Future of Television in India. Key trends

Transcription

1 Future of Television in India Key trends

2 The trends that will drive the future The Indian television industry is undergoing a seismic shift. The pace of technological change is accelerating so quickly that finding the right balance between addressing today s daily operational challenges and planning for the next big thing can be a struggle. Many executives are so focussed on the critical issues that they need to address today that looking forward is nearly impossible. And yet, looking forward is what executives need to do if they want to innovate, prosper and survive.

3 1Unbundling of content will drive new revenue models 6 Increased content cost will shift power to the content producer 2 Technology will enable omniplatform consumption 7 Digitization will increase importance of niche channels 3 On-tap content will lead to time-shifted bingeing 8 Transparency will lead to perviewer carriage models 4 Increased materialism will move TV consumption from the living room to the bedroom 9 Unicasting will lead to resultbased ad models 5 Increased broadband will result in increased piracy 10 Social dynamics will lead to more real-time feedback

4 Here are ten emerging trends that we see as having the biggest impact on the future of television in India 1Unbundling of content will drive new revenue models 2Technology will enable omniplatform consumption 3 On-tap content will lead to time-shifted bingeing 4 5 Increased materialism will move TV consumption from the living room to the bedroom Increased broadband will result in increased piracy Trend As seen in both music and books, with the advent of good-quality broadband and increasing per-capita income, TV content will get unbundled. There will be a shift from channel loyalty and TV loyalty to program loyalty and device disloyalty Consumption will move from one location to many, as viewers desire to be entertained across locations will become possible with the aid of technology like wifi. They will consume content across various formats and devices. As there is no need for immediacy of viewing (except in sports and breaking news), viewers will access most content at their ease, and indulge in bingeing (consuming many episodes at once). Increased materialism and lower TV, broadband and PC costs will enable families to split their viewing patterns from the common or living room, to the individual or bedroom Broadband growth = Piracy growth. Specially when broadband rates reduce and come on par with cable rates. Implications 1. Need for sachet pricing models - Pricing by episode, series, day, etc will be required 2. Loss of traditional subscription revenues 3. Threat that high individual pricing could be hampered by piracy 1. Content will need to move seamlessly across devices and locales; storytelling will need to evolve 2. Measurement of viewership will be individualized, and be based on large volumes of actual data 3. Increased adoption of digital supply chain to reduce cost and time 1. Digital asset management would need to be strengthened to enable subscription revenues 2. New pricing and packaging models would emerge 3. Growth of Multi Channel Networks 1. Lower share for GECs and increased importance of niche channels 2. Ability for advertisers to target audiences one-on-one 1. Need for industry-level initiatives to curb piracy 2. Flexible & fair content pricing models

5 6Increased content cost will shift power to the content producer 7Digitization will increase importance of niche channels 8Transparency will lead to perviewer carriage models 9Unicasting will lead to resultbased ad models 10 Social dynamics will lead to more real-time feedback Trend IP will begin to be co-owned by production houses, and not just broadcasters, as increasing content costs will result in increased risk sharing India will digitize its distribution across Phases I to III, and increased collections from subscribers will trickle to broadcasters. Phase IV will remain a fragmented or HITS play, with LCOs retaining their last-mile relationships. Carriage is a distribution cost and will be recognized as such, till such time as MSOs begin to collect a larger share of subscription revenues Ad service will change to unicast models, targeting individual viewers, like the internet Apart from viewership measurement, trends from social media like Facebook, Twitter, etc. will provide inputs to marketing, pricing and story-telling Implications 1. New models of content licensing 2. Need for robust content use monitoring systems 3. Premium artists start to share the risk 1. Increased revenues for niche channels 2. Fragmentation of the GEC into sub- GECs with focused target audiences 3. Possibility of massive viewership measurement at the household level 4. Marketing will need to support Phase III viewership 1. Per-viewer carriage models will come into being; split across 50 large and medium distributors 1. Advertisers will begin to pay per ad served and viewed, and increased measurement will be the norm 2. Value of a served customer vs. a mass customer will be determined 3. Use of return path (where possible) to drive interactivity 1. Need to implement social media crawlers and big data analytics 2. Content supply chain needs to be flexible

6 The future of TV will have implications for every component of a media company We believe tomorrow s TV broadcaster will transform into omniplatform content company. We expect the business to look like: Strategy and monetization Front office Middle office Back office Customer experience management Customer and channel segmentation Digital IP: products and services Pricing and bundling Sales, service and marketing transformation Social media strategy Technology enablement: lead to service, web, contact centers, customer resource management (CRM) Support operations optimization: Marketing, sales, service Enterprise cost reduction Operating model and governance Content monetization Digital/media asset management Technology enablement: non-core IT, next-gen sales, operations and engineering Supply chain and distribution Finance transformation Enterprise resource planning (ERP) Shared services optimization Intellectual property management: rights, royalties, participations IT Services Management: disaster recovery, business continuity, digital content security, cloud Business intelligence and advanced analytics Organizational design, change management and governance Technology selection and program management Privacy, security and risk management

7 What s next? A new reality M&E companies need to do more than react to today s trends they need to be able to see emerging trends that will dictate the future of television and how it will impact established business models. The B2C front-end At a foundation level, the trends we have described will require M&E companies and content providers to develop much richer relationships with viewers. To cultivate these relationships, affected M&E players will need to invest in the technologies that will enable them to analyse audience data, deliver deeper engagement with advertising and prove incremental value to brands. The digital backend Most importantly, they will need to offer deeper engagement with the content experience itself in such a way that viewers will choose to directly pay for content streaming services or ownership. They will also need to plan and execute strategies that adapt their supply chains, customer experiences, and analytics platforms to address these trends. The mantra for success Ultimately, we see the future of television as a carefully crafted omniscreen experience that combines great content with equally compelling social and gamification techniques tailored to individual viewer s stated and implicit preferences. This, we believe, is the key to winning the future of television in a world where consumers are in control. M&E companies preparing today for the television experience of the future should ask the following questions: Which trends dictating the future of television will have the greatest impact on my company? Do I have the systems, processes, and organisational structure to meet these trends head on? Have I thought through the supply chain, customer experience, and data needs? How will they disrupt the well-established business models? What will I need to adapt my strategies to prepare for a media consumption future that doesn t look anything like the models of the past How do I reimagine a viewing experience where the television complements the tablet experience, and not vice-versa? What tools or technologies do I need to measure engagement in an omniplatform, multiscreen environment? What will it take to drive relationships with content franchises and deliver value to advertisers that are DVR-proof? How do I measure bingeing? How do I monetise it? How do I use it to boost the value I can deliver to advertisers? What is my risk tolerance when it comes to creative innovation?

8 Ernst & Young LLP EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. How EY's Media & Entertainment Practice can help your business EY India has a dedicated M&E practice of more than 250 professionals across 15 key segments of the media industry. We provide services to 7 of the top 10 M&E companies in each segment of the media industry - across people, processes, IT, assurance, tax and M&A. For further details, contact: Radhika Pradhan on radhika.pradhan@in.ey.com or Ernst & Young LLP is one of the Indian client serving member firms of EYGM Limited. For more information about our organization, please visit Ernst & Young LLP is a Limited Liability Partnership, registered under the Limited Liability Partnership Act, 2008 in India, having its registered office at 22 Camac Street, 3rd Floor, Block C, Kolkata Ernst & Young LLP. Published in India. All Rights Reserved. EYIN ED None This publication contains information in summary form and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Ernst & Young LLP nor any other member of the global Ernst & Young organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor. MS EY refers to the global organization, and/or one or more of the independent member firms of Ernst & Young Global Limited