Fast forward to 2020. What will “watching TV” be like then? How will we consume television content – what devices will be best suited for consuming TV 8 years from now? And what might the commercial business models for TV content production, distribution, consumption and interactivity look like? Are we heading towards a scenario where almost all content becomes on-demand, and the concept of channel surfing becomes obsolete?
In order to get a better feel for the future direction of TV, let’s first align our understanding of TV of the past.
Past TV Models & Consumption
The experience of watching moving pictures with audio on a small box in our living rooms has evolved from a basis of using different analogue frequencies to separate content types across several channels. We “tuned in” to discover these new channels and content, and in so doing became socially conditioned to believe that the concept of using channels was the most efficient way to bundle similar content and cater for the tastes of a diverse market of demographics.
In this linear-broadcast world, we timed our lives around the network’s broadcast schedules. In the 80’s and 90’s, prior to the advent of the Internet and other media consumption devices, “plain old TV” could command nearly 100% of our evening attention-spans. Channel surfing offered an escape to “lean back”, flick through what was showing until you landed on a channel worth watching. Advertisers had a captive audience – the only way you could escape the clutches of an in-programme commercial was to leave the room, change or mute the channel – there were no alternative distractions available. In these times, advertisers made the absolute most of our attention spans to cram as many commercials into the additional 9 minutes for a 30-minute TV show, or 18 minutes for a 1hour TV show. Everyone remembers their favourite TV adverts from the 80’s and 90’s.
VCR’s provided the first magical experience of controlled time-delay and a sense of “content ownership” to consumers. People found that using a VCR allowed them to bend the rules of how networks dictated their TV-viewing schedules. The home video entertainment market took off as consumers bought into the convenience of watching movies in their own time while at home. VCR’s eventually gave way to improved technologies such as DVD and Blu-Ray, whilst PVR’s have provided an even greater flexibility to re-arrange their TV consumption habits to suit the evolving changes in their recreational lifestyles.
In essence, through the 80’s, 90’s and 00’s, the general TV-consuming public has evolved with technological advances around the TV broadcast model (VCR’s, DVD, PVR, Blu-Ray, Home Media Extenders), whereas the TV broadcast model has arguably remained static: one-way, linear delivery of TV content on the broadcast network’s terms.
The Changing Habits of TV Today
But somewhere between 2007 and 2009 we passed a threshold that, in hindsight, has been the catalyst for dramatic change in the accessibility, storability and usability of high-quality digital media content. In that window of time, the following 5 technology streams converged:
- PCs: became more available and more affordable with enough core central processing power to be able to transcode high quality source video in manageable amounts of time
- Storage: increased at a phenomenal rate. 40GB hard-drives soon gave way to 80GB, 120GB, 160GB, 320GB and 500GB drives. Nowadays, buyers only really look at a minimum of 2TB drives as being useful, with 4TB drives now emerging.
- Telecommunications Networks: continue to get faster, both in terms of mobile & fixed technologies, with high or unlimited monthly data quotas and high-speed throughputs, combined with increasingly affordable data tariffs.
- Open-Source and Social: has revolutionised the “reach”: the sharability and distribution of content through social media communities and p2p technologies continues to rise exponentially, with forums and software development groups constantly releasing tools to manipulate digital media.
- Devices: between smartphones, tablets, game consoles and connected TVs, the ability to share and consume media across multiple formats and devices is easier than ever before: desktops, laptops, connected TVs, smartphones, tablets and game consoles.
The intersection of these five areas unleashed an intensely disruptive wave across the TV and entertainment industries, insofar as empowering consumers to be more selective over the content they want to view, share, store or discard. Irrespective of whether TV content is accessed and consumed through commercial media streaming services (e.g. Netflix, Hulu), or whether TV content is accessed and distributed through alternative legal or illegal means, i.e. community-driven, self-organised peer-to-peer groups, the demands are the same: consumers want greater control over their content consumption habits.
Take the HBO-exclusive TV series “Game of Thrones” (GoT) as an example: currently the most downloaded TV series outside of the US, with a figure of 3.9m downloads vs. 4.2m TV viewers on HBO (Source: TorrentFreak, May 2012). An incredible ratio to comprehend; one could argue on the one hand why HBO hasn’t explored means of monetising the obvious demand for their product that exists beyond their cable TV subscription, while on the other hand it may be precisely because of the exclusivity that the pent-up demand outside of the US exists in the first place. The GoT example is a strong representation of how the rest of the world demands and consumes US-centric TV and digital entertainment content vs. how US networks still continue to hold control over domestic accessibility.
A major consequence of the US’s control over domestic TV & entertainment content has an indirect influence over the changing TV habits of the international audience. While US audiences may still have the “privilege” to be the first to watch a new TV episode of a series, the downside of that privilege is that because new episodes only air once a week, there is a 7-day waiting period between episodes, and the live episodes are punctuated with TV commercials. The typical US pay-TV consumer has thus become accustomed to “multi-tasking” their TV consumption by watching several different shows in parallel. US TV Networks continue to push this model as a means to hold onto the legacy social conditioning from the channelised days of analogue TV.
By contrast, the international audience has increasingly become accustomed to consuming TV series a “season” at a time. The main drivers for this change of viewing habit has come from the availability of TV series as DVD “box-sets” as well as the availability of entire seasons of TV in high-quality HD format. It is more engaging to devote one’s limited time to consuming an entire 24-episode season of a TV series in a weekend, or during weeknights over a period 1-2 weeks, than having to spread one’s attention across multiple TV series simultaneously and constantly recap on the plots. Many local pay-TV satellite providers offer “On-Demand” or “Catch-Up” TV functionality with their PVRs. Many consumers concur that episodic TV series content is better suited towards watching on-demand than to be broadcast on a weekly basis.
So what content is left and still has a place for live broadcasts? Only two categories: live sport, and live, breaking news. And it has to be live, breaking news that demands immediate, “stop-what-you’re-doing” attention: natural disasters or events that affect national security for example. All other news, by the time it is broadcast in an evening news show, is already outdated. Twitter has already seen to that. How many people have the time to sit down at 7pm every night to watch a news broadcast that recaps the day’s Twitter feed?
These two categories of live sport and live breaking news share a commonality in that they both lend themselves towards people “sharing an experience” of watching something together. Whereas a TV series, a movie or a documentary might be better suited towards the personal experience, watching live sport or watching live breaking news alone can be somewhat isolating. For movies and TV series, the shared experience is better in the pre-watching or post-watching phase of media consumption, whereas for live sport and live breaking news, the shared experience is better during the consumption – fundamental human nature.
This has an implication for how TV networks and content creators need to think about distributing their media in future. Smartphones and iPads are ideal mediums for consumers to catch up on TV series content, movies, documentaries, music videos in their own time. This multi-screen aspect of content consumption is commonplace: being able to consume TV media content in multiple contexts: from the TV in the living room, to an iPad in the bedroom, to a smartphone on a bus or train. The combination of broadcast, streaming, side-loading and mirroring of content across an ecosystem of multiple consumer devices creates a challenging number of new scenarios for TV content and producers to exploit.
Future Trends of TV & Entertainment
Several important trends continue to intersect and are likely to create further disruptions to the TV landscape in the medium term:
- Connected TVs: HD LCD and LED widescreen TVs continue to infiltrate top-end markets and filter down to middle-income markets as well. A “connected TV” comes with built-in Ethernet ports, WLAN support and USB connectivity, many of them with up to 1GB of storage for downloading and installing applications: Samsung and LG are leading the way here. Connected TVs allow streaming of media over local home networks offering a convenient way to bypass broadcast network channels. With little effort, one’s entire home media library can be organised and categorised with full metadata. Again, all this activity is currently happening at the “network edge”, but the opportunity for TV networks really lies in the network itself…
- Self-Organised Communities: are currently organising and cataloguing the world’s media library. If one knows where to look, it is possible to source almost every movie and TV episode that has ever been broadcast in the history of broadcasting. Media communities are so well organised, that the experience of sourcing content “illegally” is more user-friendly than the legal options available. This disparity, where content is collected at the network’s edge, indicates a market ripe for radical disruption. What Apple’s iTunes did for organising the world’s music is what is needed now for the world’s film and TV content. TV networks are sitting on a goldmine of back-catalogue content that can be organised into accessible on-demand libraries and made available for streaming access to an international audience. Content that is 20-30 years old should be as accessible and on-demand as content broadcast in the past 20-30 minutes. Networks themselves must transform to become the giant cloud-based PVR’s of the world’s content.
- Moving Beyond Channel Bundles: the concept of seperate “channels” is prehistoric. Separate channels made sense when technological limitations meant that simultaneous broadcasting of content was the only means of distribution. The advent of time-shifting PVR’s and online, on-demand streaming media have made the simultaneous aspect of broadcasting obsolete. Of all the TV content on all the available channels, how much content is actually relevant to each individual consumer? TV networks cannot afford to only push content into wide demographic blocks, or channels, any longer. In future, consumers will dictate what content they want, when they want it, and on what device they will consume it. TV network ratings assigned to television series will need to factor in many other variables beyond simple channel selection in order to get the true visibility of a TV show’s popularity. Social TV, and real-time Twitter interaction during TV content consumption using apps such as IntoNow, will emerge as the true measure of a shows popularity.
- Advertising Must Entertain: in the days when TV broadcast networks could hold TV audiences captive during their linear broadcasts, consumers had no option but to sit and endure through TV commercials. Today, it is likely that less than 50% of kids under the age of 10 even know what a live TV commercial looks like – because they’ve never seen one. The TV viewing environments in their households are most likely setup with a combination of PVRs, Blu-Ray players, Game Consoles and Media Streaming Extenders that effectively mean almost all the content is consumed on-demand. Advertisers that still target ad insertion into primetime TV are increasingly missing out on target demographics. The most effective response for advertisers is to shift their messages into the on-demand realm, but to do this, the target demographic must want to watch the commercial. And as we’ve learnt, for that to happen, the TV commercial needs to go “viral”, i.e. spread across social networks, so that it reaches its audience across a multi-screen environment. And that only happens when the TV ad offers entertainment value.
- Content Creation Decentralises: some of the best creativity in film and TV content creation today is happening on the Internet: big studios are seeing intrusion from the art of crowd-sourcing and online distribution. Typically, studios make TV and film content and then look for a distributor, however this traditional model is being upstaged by the community-driven approach of the Internet. Movies can now be made on lower budgets, and post-production skills are being in-sourced on demand to handle the video, audio, effects, editing and distribution. Advertising models are shifting from being “inserted” into content to becoming the “wrappers” around content distribution. The power of content creation, distribution and consumption is shifting to the consumer, especially in the area of independent filmmaking. It is likely that the “big name” studios will still dominate the “summer blockbuster”, high-profile, effects-intensive space, however will see far more competition in story-oriented drama feature films from the independent communities.
Looking ahead, at least for the rest of the decade, expect a wave of radical innovations to appear in this space. The question is whether those big players currently in the game are ready to reinvent their business models to fit the new demands of consumption, or face irrelevance by the time the decade is out.