Television is a medium that is only halfway there because the internet is required to complete it.
I’m paraphrasing the brilliant Frank Rose here, but he’s right. The changes to the TV world over the last 50 years or so have been trivial compared to the impacts that the internet is having, and will continue to have, on the TV ecosystem and, crucially, how people-power will increasingly shape it.
For decades, TV has provided a largely passive entertainment experience occupying 4+ hours a day for most people on the planet. The TV set has been the dominant screen of consumption, and the industry’s economics have been largely driven by advertising, bundled subscriptions and consumer purchases. Only recently have device ubiquity, mass adoption, and the powerful attributes of the internet combined to change TV’s long-standing foundations in profound ways.
The Internet, and related technological advancements, deliver the following (and more):
- 3.2bn instantly reachable and networked people
- A multiplicity of connected, screen-based, mobile devices
- Sufficient bandwidth to enable acceptable audiovisual quality
These key developments have resulted in an amazingly fertile environment within which TV as we know it is evolving like never before.
The Internet unlocks the shackles that have bound the TV sector and perpetuated an inefficient system that people are drifting away from now they have seen an alternative.
Now it is possible to watch what you want, when you want, on any screen you want, without advertising – and with cool touch screen user-interfaces. The increasingly frictionless controls are being handed over to the viewer to usher in a new, people-driven TV world.
People have always wanted more control, greater participation, easier access and frictionless consumption – it just wasn’t easily available! Now that it is, a new normal has been created.
What’s at play now is the transition from the old world to the new, with the path to the new world of Internet enabled TV being well and truly led by the likes of Netflix and Amazon as consumption moves unstoppably towards OTT (Over-The-Top).
It’s a grim outlook for the incumbent players in the old network world. Without major strategic shifts they will be left with the scraps as the new kids on the block deliver what the newly empowered audiences and subscribers have always wanted.
So what has the Old TV World got left?
Audience inertia! Old habits die hard and the switch from Old to New will be gradual, but those people that remain are less attractive to advertisers. And where’s the fun in managing decline in the face of technology driven progress and all it’s wonderful possibilities?
Exclusive access to the best scripted content? Er, not anymore. Netflix and Amazon have evolved from distributing other people’s content to commissioning their own – and with huge budgets afforded by totally different economic models. How can an ad-funded national network compete with a subscription-funded global mega brand like Netflix?
Netflix can take much greater risks because it doesn’t have to deliver immediate ratings points to attract advertising revenues. This is why a lot of Netflix Originals consist of programmes rejected by, or perceived as unaffordable by, Old World TV. For example, House of Cards was destined for HBO but the 26 episode order from Netflix sealed that deal – and don’t believe the hype about data driven commissioning, having David Fincher and Kevin Spacey attached, and a good script, is a better indicator of success than any historical data inference you might have. Unbreakable Kimmy Schmidt, lured away from NBC, is a more recent example of the power of the Netflix £2 season order a tactic which also gives a series time to develop a strong audience – networks can rarely afford the luxury of time.
Access to non-scripted content? Certainly, for now, reality entertainment remains the preserve of the Old World incumbents as it makes a virtue of event driven schedules to build a real-time narrative with so called water-cooler word of mouth appeal. But Netflix just announced a move into reality (Ultimate Beastmaster featuring Sylvester Stallone) – doesn’t sound like a good one to me, but it’s a start. And many excellent documentary series are already available. The story behind Amazon’s upcoming and newly named The Grand Tour, from the old BBC Top Gear team, is well-documented. Sports and news won’t be too far behind.
Advertising growth? Old World TV still dominates the brand-building segment of mass advertising, but TV’s share is declining, and a tipping point is approaching which will see significant advertisers reduce their TV spend over time. This will be a major concern to ad-funded networks due to the fragile economics where a fall in revenue goes straight to the bottom line. A situation made worse by the increasingly competitive content commissioning environment.
Subscription growth? OTT growth is chipping away at the incumbent strategy of bundling together expensive packages containing lots of content that people don’t want. Cord-cutting will continue as people trade out from expensive cable bundles into cheaper OTT offerings. Unless there is access to exclusive sports, subscriptions are only likely to decline.
Add to these problems the consumer benefits of OTT and it easy to see the inevitable long term shift. It’s not just about content and economic models, OTT services have demonstrated that users view convenience as at least equal to content. People are binge viewing old and new series because it is easy to do, whereas traditional broadcasters are hampered by the constraints of scheduled TV, the set-top box and the remote control. OTT’s one-click, device agnostic, frictionless delivery at an unnoticeable price point, is the winning proposition. For now.
Next stop: People power!
So far the internet has delivered largely technical-driven benefits – like removing device & time constraints, improving convenience and user experience, unbundling and so on, but the real impact will come when the access to and empowerment of individuals (people power) will be fully explored and unlocked.
People power already exists to a degree but it manifests anonymously and in aggregated form (eg ratings data). True people power comes from the following:
- Being able to identify each individual’s consumption patterns
- Offering individualised services and pricing
- Identifying the best and most influential fans and treating them individually
- Encouraging and rewarding these fans for the effects of their influence
- Creating and offering more immersive and participatory entertainment
All of these things are possible now and the technologies exist to deliver them, at least in nascent form, but no one appears yet to be seriously developing Internet enabled TV that is centred around core fans – the 20% of people that drive 80% of the activity and value. This will be how people power will truly be unlocked.
In the coming weeks I will set out some future use cases for unlocking people power using new technologies, including the following:
- People driven recommendation engines
- Building empowered fan communities
- Building awareness, audiences and subscribers through fans and their networks
- Creating the next wave of entertainment formats that seamlessly integrate social sharing and its measurable impacts
- Audience driven transactional revenue streams to augment (declining?) mass market advertising
- Accessing fans and their networks to deliver superior intelligence to drive editorial and other business decisions
The meshing together of the unshakeable human desire for screen-based entertainment and the multiple features of the Internet is well underway thanks mainly to New World TV players like Netflix, YouTube and Amazon. The race is now on to move through the gears and unlock the potential of people power – only then can the medium of TV move from being halfway there to completing its journey.
® Dan Allen