In Broadcast - May 2018 - 26

www.inbroadcast.com | Vol: 8 - Issue 5 | May 2018

InForm

Achieving Broadcast
Success In The Netflix Age
John-Paul O'Sullivan, Research Analyst - S&P Global Market Intelligence, is set to discuss
the market outlook for the broadcasting and media industry at BroadcastAsia 2018...

'Sullivan's session will explore
the opportunities for growth for
the sector in the coming years, what
businesses should be mindful of, and
the emerging market trends.
The next twelve months will be
crucial for OTT opportunities, states
O'Sullivan. 2017 was a year that
SVOD services - led by Netflix and
Amazon's mass market propositions
- shook up traditional TV and video
dynamics. Netflix delivered strong
financial results driven by popular
original commissions and rapid global
subscriber growth, with its members
watching more than 140 million hours
per day (See Fig. 1). Both services now
spend billions of dollars on content;
Netflix earmarked US$16 billion in
2017, while Amazon's aggressive
premium video push meant joining its
counterpart in surpassing 50 million
video subscribers in the U.S. alone,
according to Kagan estimates for Q4
2017.

One of the key challenges for
broadcasters' in 2018 will be the
transformation of legacy infrastructure
and services to cater for new viewing
habits, brought about by advances in
technology and consumer connectivity.
Even as legacy media companies
face more competition and audience
fragmentation from digital platforms
providing vast video content slates,
opportunities still exist for them
to offer broader, more targeted
distribution direct to consumers. This
can be achieved through technology
and content production partnerships,
and
understanding
market
demographics, in particular, younger
viewers on mobile devices.
Key Trends in 2018
For broadcasters, it is important to
look beyond the numbers in this period
of change as tech firms grow their
influence. Investment in technology
and production assets provide new

distribution opportunities and a
stronger, more flexible content engine.
These are essential tools for a digital
horizon, and the broadcasters that
make the smartest moves will be the
ones reaping the benefits in the longer
term.
Over-the-top
provides
content
owners a means to further monetise
their content, either by partnering and
aggregating with video-on-demand
services or launching their own directto-consumer offering. For example,
2018 should be the year we finally see
Disney launch both an entertainment
and a sports subscription service
outside of a traditional pay TV bundle.
Addressable TV advertising is
another major growth opportunity,
as the emphasis shifts from audience
volume to efficiency. Better pricing for
smaller but more distinctive audiences
is the name of the game. Broadcaster
video-on-demand or TV Everywhere
services can profit from the greater
availability and more
precise nature of digital
data, increasing value for
advertising partners and
distributors.
Consolidation
and
convergence are the
overriding
industry
themes
with
scale
increasingly
key
to
challenging
the
digital media giants.
Multichannel
service
providers,
digital
heavyweights
and
major
brands
are
driving
vertical
and
horizontal
merger
and acquisition (M&A)
alignment to expand
into new markets and
cement their competitive
standing in the content
space. The theme is
best demonstrated by
motivations behind the
Fig. 1: 2017 Netflix Binging
(Source: Netflix)

potential acquisition of Sky - Europe's
leading pay TV service - with offers
from legacy U.S. media giants Comcast
and Disney, or the merger between
international programmers' Discovery
and Scripps.
Consolidation in the production
sector has also rocketed, bringing
with it the risk of a negative impact on
creativity. In film, we continue to see
a focus on building franchised titles
to lower marketing and production
costs due to existing fandom. There
is no sign of this slowing down, which
could mean less risk-taking with costly
script ideas, so a strong voice for the
independent producers has never been
more important.
Looking Ahead
For broadcasters, it is important to
play to its strengths. Global viewing
time in terms of linear television is
still strong, and broadcast delivers
uncomplicated mass reach. The
traditional broadcasters have an
illustrious history of producing quality
and memorable content, but now
editorial decisions need to be made
in context of a more competitive
environment.
It has never been more difficult
to monetise traditional TV with the
emergence of SVOD players, following
on from other disruptive influences in
the form of time shifting, cord cutting
and viewing declines in younger
audiences. To ensure traditional
players are not left behind they
must innovative and become more
agile. Broadcast heritage can only
account for so much, so embracing
the IP environment is an effective
way to improve the distribution and
presentation of content libraries both
old and new.

John-Paul O'Sullivan, S&P Global
Market
Intelligence,
will
be
speaking on Tuesday, June 26 on the
company's 2018 market outlook on
the broadcasting and media industry
at the ConnecTechAsia Summit.

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