The Media and Entertainment industry (M&E) is in the midst of a major transformation, as content proliferation, audience fragmentation, and digitization continue to forcibly reshape traditional M&E content, distribution, and monetization strategies. Though there is no shortage of theories and predictions about how the landscape will evolve in the coming months and years, we will humbly offer our prognostications in this space over the next month.
Our crystal ball has no more mojo than the next guy’s, but millennials are the biggest drivers of change in Media and Entertainment consumption, and we measure and analyze more global millennial TV, Movie, and Gaming downloads/streams than just about anyone. We’re watching the action from a somewhat different angle, which seemed like a good reason for us to join the fray. With that, over the next 3 weeks leading up to M3NYC (truoptik.com/events) we offer our take on 3 anticipated developments you may not have heard much about.
Part 1: OTT Morphs As It Mainstreams
The “OTT mainstreams” premise of this you already knew. Digital is the future of television, and a device other than your TV or at least your set-top box will be the primary content gateway (though TV will remain an important viewing “screen” for many). By cleaning up at the Golden Globes earlier this year, Amazon and Netflix further piqued consumer interest in TV “beyond the bundle.”
So it’s no surprise that the first quarter of 2015 has been marked by a steady stream (pun intended!) of announcements heralding the arrival of new OTT TV services by industry heavy hitters including DISH, Time Warner-HBO, CBS, and Viacom. Major players new to TV distribution per se, such as Apple and Sony have also joined the OTT fray.
We expect the flood of OTT services to be followed a series of shakeouts and changes that will occur mainly along two dimensions:
Problem-solving OTT will separate from “online cable” offerings. Some OTT offerings are designed to provide a more attractive TV “product” for certain groups of consumer by delivering unique content (Sling International), or lowering costs. Lower costs can come from more efficiently aligning channels with viewer interests (Sling TV), or enabling a la carte access to select channels (HBO Now).
Other OTT services, at least as initially described, are little more than slimmed down cable packages delivered over the Internet instead of through a set-top box. It may well be that the purveyors of these offerings are rushing to stake out a space in the OTT landscape, and that their services will evolve into more compelling consumer propositions. Short of that, we don’t expect a lot of traction for these sorts of OTT packages, which means most will not last very long. Consumers will demand more from their TV-service providers than just online access to content.
Watch for a rebound effect triggered by too many a la carte solutions and “too skinny” bundles. Increased choice and more efficient bundles are wonderful things, except when they lead to greater complexity and higher bills. Consumers are balking at the forced choices and high prices imposed by traditional TV-service providers, but they do like the simplicity of an integrated platform for accessing content, and dealing with a single (if often notoriously difficult) company for billing and service.
The ultimate promise of OTT is something close to the nirvana of paying only for the content you consume, though more on a “channel” versus “program” basis. That means every consumer may soon be able to cobble together a customized collection of channels perhaps anchored by a skinny bundle or two. It’s unlikely that any one bundle by itself can sufficiently and efficiently serve all the programming needs of large groups.
That still sounds like a pretty good world for the TV consumer, but it will likely come with some drawbacks, at least for a while:
• Complexity, Part 1. Consumers may be forced to switch across platforms and even devices to access their personalized TV package. Let’s face it – there are times when picking up the remote requires more effort than many of us can muster. Having to navigate across devices, flip switches, or unplug dongles is going to be a drawback. While many content streams may be available via a single device (e. g., an SMP, such as a Roku box), it’s likely some will not.
• Complexity, Part 2. Managing multiple content providers versus a single one. Imagine a half dozen automated credit charges coming from different OTT offerings each month, and having to deal with each separately when there are problems.
• Cost. Yeah, the big one. Consumers could end up paying more for their personalized ensemble of channels than they pay for their “bloated” cable package today. True, they may be receiving more of the content they want and less of the content they don’t, but a higher TV bill is not what most people are seeking.
While it’s hard to know exactly where this will go, we suspect some sort of partial rebound will occur, with sets of providers pooling their content to offer “combination” packages that cost less than buying each component separately, are delivered via a common platform, and offer unified billing and servicing. These “combo packs” will be smaller and more consumer-driven than the mega-bundles of today, and will exist alongside a la carte options. Though this near-term future may not sound all that radical, we believe that technology and consumer choice are the forces that will ultimately reshape the TV industry, and that rapid change will be the norm for all categories of media and entertainment in the coming years.
Look for the second installment of this series coming soon: Part 2: Creative Content Monetization (CCM)
About Tru Optik
Tru Optik is a trailblazer in data driven millennial audience and consumer monetization. Armed with the largest census level audience measurement of global OTT media consumption, Tru Optik uses interest and behavior segmentation to empower brands, media companies and agencies to deliver targeted advertising and experiences to millennials across all channels.