Brian Fitzpatrick is Managing Director, Europe, for Adap.tv, a video advertising platform and marketplace. As new content distribution channels emerge and consumers show increasing interest in alternative sources of entertainment, Brian asks whether broadcasters are moving quickly enough to embrace the technological and attitudinal changes required for long-term survival.
Industry change is always a double-edged sword. On the one hand it is incredibly exciting as ideas that were once no more than pipedreams transform our daily lives. But on the other hand, we may also perceive change as a threat that must be stamped out in the hope that our current business model will continue to be successful in the coming years.
TV is of course going through a period of rapid and disruptive change. The developments in technology allow content to be consumed anywhere on smartphones, tablets, PCs, games consoles and smart TVs. At the same time people are increasingly coming to realise they no longer have to fit their lives round the fixed TV schedule – instead they expect to watch what they want, and on the device in front of them when they make that decision.
Time to Step Out of the Comfort Zone
It’s tempting to try and maintain the status quo, particularly as the changes are often complex and well outside the comfort zone of even the most experienced executives. However, a cautious and protective stance brings with it certain risks – a lesson painfully learned by the music industry which did significant damage to both its reputation and its business model by going on the legal offensive instead of focusing on the consumer’s newfound needs.
Similarly, book publishing is currently experiencing its own renaissance, as companies like Amazon enable authors to bypass publishers and link directly to their audience. Could the same happen with TV where, in an on demand world, production houses could distribute content directly to the consumer?
Alongside the challenges posed by on-demand and multiple devices, the are the new content delivery services such as Netflix (which, according to a Sandvine Intelligent Broadband Networks report, represented an astonishing 33% of peak downstream traffic on US cable networks earlier this year) and NOW TV, which are servicing the growing demand for more flexible a la carte services that people are coming to expect.
And then there’s the threats posed by alternative forms of entertainment. While TV continues to be the dominant source of entertainment for the majority of the population, its role in the home is being challenged by online games such as Farmville and World of Warcraft, which regularly get bigger audiences at peak time than TV shows. The games industry is also widening its net to attract users beyond the traditional demographic of young males, so gaming has become a more family-oriented and female-friendly activity.
In the face of these various challenges, one thing is clear: the businesses that thrive in the new environment will be the ones who understand and embrace the technology that is driving the TV revolution. Choosing the right technology partners mightn’t be the easiest task in such a nascent market, but now is the time to start learning and experimenting. Many tech companies in the space are simply waiting to see broadcasters stand up and take a lead in pushing the industry forward.
While the new TV world may appear daunting at first, there is still time to take action. Already, the broadcasters who have an eye on the horizon are working with the new generation of companies that have built their businesses by developing technology that has been custom-built to solve the modern broadcaster’s business challenges. Although the future is far from certain, one thing is clear – the biggest risk will come from doing nothing.