. But making voice truly functional has a long way to go.
“Users shouldn’t have to talk in a keyword friendly order to get what they want because that isn’t natural,” he insists. Instead, developing UIs that understand natural language —
and its syntax — will be key.It’s not hard to see that today’s TV viewing experience has
become more fragmented.Broadcast TV, traditional pay TV with dozens of broadcast
and cable network choices, SVOD services, AVOD and freemium services, TVOD, EST and any combination of the above have served to create a massive queue of content.
Hardware, including SmartTVs, tablets, smartphones, Roku boxes, Apple TVs, Amazon Fire TV sticks, Chromecasts and other devices has added to that tangle, as well as adding to
the pile of remotes that clutter coffee tables and can create Goldberg-esque content search and discovery rituals.
The next generation of UI will have more in common with today’s nascent heads-up-display (HUD) technology that’s begun to appear in cars — graphical displays on a windshield that show traffic conditions with lane colors, a driver’s speed, road conditions and the route to a destination with-out being distracting — than they do with current electronic guides. And they’ll be more immersive than guides like those of SVOD services like Netflix offer.
As Trisha Cooke, chief of marketing for Canadian user interface specialist You.i said: “There’s no better business,” as long as you can seamlessly connect consumers with content... without getting in the way. A ROOM WITH A (DIFFERENT) VIEW
Just six years ago, IBC featured a number of panels on the coming 3D boom; booths featured multiple monitors showing 3D content to visitors wearing an array of 3D glasses
and camera manufacturers presented live display that, literally, stopped traffic.
That boom went bust in less than two years as consumers
essentially yawned (or gagged) at their experience.
Fast forward a couple of years and UHD/4K sets — some of them massive — attracted similar queues of viewers eager to get a close up peek of the technology, learn about
the massive bandwidth required to deliver UHD content, gawk at the (too) clear close ups of and gasp at the prices.
This year, UHD took a backseat to virtual reality at IBC, becoming almost passé as 4K content creation is becoming the norm and more operators start to offer 4K services.
While not yet ubiquitous, the industry is convinced that UHD will become the norm in the very near future, likely leveraging HDR technology.
The star of the show — obvious to anyone who walked through the halls — was VR.
Booths with VR headset wearing visitors were packed as demonstrations targeted at gamers, sports fans and the general entertainment industry ran their course to oohs and aahs.Interestingly, concerns that VR would meet the same fate
as 3D — where users just weren’t keen on wearing goofy glasses while watching content that wasn’t necessarily better in 3D — are few.
In the weeks after IBC, several major firms invested in the technology and analyst firms forecast huge sales within the next few years, a time frame that’s crucial to VR’s growth,
said Alex Mahon, managing director of The Foundry.
“If we look maybe two hardware cycles on, then VR will be massive,” she said. “So, two hardware cycles — that’s probably three or four years — then we’ll see tens of millions of
people with headsets because by then the headsets will be less invasive. They’ll be simpler to hook up to a computer system, more like a pair of glasses and a phone.”
The next generation of UI will have more in common with today’s nascent heads-up-display (HUD) technology that’s begun to appear in cars — graphical displays without being distracting with-out being distracting — than they do with current electronic guides.