With mobile, VR and other disruptive forces at play, understanding how to adapt is crucial in the connected entertainment industry, writes Andy Fry. But most respondents to the Q1 TV Connect Survey see this disruption as an opportunity.
Increased video consumption is driving revenue across PayTV, OTT and mobile, according to the winter 2017 TV Connect Survey, and is creating opportunities for operators in service sectors from content to advertising and video software solutions.
The prevailing sentiment in most sectors is that disruption is a commercial and creative opportunity. With few exceptions, respondents said that their companies grew during 2016, taking advantage of the fact that consumers are watching more and more video across traditional and emerging platforms.
The survey captured job functions covering product design & development, innovation, technology & engineering, sales & marketing, academia and analysis. From CEOs to students, the survey provided a snapshot of how the connected entertainment industry is managing rapid change.
Building on the survey responses and analyst insights, key themes emerged that are likely to dominate the connected entertainment debate during 2017. Generally, the outlook from respondents was that business was good. In content creation, the US$6 billion content budget that Netflix has allocated for 2017 was cited by analysts of a sign of this. IHS Markit also projected a positive revenue story for video software.
There was plenty of emphasis among respondents on expansion over the next 12 to 24 months – with companies seeking to “increase reach”, “launch new platforms”, “secure more partner agreements”, “expand globally” and “establish branches in new regions”. Others talked of innovating faster and refining audience intelligence.
Breaking down walls
Evident throughout the responses was the fact that sector distinctions are breaking down. Broadcasters and traditional PayTV platforms are shifting into OTT and mobile, making both areas especially crowded. The fact that Netflix, Facebook and Google are positioning themselves as platform agnostic brands is equally significant.
There are convergence implications for advertising too, with the underlying ad technology platforms also coming together.
Mobile is very much front of mind both among survey respondents and analysts. Ericsson sees a seismic shift coming in the way people consume their video – with mobile set to benefit. Indeed, this was a key theme at this week’s Mobile World Congress.
Heralding the importance of 5G, Ericsson also forecasts that there will be 550 million 5G subscriptions by 2022. “5G is one of the most anticipated advances in the ICT industry. It will accelerate transformation in many industry verticals, enabling new use cases in areas such as automation, IoT and big data.”
Survey respondents cited dozens of companies that they regard as innovators across the various sectors of the business. Names that cropped up frequently included Netflix, Amazon, Apple, Google/YouTube, IBM, Sky, Vodafone, Verizon, Huawei, the BBC and Microsoft. On the subject of innovations, 4K/UHD/HDR, VR, 5G, DOCSIS 3.1, screen ubiquity and voice recognition were mentioned to varying degrees.
Among these, 4K is viewed as a natural extension of HD’s rollout but VR is regarded with a little more caution – some observers regarding it as less viable commercially than augmented reality.
Of all the trends on the table, voice recognition appears to have emerged quicker than anyone expected. Already this year, Google has unveiled plans to roll out its voice-controlled Google Assistant service to Android TV devices.
“You’ll be able to ask the Google Assistant for help so you can enjoy the content you love, faster than ever, on the best screen in your house. No more typing or struggling to get to what you’re looking for — just ask the Google Assistant,” says Android TV director Sascha Prueter.
On the subject of revenue, the industry is betting on an increasing propensity for consumers to pay for content. But with this comes issues related to security and piracy. One theme identified was that the threat of piracy in some key markets will make advertising a compelling alternative.
The ad industry faces tough issues around fake bot advertising, but survey respondents were optimistic that brands will benefit from a shift towards personalisation and better engagement. In what promises to be an exceptionally exciting year for the connected entertainment industry, TV Connect’s Survey and Report anticipate significant levels of innovation around technology and devices.
The coming together of connected entertainment and consumer electronics around Internet Of Things (IoT) advances represents a new wave of disruption.