In today’s world, the living room is just one place where people are consuming content. At the same time, the number of people watching television over traditional cable is in decline. On the other hand, never before has video entertainment been more popular, and the decline in traditional cable viewing is a bi-product of a fragmented media landscape within which people can view content on-demand, using any device, anywhere, at any time.
As well as reaching existing audiences in different ways, video content is being delivered to new, previously untapped audiences as non-traditional methods of distribution increase the reach of TV companies and OTT providers.
Given this evolution that changing TV distribution methods have had, traditional cable companies are under pressure to find new ways of getting their content seen in order to develop new audiences and generate new revenue streams.
A breeding ground for disruption
While it sounds like an old adage, the evolving media landscape is both a threat and an opportunity for traditional cable TV players. The major advantage that companies in the TV production, broadcast and entertainment industries have is scale. While the barriers to entry to these markets are not insurmountable, they are abnormally high and it is rare for a brand new TV broadcaster or platform to spring up from out of nowhere and obtain enough market share to survive its first cold winter.
As we have seen with the case of Aereo – a New York City based technology company founded in February 2012 – gaining market share and making waves is sometimes still not quite enough. Having caused an initial stir with its service, which allowed viewers to watch time-shifted streams of over-the-air television on Internet-connected devices, several major broadcasters hit Aereo with a lawsuit that rendered it bankrupt and defunct by November 2014. Its intellectual property was acquired by TiVo, which is fittingly an example of the kind of company that has flourished thanks to the changing media landscape which once threatened its own existence.
Those of us old enough to remember the world of TV in 1999 will know that it was a wildly different beast to today’s industry. TiVo burst onto the scene with an intuitive digital video recorder. While the world was still only just getting used to DVDs replacing video tapes, within a few years TiVo was forced to quickly adapt to a world where viewing habits would shift again. The launch of new services such as Sky+ that allowed viewers to create their own TV schedules on one interface was a sign of things to come.
However, by adding broadband features and transforming its digital video recorders into a connected home entertainment hub – TiVo hit back. Its technology is now used not just in the US, but also the UK, Australia, Canada, Mexico, New Zealand, Puerto Rico, Sweden, Taiwan and Spain. In the UK, for example, TiVo partnered with Virgin Media to provide viewers its Virgin TiVo service which allows viewers to record programmes, watch TV on-demand and pause live TV – as well as connect to the Internet to enjoy a host of online features.
Major players need to be the disruptors
As the transformation of recorded viewing habits didn’t kill TiVo, it gave Netflix, founded in 1997, a new lease of life. While other DVD-by-mail and video rental companies such as Blockbuster doomed themselves to extinction, Netflix showed impressive nimbleness.
In winning the streaming war, a market which it has gone on to dominate, Netflix has become an award-winning producer of content as well as an OTT distribution service, landing its first best series win at the Golden Globes for serial drama The Crown earlier this year. This is an excellent example of how major OTT players are in pole position when it comes to seizing new opportunities. While Netflix may not have initially had the experience to produce a leading serial drama, it has the scale to provide the necessary data to analyse what viewers wanted, a captive audience and capital to invest.
So, if a company which used to post DVDs to subscribers can become the largest global streaming service and win a Golden Globe, what is stopping traditional cable broadcasters from uncovering new potential revenue streams using non-traditional distribution? My answer to that is that there is nothing stopping them, but that they do need to rethink how they operate by harnessing the power of OTT and other non-traditional content distribution models, and rethink how their business models are structured.
Firstly, they must adopt a digital-first model which allows them to predict and react to the latest content consumption trends with agility, staving off the threat from competition in this space – which comes from all angles as we can see with the examples of TiVo and Netflix. Secondly, to reap the benefits of previously untapped methods of distribution, content formats and global audiences requires more existential questions to be asked. What is our purpose and why do people view our programming? How do we differ from our competitors? What are we better at than they are? Where are they beating us?
Understanding the answers to these questions is the first step towards creating new and exciting viewing experiences, driving growth through digitally transformed business models, and even stealing a march on content producers. This is how the “traditional” broadcast players can become the disruptors of their own industry.
Want to learn more about how ‘traditional’ broadcast sports will change? Read Mehul Kapadia’s blog post here.