Contributing author: Rodney Thompson
As with any volatile market, it is next to impossible to predict where broadcasting will be in ten years. The industry is under constant threat from large digital disruptors that are claiming audiences and advertising at an alarming rate.
But instead of writing another doom-and-gloom article, I want to focus on exploring potential future scenarios that could inform long-term strategies for broadcasters.
The future of broadcast: 4 scenarios to consider
In a recent report, Deloitte applied research data and scenario design to predict the four most-likely future outcomes for the broadcast industry, as displayed in the following diagram.
The x axis represents whether the player structure will be driven by global companies such as Google, Amazon, Apple and Facebook or by national entities such as broadcasters. The y axis represents the ownership of relationships with consumers, whether it’s a platform like Amazon or the content owner.
For example, if Netflix dominates both factors, they would become a global player who also owns the relationship to the end user, which would put us in the Universal supermarket quadrant. Let’s walk through the four scenario quadrants as outlined by Deloitte.
1. Universal supermarket
The Universal supermarket quadrant is the worst-case scenario for broadcasters. In this scenario, broadcasters have lost control of the end-user relationship to global players and have become merely content and channel suppliers.
As a result, broadcasters do not control the advertising. Instead, they are dependent on revenue shares from the digital platform companies.
2. Content endgame
The content endgame is better for broadcasters than the universal supermarket because they still own the relationship with the viewer.
In this scenario, content is the driving force while distribution, search and recommendation engines become a commodity. Big content owners with strong branding would benefit from the economies of scale, though smaller content producers have been pushed out. Consumers pay for preferred content rather than the platforms.
3. Revenge of the broadcasters
This scenario is where broadcasters and global digital platforms coexist. Broadcasters have secured a strong national media industry with regulatory protections against global digital media companies.
Broadcasters receive help from IP network operators and have transformed to digital entities by leveraging customer data. In doing so, they have gained valuable consumer insights that lead to personalized advertising.
4. Lost in diversity
In this scenario, everyone does everything. Global digital platforms own the direct consumer relationships.
Telecommunications providers and broadcasters have created their own digital platforms. Digital platform companies have formed alliances with local producers.
National broadcasters leverage the need for local news and weather. Some use their own platforms for content distribution while others forge partnerships with platform providers. National broadcasters remain independent and maintain various revenue streams.
Another scenario in broadcasting to consider
Perhaps the outcome in ten years won’t perfectly fit into one of Deloitte’s four scenarios. Instead, it might incorporate aspects of multiple scenarios as shown in this diagram.
It’s possible that most of the scenario could fall under lost in diversity with some revenge of the broadcasters blended in. This would be the case if platform owners handled the bulk of the broadcast distribution, but broadcasters also maintained a lesser-viewed channel that had a direct link to the consumer.
Which scenario will play out?
The Deloitte research will not give us that answer, partly because they can’t know for sure. Additionally, Alexander Mogg, Partner and Industry Lead TMT Monitor for Deloitte Germany, tells me, “We want clients to develop strategies that deal with uncertainties. We want clients to think out of the box. How can they – usually as significant market participants – influence which way their market goes? Or even play against the conventional market wisdom and change the playing field?”
The Deloitte research does appear certain about three predictions:
- IP networks will become the standard for TV and video distribution.
- Traditional TV and non-linear content will co-exist and both will be equally important.
- Advertising will become more targeted.
You need strategic partnerships, not vendors
Regardless of the scenario, stations should form strategies and partnerships that can address and complement each possible outcome. This will require thinking beyond what may have worked for linear programming in the past. With this in mind, your vendors should bring a strategic level of play designed not only to secure your future, but to help you become an active participant in shaping the future.
Elements to consider when looking for strategic partnerships and evaluating your current vendors should include two key components:
- Cloud-based strategy – Moving your assets to the cloud can help you scale, gain flexibility and better manage costs. Capabilities like content sharing are native to cloud-based products along with supporting hub-and-spoke capabilities as more stations adopt this approach. It can also be immensely useful for severe weather coverage when it is no longer safe or viable to continue coverage from a specific location. In the digital world, it’s possible for stations’ groups to start covering regions where they do not have television coverage today; cloud-based products better support this type of market expansion.
- Augmented intelligence (AI) – Cutting-edge AI technology can empower you to improve engagement by delivering content to the right users in the right way and at the right time. We are helping stations use AI to provide captioning to better monetize existing content with an AI-driven recommendation engine and soon-to-produce-silent videos. Over the next ten years, AI is expected to play a critical role in freeing up resources to focus on more challenging tasks like creating more hyper-local content.
No matter which scenario comes to fruition, content will play a critical role. As consumers come to expect relevant and focused content for weather and news, all aspects of your station’s business should develop strategies around your greatest strength – your local content and knowledge. Success is no longer about looking different. It’s about being essential.
“Deloitte” is a registered trademark of entities within the Deloitte Network.