Television has an inspiring past, ripe with innovation and popular culture
influence. Since its coming of age mid-20th century, generations of TV viewers
happily embraced their broadcast experience. For the industry, making a connection
with consumers was a pretty straightforward, one-to-many experience – until recently.
Today, audiences are becoming increasingly fragmented, splicing their time
among myriad media choices, channels and platforms. For the last few decades,
consumers have migrated to more specialised, niche content via cable and multichannel
offerings. Now, with the growing availability of on demand, self-programming
and search features, some experiencers are moving beyond niche to individualised
viewing. With increasing competition from convergence players in TV, telecommunications
and the Internet, the industry is confronting unparalleled complexity, dynamic
change and pressure to innovate.
To hone our point-of-view of the mid-term future circa 2012, from both a demand
and supply perspective, IBM conducted extensive industry interviews across the
value chain and commissioned Economist Intelligence Unit (EIU) primary research
in the U.S., Europe and Asia.
Our analysis indicates that market evolution hinges on two key market drivers:
openness of access channels and levels of consumer involvement with media. For
the next 5-7 years, there will be change on both fronts – but not uniformly.
The industry instead will be stamped by consumer bimodality, a coexistence of
two types of users with disparate channel requirements. While one consumer segment
remains passive in the living room, the other will force radical change in business
models in a search for anytime, anywhere content through multiple channels.
The tech- and fashion-forward consumer segment will lead us to a world of
platform-agnostic content, fluid mobility of media experiences, individualized
pricing schemes and an end to the traditional concept of release windows. Figure
1 illustrates the behavioral differences that will lead to the "Generational
Chasm" between the passive mass audience ("Massive Passives") and leading-edge
users (divided into two sub-groups: "Gadgetiers" and "Kool Kids").
Given the influence of both segments in the 2012 forecast period, strategists
must today work amid fragmentation, divergence and opposition in the market:
to optimise across nascent and long-standing business models; across new and
traditional release windows; with old and new content programmers; and with both
IP and traditional supply chains.
This is the beginning of "the end of television as we know it" and the future
will only favour those who prepare today. IBM offers six executive recommendations
to get started:
Segment: Invest in divergent strategies and supply chains for bimodal consumer
types. Identify, develop and continually refine data-driven user profiles in
order to optimise product and service development, distribution, marketing messaging,
and service migration. Tailor content, advertising, pricing and reach dynamically.
Innovate: Innovate business and pricing models by creating - not resisting
- wider consumer choice with windows, bundles, pricing and distribution. Take
risks today to avoid losing position long-term.
Experiment: Develop, trial, refine, roll-out. Repeat. Conduct ongoing market
experiments alone and with partners to study "real life" consumer preferences.
Invest in new measurement systems and metrics for the on demand world of tomorrow.
Mobilise: Create seamless content mobility for users that require on-the-go
experiences. Ensure easy synchronisation across devices and without user intervention.
Open: Drive open content delivery platforms to optimise content and revenue
exploitation, and to create optimum business flexibility and network cost-efficiency.
Position open capabilities to bolster digital content protection with consumer
flexibility, and for plug-and-play business upgrades necessary in the fast-changing
marketplace.
Re-organise: Assess business assets against future requirements. Identify
core competencies needed for future competitive advantage. Isolate non-core business
components for outsourcing or partnership. From an external perspective, reconfigure
business to exploit market and financial levers to buy, build or team to future
competitiveness.
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