The end of TV as we know it: A future industry perspective
IBM Institute for Business Value study
27Mar2006
Industry: Media and entertainment
Summary
Television has an inspiring past, ripe with innovation and popular
culture influence. Since its coming of age mid-20th century,
generations of TV viewers happily embraced their broadcast
experience. For the industry, making a connection with consumers was
a pretty straightforward, one-to-many experience...until recently.
Today, audiences are becoming increasingly fragmented, splicing their
time among myriad media choices, channels and platforms. For the last
few decades, consumers have migrated to more specialized, niche
content via cable and multichannel offerings. Now, with the growing
availability of on demand, self-programming and search features, some
experiencers are moving beyond niche to individualized viewing. With
increasing competition from convergence players in TV,
telecommunications and the Internet, the industry is confronting
unparalleled complexity, dynamic change and pressure to innovate.
To hone our point-of-view of the mid-term future circa 2012, from
both a demand and supply perspective, IBM conducted extensive
industry interviews across the value chain and commissioned Economist
Intelligence Unit (EIU) primary research in the U.S., Europe and
Asia.
Our analysis indicates that market evolution hinges on two key market
drivers: openness of access channels and levels of consumer
involvement with media. For the next 5-7 years, there will be change
on both fronts - but not uniformly. The industry instead will be
stamped by consumer bimodality, a coexistence of two types of users
with disparate channel requirements. While one consumer segment
remains passive in the living room, the other will force radical
change in business models in a search for anytime, anywhere content
through multiple channels.
The tech- and fashion-forward consumer segment will lead us to a
world of platform-agnostic content, fluid mobility of media
experiences, individualized pricing schemes and an end to the
traditional concept of release windows. Figure 1 illustrates the
behavioral differences that will lead to the "Generational Chasm"
between the passive mass audience ("Massive Passives") and leading-
edge users (divided into two sub-groups: "Gadgetiers" and "Kool
Kids").
Given the influence of both segments in the 2012 forecast period,
strategists must today work amid fragmentation, divergence and
opposition in the market: to optimize across nascent and long-
standing business models; across new and traditional release windows;
with old and new content programmers; and with both IP and
traditional supply chains.
This is the beginning of "the end of television as we know it" and
the future will only favor those who prepare today. IBM offers six
executive recommendations to get started:
Segment: Invest in divergent strategies and supply chains for bimodal
consumer types. Identify, develop and continually refine data-driven
user profiles in order to optimize product and service development,
distribution, marketing messaging, and service migration. Tailor
content, advertising, pricing and reach dynamically.
Innovate: Innovate business and pricing models by creating - not
resisting - wider consumer choice with windows, bundles, pricing and
distribution. Take risks today to avoid losing position long-term.
Experiment: Develop, trial, refine, roll-out. Repeat. Conduct ongoing
market experiments alone and with partners to study "real life"
consumer preferences. Invest in new measurement systems and metrics
for the on demand world of tomorrow.
Mobilize: Create seamless content mobility for users that require on-
the-go experiences. Ensure easy synchronization across devices and
without user intervention.
Open: Drive open content delivery platforms to optimize content and
revenue exploitation, and to create optimum business flexibility and
network cost-efficiency. Position open capabilities to bolster
digital content protection with consumer flexibility, and for plug-
and-play business upgrades necessary in the fast-changing
marketplace.
Re-organize: Assess business assets against future requirements.
Identify core competencies needed for future competitive advantage.
Isolate non-core business components for outsourcing or partnership.
From an external perspective, reconfigure business to exploit market
and financial levers to buy, build or team to future competitiveness.
To read the full study, download the PDF file at the top of this
page.
About the authors
Dr. Saul J. Berman
Dr. Saul J. Berman, Partner, Global and Americas Business Strategy
leader, IBM Business Consulting Services
Louisa A. Shipnuck
Louisa A. Shipnuck, Global Media and Entertainment Industry Leader,
IBM Institute for Business Value
Niall Duffy
Niall Duffy, Associate Partner, Broadcast Solutions practice leader
for Europe, the Middle East and Africa, IBM Business Consulting
Services
