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service broadcasters
Antonio Schuh
A note about me
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TV Industry is changing
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We are going to talk about an industry…
Was Is
•Evolving •Disruptive
steadily Technology
•Vertically •Fragmented/
integrated Value chain horizontal
•High •Low
Concentration
•Low •High
Externalities
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Hold on – wrong industry: that was the computer industry in
the 80s-90s
Was Is
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Now, really. We are going to talk about an industry…
Was Is
•Evolving •Disruptive
steadily Technology
•Limited •Plenty
Substitutes
•Friendly •Muddled
Regulation relationship
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Oops, did it again: that was telecoms in late 90s to now
Was Is
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Main messages
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Which “Digital TV”?
Technology? DTT
(several flavours),
Cable, IPTV, DVB-S
To each type, a
Radical Creative
trajectory
Threatened Perceptions on
existence, speed
Core and type of
assets industry
Intermediating Progressive evolution affect
response
Not
Threatened Need to align
strategy to actual
industry
evolution type
Threatened Not Threatened
and stage of
Core skills evolution
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Why type of industry evolution is important?
McGahan, 2004
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TV industry
Key features
— Tech for distribution 1-to-many
— Generalist offer – news, fiction, non-fiction; audiences (children, stay-at-home
moms, adults, youngsters)
— Dominant design: vertical + horizontal grid
— Processes in place for audience research, ad sales, programme acquisition
— Foundation: economics of scarcity
— Push medium - asymmetric power relationship to audience (passive receiver)
and to some extent with advertisers
Economic organization
— Vertically integrated
– Content producer: Own productions, commissioning…
– Aggregation: (especially US-generated content)
– Distribution: Control over broadcasting infrastructure (even if outsourced)
— Diversified. Radio, Newspapers…
— Monetization. Ad-funded.
— Regulated: (1) Constraints to unsuitable content, “public interest” content
(eg. Free Football/Bread & Circus. ). “Fairness doctrine” (2) Free spectrum in
exchange for reach, diversity and public service targets
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TV industry – core assets and core skills
Elements
Spectrum
Studios
Core assets Brand/Reputation
Understanding mass
audiences
Core skills Acquiring programming
Producing
Selling ads
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Special case: Public Service Broadcasters
Need
— TV is a public good: non- rivalrous, non-excludable consumption
— Positive externalities of “quality” TV – better informed society
— Need to address industry structure concerns: concentration likely
due to entry barriers (limited spectrum) high fixed costs and low
marginal ones
— Good TV is an experience good – market failure since customers
cannot be fully informed ex-ante on quality of options available
Funding: license fee, tax, mandatory contributions…
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Importance
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Changes in TV industry
Impact
Internetization
Digital Terrestrial TV
Analogue/early
digital expansion
Time
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Impact
Consequence: decreasing
shareholder return
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Winners
Pay TV — Market
15 expansion due
to new
Magazines
devices
10 — Undeserved
Film
demand
Música Radio
5 Music Internet (publ)
Games
0
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
35%
TVE
Archive material 30%
Telecinco
25%
Extras 20%
15%
LaSexta Antena3
10%
5%
TV3
Cuatro
0%
0% 10% 20% 30% 40%
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What type of industry evolution is happening for broadcasters?
Change
Elements Impact Threatened
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Type of industry evolution in TV business
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A foresight exercise: TV under a diagnosis of “creative” industry
evolution
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Value migration and fragmentation of the value chain
Delivery
Creation Aggregation Distribution End User
Interface & Device
Enablers
• Digitalization of media • Aggregation importance as • Transport: entrance of OTT • Devices & Interfaces:
with major cost a stand-alone, value- added players that are network increase share of value
reductions in production activity decreases due to agnostic (vertical integration captured due to the
and distribution searchable databases and is no longer required) increased flexibility
• Consumer more involved content unbundling • Commoditization of the these tools provide to
Key with their media • New entrants to the market: value of the network digital media.
• New premium content Nokia, Apple; Telcos; • Proliferation of broadband
changes owners strategies: greenfield firms (ex, Joost). and increase quality of
exploitation of new Plenty of innovation, bandwidth
release windows especially leveraging new • Increase in number of
• Long Tail aggregation/interface platforms (IPTV, Cable,
mechanisms Mobile, Internet)
Example:
Apple
Value migration
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Broadcasters and reconfiguration of value chain
Antena 3 T5 La Sexta
In the TV Production xx xx
industry, this
Acquisition xx xx
would imply
focusing on Programming xx X Y
selected stages Ad sales xx xx xx
Signal transport xx xx xx
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Traditional content consumption cycle
Feedback
Content Amplification
Content discovery
consumption and feedback
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New dominant design exploiting potential of newer
technologies
Feedback: permanent and transparent
Supple-
Content Amplification mentary
Content discovery
consumption and feedback Consum-
ption
• Decreased entry • Increase in platforms • Rating • Content
barriers in • Increase in devices, systems and associated to
Change production of and especially portable commentary the original
introduced by distribution entailing devices • Prosumer consumption
technology an enormous
amount of content
offered
BBC iPlayer –
“Find, Play,
Share”
YouTube Search
• 1 Bi visits/day
• ~15% of all Social
features
Internet traffic
Supplementary
consumption
Recommendations
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Monetization
Ad Formats
— Current leaders: Web – AdWords/PPC, banners; Web Video: pre-rolls
— Overlays
— Repurposing vs custom made
Servicing
— Selling ad to advertisers – dynamic pricing?
— Delivering ad to viewers
Future:
— Dynamic advertising insertion?
— Non-ad funded:
– Subscription; Micropayments/unbundling
– Revenue share from bundled offers (eg, PixBox-like, TDC…)
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Hybrid TV
Need to combine “best of both worlds”
— Broadcasting is and still will be useful as a distribution technology: cheap
high simultaneous usage and lower density areas
— TV as a social experience
— Complementarity broadcasting/web
— Usability issues for laid back experience
Options
— Experiments over Pay TV networks (broadcaster “store”)
— Standards
– Canvas: BBC+iTV
– Hybrid Broadband TV: TF1+ Institut für Rundfunktechnik
– Microsoft Mediaroom?
— Proprietary
– “Boxed”: VUDU, ROKU, XBOX...
– “Unboxed”: Hulu, Youtube/VeVo
– Connected TV: Yahoo Widgets Platforms; NetFlix
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To sum it up
It is not the end – not even beginning of the end, just the end of the
beginning…
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To continue the discussion
Antonio.Schuh@gmail.com
(+34) 91 482 3096
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