As the media industry's premier European event, IBC attracts broadcasters, pay-TV providers, consumer electronics manufacturers and technology vendors across all parts of the television and radio value chain. That's a good thing because the media industry is changing dramatically right now. (See IBC CEO Highlights Top Trends for This Year's Show and Top TV Trends Heading Into IBC.)
Indeed, a major issue for all those attending is the fundamental shift of TV audiences away from linear broadcast TV to on-demand OTT viewing. A key panel discussion, moderated by Jon Watts, managing partner at consultant MTM, addressed some of the major prophecies of doom for the traditional viewing experience and dispeled some widely accepted myths.
Fabian Birgfeld, founder of TV design agency W12 Studios, saw fragmentation of the TV experience as the overarching trend for the industry, highlighting that we can't control viewing context, times or even screen sizes anymore. David Bunker, head of projects at BBC Audiences, largely agreed. He felt VoD was the big change and said it isn't just young Millennials binging on TV but older generations as well. The desire to watch whenever we want, and not be constrained by schedules, is a game changer.
James Alexander, strategy and propositions director at NowTV (Sky's OTT app), felt it has more to do with changing technology now affecting the economics of how you get TV to a consumer.
Nico Waesche, global head of media and entertainment at researcher GfK AG , disagreed with everyone else, though I suspect this was mostly to be contrarian. He pointed out that the data showed that TV viewing times are not falling, and in fact are actually increasing in emerging countries with more recent access to digital technologies. He referred to a major FMCG brand which just switched its advertising spend back to TV from social media, and noted that TV companies are largely profitable and their advertising revenue is rising. "So what's the problem?" he asked.
However, Waesche did concede that new technologies and behaviors are "gnawing at the edges" of the TV industry.
Netflix Inc. (Nasdaq: NFLX) CEO Reed Hastings has famously pronounced that broadcasting will end in 2030, and the panel weighed in on this prophecy. Waesche agreed that it probably would, but the others were more cautious. The BBC's Bunker pointed out that broadband penetration is not 100% so it would be difficult from a regulatory standpoint to just shut everyone off. The government would have to keep the signal alive even if a small percentage of citizens relied on broadcast information.
The panel also challenged whether audiences really wanted OTT, and not linear. Waesche pointed out that we need live TV for news, sports and other genres more influenced by the watercooler affect and social buzz. Bunker also mentioned that TV viewing is still often communal, i.e., families or groups viewing events together, and that skewed viewership towards live/linear. He also felt that certain types of content encouraged this, citing the example of UK commercial broadcaster ITV and its murder mystery Broadchurch. By maintaining interest in the identity of the murderer till the end, the series was able to maintain high linear viewership.
Watts then asked if we had reached a linear peak for TV, and wondered whether channels would soon start to die out and be replaced by on-demand. Bunker agreed, saying that smaller channels are being eroded already. He noted that finding content broadcast on channel 360 is a challenge, and it's far more effective to find that content on demand.
Gordon Castle, Head of Industry Area Mediacom at Ericsson AB (Nasdaq: ERIC), had a different perspective, suggesting that channels are simply destinations for genres of content. He mentioned YouTube channels, which are proliferating. So it's not that people don't want channels, it's just that linear channels may not be the kind of channel that they want. Castle felt it would be social media that would provide that kind of channel in the future, helping consumers find and navigate content options.
He also felt the real disruptors for the future were Google (Nasdaq: GOOG) and Facebook rather than Netflix. Netflix churn is not trivial, he pointed out. It doesn't get reported because the story is the overall growth of Netflix subscribers. But a lot of subscribers are signing up and then leaving dissatisfied. Part of the reason is the "channel" argument he made earlier. Netflix can only take you to Netflix content, compared with social networks, which will recommend and help you find a variety of services and providers. That's why he sees the social networks as the real disruptive force even though they haven't had much of an impact to date on TV viewing.
Lastly, the panel addressed the issue of millennials, and the perception that they don't watch TV. Most panelists appeared to agree with this statement, at least to an extent. BBC's Bunker called them the "biggest headache," saying viewing among 16- to 24-year-olds is down one third. He said it has been a fear for years that this generation would not watch TV, and it is now coming true. He also said that this generation doesn't love TV the way previous generations did, and that TV shows don't evoke the same almost emotional response from them. But he did point out that millennials are still viewing more than 16 hours a week, so it's not as extreme a situation as some headlines suggest.
Birgfeld from W12 Studios pointed out that millenials may be viewing less TV, but they probably view more video than any generation ever. They just do it on other devices, and potentially other kinds of video. Castle said that Ericsson's research found that 61% of media experiences for younger audiences occur on mobile devices, supporting Birgfeld's point.
Waesche from Gfk also brought up an issue that researchers are all struggling with: Will viewing behaviors for 16- to 24-year-olds change as they grow up, and become more typical of older generations?
No one had an answer to that question.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation