IBC2012 Event Report

Television industry gathered to the annual meet-up at Amsterdam’s IBC event during last week and weekend. In this report Digital Media Finland consultants Timo Argillander and Timoteus Tuovinen highlight the key findings of the event.

Sky, Disney and Discovery explain their strategies

At the conference we heard several insights in how TV companies will position themselves in the changing business environment, where new possibilities and alternatives for content delivery and access emerge on a continuous pace.

BSkyB’s COO Mike Darcey summarized Sky’s strategy in two points: 1) to provide consumers content that they want to pay for and 2) make it as easy as possible for the consumers to access the content. This means that even though Sky is known as the satellite TV company, satellite delivery is just a technical means to implement their strategy. Sky is also actively investing in Internet delivery, which supports implementing these strategic points.

In Disney’s strategy the key pillars are content, technology, and working on both international and local levels. Disney’s Catherine Powell emphasised that television is the key to reach the audiences and that new content services build on that. (With the exception of Zeebox’s Anthony Rose, no one was publicly worried that content coming outside of TV industry would be a threat.)

Discovery CEO Mark Hollinger took the investor’s point of view: ongoing technological changes are threatening the basic content investment model. However he emphasised that people still need channels – but the channels don’t necessarily have to be linear channels. Linear is still the basis of the business: “if we had to do investment decisions for on-demand only they would be very difficult decisions”. Hollinger also told, that Discovery has so far managed to make on-demand content deals that have not cannibalised their own channel viewership.

Many presenters also referred to Deloitte’s newly published study, which is quite positive towards the success of television’s business models.

OTT has a growing importance, but not regarded as a strategic centrepiece

Over-the-top television (OTT) refers to delivering TV content over open Internet, bypassing traditional TV and pay TV operators. At IBC’s conference OTT was not regarded as a main theme but rather another new way for consumers to access TV content. For most TV companies OTT seems to be a development they just have to tackle rather than a strategic opportunity.

As usual, however, disruptive companies such as Apple or Netflix were not at the conference.

Sky Deutschland’s Brian Sullivan said that so far OTT offerings have been based on low-cost content. As Netflix, Lovefilm and HBO bring high-quality offering the importance of OTT will probably grow.

BSkyB’s Mike Darcey wisely noticed, that as a consequence of OTT development no one supplier “owns the home” any more. In the future consumers will be less dependent on pay TV subscription packages. BSkyB has launched also their own OTT service called Now TV.

While the channels were not priorising OTT in their speeches, technology vendors at IBC exhibition were notably active in offering their OTT solutions.

UK’s YouView provides consumers one interface to all TV channel content

UK channel and operator joint project YouView became finally in July available for consumers as the first YouView set-top-boxes started shipping. Price for this Humax box is around 300 pounds. The set-top-box is a hybrid device with terrestrial digital receiver and Internet connectivity.

YouView is backed by broadcasters (BBC, Channel 4, Channel 5, ITV), telecom operators (BT, Talk Talk) and terrestrial operator Arqiva. Consumers can access content from various broadcasters with the single device and interface.

YouView is a UK-only specification, although it has some commonalities with Franco-German HbbTV. It doesn’t seem likely that such common content interfaces would emerge on other major markets than in the UK. At IBC panel it was also questioned, whether there is room on the market for a set-top-box solution while connected TV sets already provide access to the same content.

2nd screen hype reminds of interactive TV era

Second screen viewing refers to using tablets or mobile phones for interacting during TV viewing. Many share the view that TV screen is good for TV content but additional interactivity takes place on other devices, which are often personal devices.

Many vendors and channels demonstrated their 2nd screen implementations. While some cases were innovative and attractive, the hype around 2nd screens brings vividly in mind the “interactive TV boom” of the last decade.

The question remains, whether 2nd screen interactive content is something that the TV channels or production companies should care for, or is it an independent game-apps-like market.

The difference between “interactive television” and “second screen” paradigms is that in today’s second screen model viewers are interacting also with each other in various social media channels. Now that we mention social media – Nick North of research institute GfK reported on findings that social media activity concerning a certain TV programme does not correlate with programme’s viewership ratings.

Among the innovative approaches was a prototype presented by French company Virdual.com. Their idea was to implement a live contest show with avatars and virtual studio technology. In this programme concept people could attend with their avatars the live contest event. They would see normal TV show on their TV sets, while tablet screen would show how the scene looks like from the audience. Viewers could also attend themselves – with their avatars that is – the actual contest on the stage. Interestingly, Virdual.com’s Francois-Xavier Cardon told that this concept would be less expensive to implement than a live contest show with real audience.

Branded content advertising attracts brands

On the advertising side it was a shared understanding that revenue-wise the 30-second-spot-model will live on but will be complemented with other approaches. Examples were mostly on branded content: sponsored programmes and applications. Internet-like banner advertising on second screen or connected TV applications bring today so low viewer volumes that click- or display-based pricing doesn’t bring remarkable revenues.

Unilever’s Geoff Seeley urged TV channels to extend “trading relationships based on the cost of a 30 sec spot” and to “open up the wider skills they have in their organisations”. As examples of new kind of marketing approaches Seeley mentioned e.g. infomercial spots on YouTube that are answers to frequently submitted Google searches (like “how to use hair conditioner”).

Dotscreen’s Stanislas Leridon advocated using connected TV apps for advertising with the notion that such advertising avoids some spot advertising regulation such as product placement rules and the maximum percentage of programme time that ads are allowed to cover.

And some tech findings

After HDTV we see UHDTV in the horizon (the ‘U’ is for ‘ultra’). There are two specifications planned, “4K” and “8K”. The number refers to vertical resolution of the picture (ca. 4000 or 8000 pixels, compared with HD’s 720-1080 pixels). There were demonstrations on 4K and 8K at the show. It will however take several years until UHDTV replaces today’s HDTV.

3D is making some progress: DVB’s standardisation work is proceeding with so-called service-compatible format and there were some nice demos at the exhibition. However, as SES’s Ferdinand Kayser put it: “3d will not be a growth driver, until it can be viewed HD glasses-free”.

The satellite company presented SAT>IP technology, where satellite signal is converted to an IP signal once the dish has received the signal. At the same connection point there is connection to the Internet, too. This way all video traffic within home is carried over IP.

FoBTV (Future of Broadcasting Television) is an initiative for developing a global transmission standard for the next-generation television. The initiative is backed by, among others, organisations behind today’s competing DVB, ATSC and ISDB-T specifications.

 

Timo Argillander

Timo toimii sijoitusyhtiö IPR.VC:n managing partnerina ja Digital Media Finlandissa neuvonantajana. Timolla on pitkä kokemus strategiatyöstä ja muutoshankkeiden läpivienneistä yrittäjän, ammattijohtajan, konsultin ja sijoittajan rooleissa. Timon erikoisalaa ovat muuttuvien liiketoimintaympäristöjen ansaintamallit ja teknologiamuutosten tulkinta.

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