The communications, media, and entertainment industries face significant changes as technological innovations, shifting consumer behaviour, and new business models reshape the industry. The video entertainment sector, which spans these industries, exemplifies how the traditional linear value chain transforms as platforms play more pronounced mediation roles. It illustrates how new players with different business models become powerful forces. And it demonstrates the significant shifts in consumer expectations and demands that force incumbent firms to change their businesses.
Changing technological paradigms are altering customer preferences. Consumers have embraced smartphones, laptops, tablets, and different forms of wireless internet. In turn, they are adopting an anywhere, anytime, any device (AWAITED) lifestyle and increased demand this access from all of their service providers. Advances in one type of consumer technology create the expectation that other offerings will provide comparable experiences, which translates into the demand for all types of firms to offer easy-to-use, mobile solutions.
Platforms that provide connectivity by matching different types of users are playing a more pronounced role in the video ecosystem. Many industry platforms used to be limited in scopes, such as movie theatres which match film studio content with audience members, or TV networks that match video programming, advertisements, and viewers. But today, the most prominent platforms have a significant scope, covering books, and music, games, video, and software applications. New players are becoming powerful forces and dominating other firms through these new platform-based business models. Platforms such as Amazon, iTunes, and Android increasingly define the ecosystem.
The dynamism within the video space provides both challenges and opportunities. After a rigorous review of market data, trends, and detailed analysis of executive interviews at firms throughout the video value chain, this report ascertains characteristics of the industry evolution within the next five years.
Smaller Pay TV Content Bundles
Pay TV providers and the media companies that own TV networks will give in to the overwhelming consumer demands for lower priced entry-level bundles that include less unwanted programming.
Increased Overall Video Consumption, but at Lower Average Unit Price
The trend of increased video viewing will continue, but consumer spending will not increase at the same rate as consumption.
Larger Ad Inventory Pushes CPM Down
Greater consumption of ad-supported video-on-demand will increase the overall ad inventory, but spending by advertisers will remain relatively static. The increased supply coupled with stable demand will reduce prices.
Anywhere, Anytime, Any device (AWAITED) Content Viewing
Video firms will accommodate consumers’ demands to watch content they pay for wherever and whenever they want. The extent and quality of AWATAD, however, remains uncertain.
TV and Video Subscriptions move from Household- to Individual-based Accounts
to offer AWATAD service, firms must be able to identify individual users, not just household accounts. Individually identified accounts will help ensure access to content while preventing fraudulent account sharing.
Real-Time Targeted Ad Insertions
To stay competitive with advances in website advertising, TV and video platforms will insert micro-segmented commercials in real-time.
Consolidation of Players in the Market
The video market is subject to network effects. As a result, after a period characterised by increased market entry, a few leading firms will dominate the market.