Accenture Outlook the Eyes Have It Guess Who Controls the Future of TV Media Entertainment

8/16/2019 Accenture Outlook the Eyes Have It Guess Who Controls the Future of TV Media Entertainment

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The journal of high-performance business

This article originally appearedin the 2013, No. 1, issue of

Industry Report | Media & Entertainment

The eyes have itGuess who controls thefuture of TV By Robin Murdoch, Youssef D. Tuma and Marco Vernocchi

Television is about to undergo the same kind of disruptionthat occurred with the introduction of the smartphone.What will change when the largest screen in the homehas a big say in how we consume content, informationand services over the Internet?

accenture.com/outlook


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2Outlook 2013Number 1

Picture a typical nine-year-oldwatching TV today. She probably hasa tablet in her lap, ready to check out

videos related to the Animal Planetspecial she’s watching. Or perhapsshe’s borrowed her big sister’s phoneso she can vote on this week’s episodeof Dancing with the Stars .

By the time she’s old enough to headoff to universit y, however, her TV

viewing exper ience wil l be markedlyricher. By then, she may be invitingher fr iends over to watch the “sitcom”lmed by her classmates and loadedinto her home’s cloud-based contentlibrar y. After her friends leave, shemight pick up the easy-to-use TVremote to take a high-resolution touraround the Beijing neighborhood where

her big sister lives. Or maybe she’llsearch for a favorite scene in one of theTwilight movies.

Good-bye to the familiar old TV set? Au contraire . For years now, the demiseof the popular appliance has beenpredicted as the Web has claimedmore and more of our screen-viewingtime. The fact is, the TV is here tostay. Its role in delivering compelling

viewing experiences—collect ive andindividual—will continue. However,the big screen in the living room isindeed undergoing a metamorphosis,because what goes on behind thescreen is changing dramatically.

For most of us, the TV will developas an even more valuable vehicle forentertainment and, increasingly, foreducation and information. But forbusiness leaders up and down themedia value chain—from lmmakersand broadcast channels to Internetservice providers to “last mile” com-munications operators—the reinventedTV is a huge disruption.

There will be winners—businessesthat quickly grasp the nuances of theresulting changes in the creation,nancing, production and delivery ofcontent. But others may nd themselvesfacing erce new competit ion. Take,

for instance, the pressure the cablecompanies are facing from so-calledover-the-top (OTT) providers, suchas Netix and Hulu, which send theircontent through the Internet. In short,we’re now seeing the collapse of thewalls that prev iously excluded newentrants to the TV business.

So how can the TV st ill be relevant ina tablet and smartphone age?

To be sure, TV viewing time has becomefragmented—the result of busy lives thatsee consumers recording, for example,the Boardwalk Empire episode thatthe school board meeting forced themto miss. And of course, “screen time”today is shared with laptops, phonesand tablets.

Accenture’s latest research on consumer viewing habits nds that fully 62percent of TV viewers are concurrentlyusing a computer or a laptop and41 percent are using a mobile phone—messaging friends about a sitcom jokeor fact-checking politicians’ claims,perhaps. Coupled with the widespreadavailability of high-speed wirelessInternet, today’s viewing experience ismore interactive, more consumable andfar more sharable in real time.

Dominant mediumBut the truth is that the living roomscreen remains a dominant communi-cations medium, and will continue tobe so. There is stil l no substitute forthe collective v iewing experience ofwatching the big game or the seasonnale of a popular drama. Plus, the new

Accenture st udy reveals that youngpeople are much more engaged withTV than might be supposed.

Even 25-to-34-year-olds view, onaverage, almost 140 hours a month of“traditional” TV programming—morethan 20 times as many hours as theyspend watching video on the Internetor on their phones (see chart, page 9).

And nea rly half of al l user s st il l sitdown in front of the T V—not theirsmart phones or tablets—to watch


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some type of OTT v ideo content. Another r elevant measure: YouTubeusers average ve or so hours of

video v iewing per month—a gurethat is dwarfed by the time theyspend in front of the TV.

Bottom line: Television still has greatpower to pull audiences. And bigchanges are coming that wil l continueto engage viewers.

Not too many years from now, we willbe able to use the TV unit to accessan entire ecosystem of content—richly immersive, far more of it fullyinteract ive and all of it on-demand

via the Internet. It wi ll be easilysourced from content catalogs andaccessed with a handheld device—anext-generation smar tphone, perhaps,or a dedicated device that is as simpleand intuitive to use as today’s remote.

Just as significant ly, individualconsumers, armed with high-performance hardware and software,will become content creators, able toprovide more of what the news channelsdeliver. (Think of higher-quality

versions of the public’s mobile-phonenews bulletins of Hurricane Sandy’sdevastation.) At the same time, the

major movie studios are meet ing thegrowing demand for premium v ideocontent. Look at the money pouringinto blockbusters—$150 million toproduce Skyfall , the latest James Bondlm, for example, and the estimated$250 million spent on the newestBatman movie, The Dark Knight Rises .These movies are being engineeredduring original production to maximizethe downstream opportunity in extras,web videos, apps and so on. And,increasingly, content is as likely to bedistr ibuted by an Amazon or a Googleas it is to show up courtesy of Bravo.

King of contentNetwork executives and cable operatorsdon’t need to look far to see what isrocking their world. The easy answer,of course, is “technology”—from theTV hardware to the social media withwhich to share content to the cloudservices that make it effect ive tostore vast amounts of data. The factis, however, that the consumer is theundisputed king of content.

Over the past decade, control of the viewing exper ience has shif ted rapidlyto the one who holds the remote.TiVo and many other digital recordingsystems have made it easy for people

There are dramatic changes in the television industrygoing on behind the screen (see story). Traditional mediaplayers must respond by reinventing themselves, a processthat begins with self-examination. Crucial questions forthe C-suite management team include:

1. Should traditional media and entertainment companiesreinvent themselves as consumer businesses? If so, how?

2. Can new digital economic models be made to work for allparts of the media value chain?

3. How might new OTT offerings threaten the subscriptionpay-TV giants?

4. What new types of partnerships and collaborationsshould media businesses consider in order to better matchconsumers’ new digital experience requirements?

5. Will new industry business models sustain investmentsin high-quality content—or will prots be channeled

elsewhere?6. How can the ad industry’s traditional players collaborateto move toward a new world of multiplatform advertising

7. How can data and analytics be used to galvanize newbusiness models?

8. Should traditional vertically integrated media companiesresist or embrace open platforms?

9. How do content companies maximize revenue across lineand on-demand as the balance shifts toward the latter?

Reinventing TV: Nine key questions for established media players


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to choose when they watch theirfavorite programs. But consumersalso want to be able topersonalize theservices they consume, with search,recommendations and social featuresbecoming increasingly integratedacross media. Accenture found that64 percent of them prefer usinggenres—that is, content types such as“spaghetti Westerns,” “cartoons” andothers—as search criteria for ndingnew video content. And 43 percentprefer nding new video content byusing personalized recommendationengines that track what they’ve watchedand suggest similar content.

In a similar vein, 28 percent of usershave already created video playlistson their current video services, such asNetix and YouTube. These companiesmake it ever easier to do this, particu-larly by using historical behaviorto recommend re levant viewingexperiences. The story is much the samewith music services such as Pandoraand Spotify as well as A mazon.comwith a whole range of merchandise.

At the same time, consumers arebecoming distributors. Social mediausers have an average of 3.2 friendswho post videos at least once a day;

In the summer of 2012, the British public got anotherway to watch “telly.” The new Internet TV service, called YouView, has been hailed by some industry insiders as thenatural successor to Britain’s current model of free-to-airTV. Some researchers expect that 3 million UK homes will

have YouView by 2015.

YouView combines the United Kingdom’s f ree-to-air digitalchannels with on-demand content, all delivered withoutsubscription. An easy-to-use set-top box brings togetherIP and broadcast TV technologies, making them accessibleto viewers through a single consistent and intuitive userinterface. The service is backed by a consortium of sevenpartners, including the country’s main terrestrial broadcasters(BBC, ITV, Channel 4 and Channel 5), two ISPs (BT andTalkTalk) and a network services provider, Arqiva.

The service’s big innovation happens behind the screen. Itsapplication platform gives consumers access to a vast arrayof content options. For example, if the box is connected toa broadband line from a partner ISP, then an applicationproviding that ISP’s IPTV service will appear automatically.As the number of content sources in its ecosystem grows, YouView’s attractiveness to both consumers and to potentialnew content, devices and service providers will continue toincrease. At launch, more than 140 content providers hadsigned up to add their content to the YouView platform;today, more than 300 providers are interested.

YouView is not simply another version of a web-enabledTV service. It features a single, consistent, intuitive user

interface (integrating on-demand, catch-up and broadcastTV). It includes a unique content discovery platform:a central catalog that allows global search, browsing bygenre/popularity across content providers, and a “backward-looking” electronic program guide (EPG). “Unlike a lot of sma

TVs, it doesn’t zone off on-demand content in a separate sectiothat you access from another menu—the whole lot is integrated,notes one reviewer. Its open application platform can be usedby any participating content provider, offering consumersa tremendous range of content. It also upgrades easily,accepting new features over time such as behavioraltargeting and predictive recommendations generated byanalysis of social media data—such as iTunes Genius murecommendations.

YouView provides a strong springboard for innovation. Itsunied and open ecosystem is expected to disrupt the

existing TV business model, affecting content providers,broadcasters, ISPs, advertisers, set-top-box manufacturersand many other technology enablers. And it offers abundaopportunities to create new products and features, becominincreasingly attractive to consumers and providers of content,devices and TV services.

To date, consumer feedback on the user interface hasbeen ver y positive. UK telecom company TalkTalk—just of multiple sales channels for YouView—signed up 29,000 YouView customers in the firs t month after launch. Athousand new customers are signing up each day for theservice, according to a TalkTalk spokesperson.

UK viewers now get “all channels” digital TV


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almost four out of 10 consumers post video online via social media. Morethan half of the respondents polledby Accenture would be interested inrecommending video to others as partof belonging to a v ideo ser vice.

This is not just about controllingcontent; it’s about content creation aswell. The term “prosumer” is enteringthe language to describe ta lentedamateurs who use sophisticated butaffordable consumer technology toproduce quality news reports orinstructional videos, for instance.Today, aspiring adventurers can buy aGoPro camera for less than $300, attachit to their mountain bike or scubamask, and capture astonishinglyhigh-quality video that is easi ly editedon any laptop and just as easily shared

via social media. Indeed, the growthin so-called user-generated content hasexploded. YouTube now has more than800 million unique users every month,

and while the vast majority of them arewatching, growing numbers of themare posting content that they or othersthey know have generated.

The capabilities are developing soquickly, and spreading so widely,that it’s safe to say that prosumercontent will soon provide seriouscompetition for some genres ofprofessionally produced content—news footage, for instance, and somereality TV shows. Consumers are evenchanging the funding of contentcreation (see sidebar, page 6).

If those technology-enabled factorsare pushing the media industry fromone side, its key sources of revenue—notably advertisers—are pulling it onthe other side. Increasingly, businessesexpect to be able to measure what theyget for their investments. Traditionalmedia has always had a hard timedelivering precise measurement, and

Source: Accenture analysis

Screen of choice TV is still the primary device for watching full-length shows and live content in both the United States and the United Kingdom. Portion of US and UK viewers who watch video content over the Internet, on each device

TV PC/laptop

Mobile/smartphone

Tablet

Full-length movies and TV

70%32%

4%7%

Live content

6530

65

Short videos/clips

1274

2412

User-generated content

949

159


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while the ex plosion of Internet mediais exacerbating the situation by furtherfragmenting viewing attention, it

is also creating opportunities forbetter measurement.

Following the moneySo who wins in a new media world?The consumer does, of course. Butthe other winners are likely to comefrom outside the boundaries that havedened the industry over the pasthalf-century. It is not a stretch to saythat companies such as Amazon andGoogle will make big gains, as willothers that grasp the signicance ofthe disaggregation of traditional media

value chains and t he deve lopmentof new forms of media value creationand consumption.

We’ve already seen the a rr iva l andgrowth of businesses that offer newways for consumers to access digitalcontent. New ent rants like YouTubeand Netix are also now creatingtheir own content to differentiatetheir brand and sidestep the battle forcontent rights.

Amazon , Google and Apple alreadyoffer consumers access to signicantamounts of content, even t hough itis not at the core of any of thei rbusinesses. For instance, Google’score business is search, yet it streamsmore than 4 bil lion hours of videoper month via YouTube.

Apple generates t he vast majori tyof its income from sales of its devices ,

yet it made $2 billion in revenue

in the t hird quarter of 2012 alonefrom its iTunes Store, App Store,the iBookstore, sales of iPod services,and Apple-branded and third-partyiPod accessories.

The newcomers are following themoney. They understand that successin the media sec tor has revolvedaround premium content, and thatit will continue to do so in the future.

Which explains YouTube’s announcement,in October 2011, of a $100 millioninvestment in premium channels andthe announcement by Netix in May2012 of its plan for a $185 million,ve-year investment in originalcontent. Just two examples of Netix’sinvestments: The new season of ArrestedDevelopment , releasing short ly, andHouse of Cards , the US version of theUK political ser ies of the same namedirected by David Fincher and starringKevin Spacey.

The tectonic shifts underneath the mediaindustry will permanently reshapethe landscape, altering everyth ingfrom the ow of advertising dollars tothe makeup of the industr y itself.

To that last point: Some of the writ ingmay already be on the wall. In recentmonths, some pure OT T contentproviders have gone from strength

By 2010, a movie director named Steve Taylor securedfunding to create a lm adaptation of Donald Miller’s book,Blue Like Jazz . The following year, the lm lost the support ofa major investor, forcing Taylor to stop production.

That’s when two fans of the book stepped in. To raise the$125,000 required to resume production, they createda Kickstarter webpage called “SAVE Blue Like Jazz! (the movie).”The campaign reached its funding target of $125,000 in10 days—and blew past it, becoming the most successful

Kickstarter fundraiser of 2010. In total, $345,992 was raisedby 4,495 backers—an average of just $76.97 each.

In April 2012,Blue Like Jazz opened nationwide across 136screens. In just eight weeks—before distribution internationally

and through rental and cable channels—it had netted half of themovie’s total budget. It is just one of several examples of crowdfunding. The trend is borne out by Accenture’s recent consumerresearch: 36 percent of digital consumers would be willing todonate small sums to fund their favorite movie or TV program.

Not waiting for deep pockets


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to strength. Netix now has moresubscribers than many pay-TV operatorsin the United States. That is an aston-ishing statistic, given that Netix wasfounded only in 1997.

At t he same time, the most forward-thinking of the traditional operators

are making signicant moves toproperly position themselves in thenew media world.

To take just t wo examples: BritishSky Broadcasting is making itsexist ing content offerings availableon as many devices as possible, and

YouView—a new open-platformsystem that makes IP and broadcastTV tech nologies easily accessibleto viewers through one intuitive

user inter face—is backed by suchindustry giants as BT and the BBC(see sidebar, page 4).

Removing the guessworkTraditional subscr iption models arenot the only ones at risk from thenew media model. Advertisingwill a lso have to accommodate thesteady shift to digita l content andthe inexorable move to OTT content,together with the fact t hat moreand more content is being viewedholistically, with digital entertainmentexperiences encompassing TV, lm,web video, gaming and apps.

Thus far, the managed migration ofrights to new platforms has preservedtraditional TV advertising and pay-TVsubscriptions as the greatest drivers ofrevenue. But the industry may be aboutto change too fast for that to remaintrue. Possible signs of things to come:Subscriptions could well shift awayfrom bloated bundles to à la carte op-tions that allow consumers to pick andpay for exactly the content they wantand no more, from a range of differentproviders—new Internet-based playersamong them.

Al ready, chie f marketing ofcerseverywhere are scrambling toreallocate and optimize marketing

budgets across platforms. T hey aregetting some help from increasinglysophisticated customer data collect ionand analytics tools, which are beginningto enable new forms of cross-sc reentargeting and measurement. Toa large extent, digital removes theguesswork from traditional advertising

models—digital data is more accurateand more granular than its analogpredecessor.

But there is still much to do before thetypical marketing department is able toeffectively use sophisticated analyticsto deliver premium, personalized,interactive advertising, and create aricher, more detailed understanding ofspecic consumer groups—or fan bases—that will respond to new offers.

So what does the new face of TV meanfor today’s established media businesses?The ascent of the consumer requiresbusiness models that are built aroundconsumer needs rather than thoseof a particular channel, platformor advertiser. A single shared viewof the customer—often acrossdifferent channels—is a prerequisitefor a successful, consumer-focusedmultiplatform strategy.

The businesses that adapt successfullywill need to tr y different approachesconcurrently. They’ll need to create andrun with hybrid business models andconstantly reevaluate their place inthe media value “ecosystem”—perhapstaking on new roles—so they can spotand capture new revenue opportunities.In short, players all across the media

value chain now have to plan for a newand fundamentally different mediadelivery architecture.

Ten years from now, the TV wil l stillbe one of the largest pieces of furniturein the living room, and it will still havea central place in family life. But theTV business overall may be unrec-ognizable—certainly when comparedto the operating models and industrymakeup that prevai l today.

For further reading

Accenture Video-Over-InternetConsumer Survey 2012: Winning theBattle for Consumer Trust, Accenture2012: http://www.accenture.com/us-en/Pages/insight-video-over-internet-consumer-survey-2012.aspx

“Taking The Pulse” study, Accenture 2012:www.accenuture.com/pulseofmedia

“Changing Faces: The TV Companyof the Future,” Accenture 2012:http://www.accenture.com/us-en/Pages/insight-changing-faces-tv-company-future-summary.aspx

For more related content,please visit www.accenture.com.


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The decisions that new entrantsare mak ing today up and down themedia value chain are already forcingsome serious rethin king within theestablished media industry. Thetraditional broadcast networks—thosemost at risk of disrupt ion—must actmore promptly and assertively than

they are accustomed to if they are tosurvive in the new world.

But the decisions being made by the Amazons and Googles have ramica-tions far beyond the media businessitself. They wi ll color the choices thatadvertisers—business-to-business aswell as business-to-consumer—willhave to make. They will have animpact on the world of educat ion.They may well change the directions

of development of a host of newcontent-delivery products. And theycould even reshape t he role of mediaas it reects and affects public policy.

To paraphrase the old political maxim: Where TV goes, so goes the nation.

About the authors

Robin Murdoch leads the strategy groupwithin Accenture Communications, Me& Technology. He is based in [email protected]

Youssef D. Tuma leads Accenture

Digital Services for the United KingdomHe is based in [email protected]

Marco Vernocchi leads the Media &Entertainment group within AccentureCommunications, Media & Technology.He is based in [email protected]

Copyright © 2013 AccentureAll rights reserved.

Accenture, its logo andHigh Performance Deliveredare trademarks of Accenture.

Outlook is published by Accenture.

The views and opinions in this articleshould not be viewed as professionaladvice with respect to your business.

The use herein of trademarks that maybe owned by others is not an assertionof ownership of such trademarks byAccenture nor intended to imply anassociation between Accenture and thelawful owners of such trademarks.

For more information about Accenture,please visit www.accenture.com

Accenture Outlook the Eyes Have It Guess Who Controls the Future of TV Media Entertainment

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