Next-Gen TV shakes up various markets

Gerry Kaufhold
21 Jul 2008
00:00

The near future of television is a burly free-for-all that will see the traditional studios and TV networks trying to hold onto their revenues as the competition from online, wireless and mobile sources heats up.

As the market fragments into hundreds of smaller segments, opportunities will abound for companies that can help lower the cost of creating professional 'content,' or for companies that can make it easier for content - and advertising - to find the most profitable niches quickly.
There are eight ecosystems crashing together to create a volatile market that will take many years to completely sort itself out:

  • Companies that own professional content (Disney, Fox, Sony, etc.)
  • Consumer attitudes and usage models about how they use 'content'
  • The internet, including e-commerce
  • The subscription TV industry (cable, telco, satellite, etc.)
  • Consumer electronics companies and their products
  • The semiconductor industry
  • The mobile communications industry
  • Mobile internet (including Wi-Fi, Wimax, 3G, and others).

The movie studios will need to get solidly behind Blu-ray, but they will face an evolving business model when legal downloading becomes widespread. A movie studio can make over $10 for each DVD disc sold at retail, but only makes a fraction of this from online rental services that offer video streams or downloads.

TV networks are racing to post their hit shows onto their websites and find ways to extend their ad revenues from the TV set out to online services and to mobile consumers.

Consumers are the 'wild card' because they are continually discovering new ways to get their favorite content and finding new usage models for it. Search engines have become the first stop for online consumers, who do a quick search and then follow the links that are presented. For example, teenagers on MySpace.com share their favorite TV clips with their friends and find new friends by searching for people with similar tastes. Play lists of your favorite music, videos, TV shows and movies are being used to create ad hoc communities of like-minded consumers. Advertisers have figured this out and are mining this data to help them be more efficient with their ad spending.

For TV networks, the key to survival is going to be finding ways to monetize multiple aspects of viewers' interest in each program.

Fox TV's American Idol program has become the top TV show in the US market by creatively reaching out to viewers with a branded web portal that includes a social networking feature called MyIdol Community, in-depth information about contestants and e-commerce. Mobile users can sign up for text updates, ringtones and full-song downloads. Recently, Fox partnered with Apple's iTunes to sell downloads of extended versions of each song.

The American Idol approach creates a fan-centric world in which Fox makes money selling branded T-shirts, caps and other hard goods in addition to CDs. Several commercials for Ford are presented in the form of music videos featuring the current Idol contestants. Imagine having the advertisement actually be the content being sought out. Other TV shows are learning from Fox and will soon be cloning the approach.

Outside the US, sports teams, audience-participation TV shows and news organizations are all spreading their content from TV screens to online portals as well as offering mobile versions.

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