2019 TV FUTURES INITIATIVE: DIGITAL TRANSFORMATION – A ... · The 2019 TV Futures Initiative...

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WHITE PAPER | 2019 TV FUTURES INITIATIVE

2019 TV FUTURES INITIATIVE:

DIGITAL TRANSFORMATION – A FRAMEWORK FOR SUCCESS

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ABOUT THE 2019 TV FUTURES INITIATIVE

In 2017, Comcast Technology Solutions and MTM successfully launched the TV Futures Initiative, an ambitious international programme designed to deliver a thoughtful body of research and analysis, and engage extensively with the industry.

The 2019 TV Futures Initiative explores broadcaster and pay-TV experiences of digital transformation from across the world, with a view to help businesses develop their strategic plans as they move from offering digital products as a bolt-on to offering fully integrated multi-platform services.

The programme this year has comprised an extensive series of interviews and workshops, conducted by MTM on behalf of CTS, and involving senior executives at some of the world’s leading broadcasters and pay-TV platforms. The aim of the research is to help management teams within those organisations do the following:

• Assess the key digital trends impacting these broadcasters in their market• Understand the main digital challenges and opportunities facing broadcasters• Explore the experiences of other broadcasters and identify the key factors underpinning

successful digital transformations• Assess their organisation’s progress with digital transformation• Identify the key priorities for transforming their business, workflows, and operating models to meet

the challenges and opportunities of multi-platform TV

The paper uses an analytical framework created specifically for the project to review key market developments in the broadcast and pay-TV market. By exploring how broadcasters are digitally transforming their businesses, the 2019 TV Futures Initiative seeks to answer the following key questions:

• How have broadcasters transformed their products, services, and processes to support the delivery of OTT and multi-platform TV?

• Which trends are shaping the TV market over the next three to five years?• What level of digital transformation do broadcasters need to undertake over the next five years to

ensure they are fit-for-purpose in a multi-platform TV market?

Comcast Technology Solutions and MTM would like to thank everyone who contributed to the interview and workshop programme, which is the source of all the quotes in this paper, unless otherwise specified. Interviews were conducted under Chatham House rules (no attribution without prior permission) so in most cases have been anonymized. However, we would like to acknowledge the support and contribution of the following organisations:

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IS THE TV INDUSTRY’S DIGITAL TRANSFORMATION ON TRACK?

TV MARKET DEVELOPMENT VARIES WIDELY ACROSS REGIONS

Digital technology has changed the landscape between media companies and their consumers. Today, the industry operates in a consumer-driven market where there is far more information and choice for the buyer. Digital technology dramatically improves the economics of business, improving the bottom line when it is effectively implemented.

Consumers in a digital era expect to access content on their own terms, on any device, and when they choose. Moreover, as more compelling and high-quality content becomes available, consumers have significantly more choice as to how and where they spend their entertainment time and their discretionary income.

Consumers are now able to curate their entertainment easily and on their own terms. They are aware of what constitutes value to them. Media businesses are shifting their business models and developing their core platforms to take advantage of new technologies and to understand the true value of their entire catalogue of content. They must also get the consumer proposition right by testing and exploring the value exchange.

Growth across the board can now come from distribution across multiple platforms. Broadcasters are deciding the best approach to delivery across the entire lifecycle of their content, and how to scale up their digital activities in addition to their core broadcast business which, in most cases, still accounts for the majority of revenues. They are also looking for the most economical and efficient way to serve content to multiple devices.

While the US may be among the largest TV markets in the world, the dynamics and trends that characterise it, though well-documented, are not always universal. It is unwise to generalise when looking at TV markets, even within a region. TV executives in Argentina, Brazil, and Mexico, for example, are all dealing with a number of country-specific issues. In Western Europe, markets vary significantly: While the UK, for example, has been at the forefront of many TV industry innovations (Channel 4 launched a VOD product in 2006, with the BBC launching its iPlayer soon after), Germany has been slow in its move to digital, with free-to-air traditional TV still dominant for now.

OTT services, notably Netflix, while a global brand, may still have some way to go to compete for those TV audiences in Asia Pacific or Latin America who prefer local content. However, as broadband access improves, there is a growing popularity of both legitimate OTT services — with more direct-to-consumer offerings in the pipeline — and piracy.

The emergence of new segments, substantial variations across regional eco-systems, and increasingly savvy consumers mean that businesses have to be fully connected across broadcast and digital. Equally, businesses need to be fully agile with a ‘test and learn’ approach at the core of their consumer strategy which can deliver incremental growth while minimising risk.

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THE IMPACT OF DIGITAL TRANSFORMATION

Digital technology is ubiquitous in our everyday lives and rapidly changing the way we consume content. Broadcaster and content owners are seeking to adapt their businesses and are now routinely investing in multi-platform TV services and OTT offerings.

EXHIBIT 1: DEFINITION OF MULTI-PLATFORM

The delivery of rich media, information, and applications to any device, regardless of transport, distribution system, or user interface, while providing the consumer with seamless, integrated, and interactive access. — Cable & Telco Association for Marketing

A typical approach to internal transformation — in response to the need to provide a multi-platform service — has started with a standalone team responsible for digital products. Multi-platform and OTT products are developed in parallel to the broadcast business, and OTT workflows are dominated by the need to ingest programming from broadcast services.

However, many broadcasters have now gone beyond just creating digital products for their viewers. They are utilising digital tools and technologies across the wider TV ecosystem — developed in-house and, increasingly important to success, those from third-party vendors.

Digital transformation is evident in all aspects of the TV business as new technology continues to transform business processes and models. Data and analytics tools are creating new value and insights that apply across the wider business; helping content providers meet the needs of both subscribers and advertisers by improving internal decision-making. In addition, broadcasters are now fully integrating their digital teams into their core TV business rather than running them separately. Some are even rebuilding their platforms entirely, with an entirely new business model for measurement (See RTÉ Case Study: page 3).

But how are broadcasters and pay-TV platforms prioritising the opportunities enabled by the digital transformation? In which areas should they invest next? What questions do they need to ask? How can each area of the business better serve its users and deliver value, using digital tools and technologies? How can media companies use data to create optimal incremental value from a range of monetisation models, including AVOD, SVOD, and transactional funding?

Our research has revealed that in order to transition to multi-platform TV, and to maximise revenues from multiple services and platforms, broadcasters are transforming their businesses in a number of key areas. But how important are these areas, what are the trends and dynamics of each one, how can they be measured, and what changes are they expecting to see in each case?

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Richard Waghorn is Director of Transformation and Technology at RTÉ, the national public service broadcaster in Ireland.

“I focus on technology, but also work on transforming the organisation for the future. There are six main strands I work on. The first is communication. The second is HR. The third is creating smarter — that is about efficiencies

in our operational side. The fourth one is about defining our team structures. The fifth is about reviewing our technology. The sixth is on building our future.

We see that as a transformation program — we don’t see it as a digital transformation program. The 5-year strategy that we put together and released this year is about transformation in every area. It includes content and how we produce content, making sure we produce the right content for different audiences as we move away from a linear approach. That is one side of our transformation.

We have a data strategy and a data plan. All our data is now integrated which means that we are able to cut it based on genre and audience. We have a much better understanding of the audience journey, which helps us make decisions with our content. We have completely improved our back-end which means that the time to take queries is reduced. That means the data team is much more agile to analyse data.

Once we know what businesses are looking for in data, we can move to more sustainable models. Sometimes we don’t know what the answer is until we have tried it. We won’t build an entire system from scratch. There are enough in the market, but we are looking at systems which are upgradeable.

A potential challenge in the next few years will be a migration to UHD. If it catches on, it will really only be delivered online. It will not be delivered to market through traditional broadcast means. If there is more of a shift to UHD, we would need to upgrade all of our structures just to remain competitive. If the market demands it, we will have to follow. All of our cameras, production systems, studios — everything would need to be upgraded.

Other challenges on the horizon are moving more of our production chain to IP, moving our editing to the cloud, and digitizing our archives to create a content management system that would be available to everybody to access through our browser.

We are trying to create the right creative environment for our staff, using new technology. A lot of our focus is on creating flexible working conditions. For us, technology is much broader than just changing particular workflows, it is about transforming the business.”

CASE STUDY: HOW RTÉ TRANSFORMED FROM THE GROUND UP

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INTRODUCING THE FRAMEWORK FOR TRACKING DIGITAL TRANSFORMATION

MTM has worked with Comcast Technology Solutions to develop a strategic framework to benchmark the digital maturity of broadcasters and identify strategic priorities for the next five years. This framework is intended to help media businesses as they look to future-proof channel and product portfolios, strengthen and support business models, and establish fit-for-purpose operating models.

EXHIBIT 2: DIGITAL TRANSFORMATION FRAMEWORK

In order for broadcasters to transform, they need to consider and plan in these six key areas. Technology and operations sit across the five areas of content, products, delivery, customer management, and sales and monetisation as each of the areas looks to adapt to deliver market-leading offerings for consumers.

Based on interviews with industry executives across the industry, the following section aims to address the major challenges and opportunities that lie ahead, as the process of digital transformation continues across our industry.

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1 — CONTENT

What to offer and how to source it?

The way broadcasters plan, produce, and present content is changing rapidly amid the industry’s digital transformation. They are adopting new technologies and business practices as they adapt to the challenges posed by new digital competitors. In the area of content, broadcasters need to answer the following questions:

• What content do our viewers want to see, and when?• How can we enhance our content through new technologies such as UHD and VR?• How do we optimise new release windows across linear and on-demand services?• How can we integrate in-house and third-party content partnerships? • How can we use insights to optimise the lifetime value of our content?

CONTENT: KEY DIGITAL TRENDS

Broadcasters are investing heavily in content The growth of SVOD services has resulted in increased competition and a change in market dynamics. This has encouraged a trend of original content creation among broadcasters and pay-TV operators seeking to attract and retain audiences. In particular, industry participants have noted a significant rise in the spend on drama series, the number of co-productions, and investment in local content.

The transition to HD continues, but VR is less of a priority The TV industry as a whole has continued its transition from SD to HD. Although some broadcasters have become early adopters of 4K and HDR content, others are reluctant to invest heavily in UHD until market demand increases. A similar trend can be seen around emerging technologies such as 360° video, virtual reality, and augmented reality. Despite the opportunity to provide an enhanced viewing experience, industry participants remain cautious at this stage about the mainstream appeal of VR.

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CONTENT: KEY DIGITAL TRENDS CONT.

Broadcasters are launching their own OTT services

Many broadcasters and pay-TV operators have now developed their own streaming services to complement their core broadcast service. This has created the opportunity for developing and exploiting new content release windows. While there is a steady increase of non-linear viewing, participants believe that it will not replace linear and live programming any time soon.1 Linear programming will retain an important role in viewers’ lives — especially in terms of sports and news.

Content partnerships are becoming increasingly important

To meet the increased demand for original content across multiple platforms, broadcasters are forging content partnerships with third parties in addition to producing content themselves. Such deals enable them to compete on big-budget productions, although they are also working with (and in many cases acquiring) small, independent businesses to ensure that content appeals to local audiences.

1. As of October 2018, 84% of UK TV viewing was of live content versus time-shifted, according to BARB (www.barb.co.uk/viewing-data/catch-up-and-live-tv-compared/)

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2 — PRODUCTS

How should this content be packaged into products and services?

The way broadcasters and content providers package and bundle their products and services is key to remaining competitive in an evolving media landscape. As viewers access content across multiple platforms, it is important to create a compelling brand position, including the features and functionalities that enhance the viewers’ experience. In terms of products, broadcasters responding to digital transformation need to answer the following questions:

• What products and services should we offer?• What is the role of our brand in a competitive market?• What functionality and features are key to successful products and services?• How do we create products that work across multiple platforms and devices?

PRODUCTS: KEY DIGITAL TRENDS

Branding and a clear target audience are vital to success in a competitive market Broadcasters and pay-TV operators have recognised that in a highly competitive market, they need to have a strong brand and a clear understanding of their target audience. Amid digital transformation, as the number of channel and online propositions grows, it is imperative to have a strong brand that viewers can recognise and identify with.

Customers are increasingly demanding when it comes to UI, personalisation, and the use of new tech Viewers are now starting to expect a user interface that offers personalised content recommendations, a compelling user journey, and easy search (via voice, for example).

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PRODUCTS: KEY DIGITAL TRENDS CONT.

A high-quality video experience is essential to attract and retain viewers As technology evolves, viewers will expect ever-more personalised content recommendations that appeal directly to them. While executives recognise the potential value of being able to tailor content to each individual user, they also agree that ongoing improvement in the quality of the video experience itself is vital too.

Multi-platform strategies are a must-have, though TVs remain the preferred screen for long-form content The TV industry has adapted to the reality that customers want to watch content on multiple devices and platforms. Most broadcasters and pay-TV providers have now launched OTT and multi-screen services in response to this customer demand. However, in the near future, it appears that customers still prefer to watch long form content and live events on a TV screen. This still remains the case with live big-event sports such as the 2018 World Cup, where viewing was still predominantly via the TV screen. That is likely to continue even as more rights holders look to enter the OTT and D2C market. Although services are available to watch on any screen, most viewers still prefer to watch premium content on a TV. That is likely to continue even as more rights holders look to enter the OTT and D2C market. Although services are available to watch on any screen, most viewers still prefer to watch premium content on a TV.

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3 — DELIVERY

How should these products and services be distributed?

Broadcasters and pay-TV operators flagged a number of considerations that are impacting content delivery decisions in the evolving TV services landscape. These relate primarily to features of IP-based service delivery as well as issues that grow in importance as OTT becomes more prevalent. Key questions include:

• How do we structure digital platforms to deliver the best user experience?• How can digital services support linear and non-linear consumer offerings?• How do we tackle piracy and its impact on ecosystem growth and investment?• How do we access all the services and technologies required to support delivery of our

consumer offerings?

DELIVERY: KEY DIGITAL TRENDS

High consumer expectations require a high-quality video workflow The high standards of consumer expectations are a key factor in video service development and integral to a service’s success. To meet these expectations, online video services must incorporate a number of high-quality service elements including rich media features, high-quality graphics and videos, easy and intuitive navigation, personalisation, and customisation elements. From a digital delivery standpoint, this means an increased emphasis on high performance across the video workflow including ingest, encoding/ transcoding, and metadata.

Broadcasters increasingly require digital distribution to support both linear and non-linear services Broadcasters continue to invest in linear broadcast operations and look to digital workflows for an efficient way to distribute content over multiple concurrent channels. Alongside their linear channels, broadcaster portfolios increasingly include non-linear OTT services, on which audience engagement and usage habits are distinctly different (e.g. greater representation of younger audiences, high engagement of box set/binge viewing). As these portfolios evolve, so do broadcasters’ digital workflow needs, including simultaneous encoding/transcoding for multiple content formats, coordinated content distribution for on-demand, and metadata frameworks.

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DELIVERY: KEY DIGITAL TRENDS CONT.

Piracy remains a serious concern for OTT services, and sports content in particular Security and digital rights management remain serious, in the world of OTT relative to broadcast, and hurt not just telecommunications and content players, but also the wider ecosystem. Access to pirated services is a key factor in the loss of consumers from linear services as they seek out content on pirated OTT and non-linear services. This creates a further challenge for broadcasters and pay-TV operators looking to develop their paid-for OTT offerings. Although the technology exists to counter piracy (including monitoring and shutting down illegal streams, and digital ‘fingerprints’), it still continues to prevail, with live sporting events now a key target.

Developing content management systems to effectively support online services can be challenging Broadcasters identify a key challenge in launching online services, namely developing a reliable and scalable content management system (CMS). It can be complex and time-consuming to deliver a CMS that supports easy and frictionless consumer access to desired content across extensive libraries, but in the long-term this remains a critical facilitator of positive consumer experience.

There is no single solution for digital services technology, so third-party integration is a priority Broadcasters and pay-TV operators tend to rely on multiple services from a range of suppliers to support the end-to-end video workflow solution that best suits the specific needs of their video services. Even where they take an end-to-end workflow offering from a single provider, these solutions tend to integrate third-party technology in order to provide the complete service. Given the variance in viewing trends, delivery, service offerings, and video workflow demand across different services (e.g. live streaming, on demand, broadcast, pay TV services over STBs, or web-based OTT services) there is little standardisation of the end-to-end workflow. At present, the digital workflow supplier landscape is highly competitive, dynamic, and supports a wide range of operators with similarly varied service portfolios that in turn support a wide range of customer needs.

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Guilherme Saraiva is CTO at Telecine, which provides online video streaming services and distributes seven pay-TV movie channels to over 4 million subscribers in Brazil.

“At Telecine I manage the technology team, content operations, and customer support. Your analytical framework is a good overview of what needs to be done.

We launched our new OTT service, called Telecine Play, in October last year, and are now authenticating customers who have purchased our channels through operators. We have built a database of 800,000 customers who purchased our products from pay-TV. We also have real-time analytics; earlier we had data which was at least 48-hours old.

We are using digital marketing initiatives to drive new sales and audiences. When I joined the company two years ago, we didn’t have details of customers. We were a traditional pay-TV programmer. The companies that sold our channels were pay-TV operators. We launched a digital marketing platform and got analytics we didn’t have before in the company.

There are several benefits to having this data. The first is to understand our customer base. We know who they are, where they are located, the number of family members, and their devices. You know what movies they watch at what time of day. We didn’t have this data before. There is a lot that can be done with this — we are just starting but we have many ideas in mind. The second advantage is to do marketing campaigns, via emails, or push notifications. We can address each subscriber individually to drive engagement.

In terms of content, we have movies from the big U.S. studios as well as Brazilian movies. Big American blockbusters are the ones most watched online, but Brazilian movies perform better online than on linear channels. That is something we found out. We have also been able to identify people who love horror movies, for example. We didn’t know that before. Another thing we have discovered from the data is that French movies are a big success online. With such information we have been able to create targeted themed playlists, such as the Brazilian movies and the French movies playlists, as well as the ’Do Not Watch Alone’ horror movies playlist.

Data and analytics tools can help us in all aspects of the business. For example, we are thinking of creating more products based on users’ personal profiles. In terms of delivery, we use data to evaluate the performance of our delivery. In terms of customer management, we are using it in marketing campaigns to drive audience and in customer support services where we have seen a big improvement in customer satisfaction scores. We want to know all about customer touch points, whether they have visited our help centre pages, if they have had any problem with movie playback, and make such information available in real time to our agents in customer service. On monetisation, we are looking to start selling next year, and data will be key to that.

In terms of the business overall, there have been two big changes. One is how we relate ourselves to customers. We have learned so much in these last months and we will learn more when we will start selling direct. This is a big cultural change. The second is that we are now data-oriented — we are using real-time data to help us make decisions.”

CASE STUDY: HOW TELECINE LEARNED FROM ITS CUSTOMERS

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4 — CUSTOMER MANAGEMENT

How to engage, support, and bill your users and subscribers?

Direct-to-consumer models, streaming services, and new technologies have transformed the way broadcasters and pay-TV operators engage, support, and bill customers. Interactions are increasingly taking place online or through automated services, both of which bring their own expectations and challenges. As digital transformation changes their relationship with viewers, broadcasters must ask the following questions:

• How do we manage customer care and data collection?• What is expected of customer support in a digital age? • Which payment types and platforms are available for use? • How should we bill our customers?

CUSTOMER MANAGEMENT: KEY DIGITAL TRENDS

Broadcasters are starting to build direct relationship with their viewers

Traditional broadcasters have historically had little opportunity to build a direct relationship with viewers. That has changed with the roll out of digital services that allow them to authenticate customers who purchase channels via operators, or who register online for an OTT service. Such data allows service providers to understand their customer base and adjust the content and service offering to better meet their needs and thereby reduce churn.

Customer support is now expected to be effective and dynamic

OTT services have altered the relationship between content providers and customers. While pay-TV customer support has traditionally revolved around issue-prompted phone calls, online customer support is expected to be more intuitive, predictive, and engaging.

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CUSTOMER MANAGEMENT: KEY DIGITAL TRENDS CONT.

Data and analytics offer new opportunities for broadcasters

Broadcasters are increasingly using data and analytics to support marketing and improve customer support. It can identify customer touch points, frequently asked questions, and most commonly faced issue. Data can be utilised to improve and integrate support services, and understand how to best engage with customers, among other benefits.

New payment solutions are encouraging new subscribers

In all markets, amid growing consumer demand for content and services, the ability to offer a range of payment solutions is critical to maximising potential revenues and combating the appeal of piracy. Popular payment solutions include not just credit cards and direct debits, but also carrier billing (where payment is taken by a mobile operator) as well as pre-paid cards, PayPal, and banks’ payment apps. There are multiple payment solutions that can be integrated into OTT service providers’ platforms, and these vary by market and region; the key is that they must be as frictionless as possible.

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Olivier Van Zeebroeck is Digital Director at MEDIALAAN — de Persgroep, the sales house of the Belgian broadcaster and publisher.

As video services expand across different platforms and devices, a key challenge for commercial broadcasters is to create an ad experience that complements the premium content delivered and meets the evolving demands of both advertisers and viewers.

MEDIALAAN, the commercial broadcaster serving Belgium’s Flemish-speaking community, has a history of innovation in the digital space. It was early to market with a VOD solution and has been working closely with ad server Freewheel for several years to grow revenues from advertising on digital platforms such as its VTM digital platform and its premium TV Everywhere service Stievie.

One key finding, according to digital director Olivier Van Zeebroeck, was that ad loads were too high for those viewing on digital platforms; the digital consumer wants a lighter ad load than the 12 minutes per hour broadcast channels devote to TV advertising. MEDIALAAN’s research also confirmed that viewers prefer seeing a lot of variation in ads and not the same ad over again, are turned off by irrelevant ads, and are annoyed by technical issues around delivery, such as surges in volume, or on-screen delays and buffering.

MEDIALAAN – de Persgroep therefore decided to prioritise improving the ad experience. It started by halving the ad load on its digital platforms to six minutes per hour, aiming to compensate for the reduction in inventory by delivering a more valuable viewer experience. Freewheel helped to optimise the remaining commercial breaks, with a mix of bumpers and spot ads, and a mix of ad durations. The broadcaster also worked to improve the technical delivery of ads, to ensure that sound and picture quality are in line with the premium content against which they are placed.

Crucially, in order to differentiate and enhance the OTT service further, the ads are also targeted, based on socio/demographic data captured when viewers first register for the service. This requirement was built in from launch, with the result that the digital video platforms from MEDIALAAN now have over 2 million registered users.

The improved user experience applies not only to on-demand OTT content but also live linear content delivered via IP: Viewers on the digital video platforms can now rewind a live stream in a programme, while ad breaks for viewers using this capability are made shorter so viewers can catch up with the real-time live programming.

“We want to extend our strengths in linear broadcasting to the online world through radical innovation,” as Van Zeebroeck puts it. “By replacing ads that are shown on TV with fewer, more personalised ads, customers watching the same live stream online have a more compelling service adapted for digital devices.”

CASE STUDY: HOW MEDIALAAN – DE PERSGROEP IMPROVED THE OTT AD EXPERIENCE

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Advertisers are embracing these factors, as well as the perfect view, through rate and viewability that MEDIALAAN – de Persgroep guarantees. Viewers, meanwhile, receive a targeted, varied, and relevant range of ads alongside their premium content. The initiative has received recognition from industry peers, too: It was awarded the coveted Innovation Award for Content Distribution at IBC in September 2018.

Even more importantly, MEDIALAAN is now finding that, by targeting a younger audience, it can generate higher returns from digital platforms than from TV, even with the lighter ad load. Van Zeebroeck also dismissed fears of cannibalising the existing TV revenue: “That is not happening — we are simply addressing different audiences in different ways. Our overall aim is to create a great brand experience on all devices, thorough balancing ad load, plus ad rotation, high technical quality, and a fluent experience. It’s been hard work but advertisers like what we are doing and want more.”

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5 — SALES AND MONETISATION

How to grow commercial returns?

The growth in OTT services, as well as the growth in telco TV bundles, has created a more fragmented market. Participants believe there are growth opportunities from subscriptions and advertising revenue, if the products and services can adapt to new market realities, through the integration of new technology. Providers should ask themselves the following questions to optimise sales and monetisation strategies:

• How can we adapt revenue models in a changing market? • What is the best approach to develop hybrid monetisation — from both advertising and

subscriptions — in a multi-platform world? • Should we create a direct-to-consumer offer?• How do we achieve a holistic view of our customers?• How can we respond in an agile fashion to their current and predicted behaviour?

SALES AND MONETISATION: KEY DIGITAL TRENDS

Broadcasters are embracing hybrid monetisation models

Broadcasters and pay-TV providers are embracing new business models and experimenting with new revenue streams to meet the marketplace dynamics. A common response to the growth of SVOD services has been to create OTT platforms and to increase their investment in original content. They are also looking for the optimal way to monetise that content across an increasingly fragmented marketplace, through a hybrid combination of subscription and advertising revenues. It is also critical to use testing and learning to be responsive and agile, and to use data to expand and refine the model.

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SALES AND MONETISATION: KEY DIGITAL TRENDS CONT.

Advertising across multiple platforms is complex but remains a growth opportunity

In a multi-platform world, where viewers are accessing TV content across different devices and platforms, optimising advertising revenue is a major challenge. Broadcasters and pay-TV platforms are investing in the data tools that enable them to deliver personalised advertising, while also forming new alliances with traditional rivals to more effectively measure advertising across multiple platforms. There is optimism that in an evolving marketplace, such initiatives will enable broadcasters to harness the persistent appeal of great content and thereby maximise ad revenues.

Providers are looking to develop direct-to-consumer offers

Broadcasters and content providers are looking to build on their newly-acquired insights from audience data by developing direct-to-consumer paid-for offerings, alongside their linear channel businesses. Two key areas to focus on: How to maximise this revenue stream and how to provide value to consumers who are managing multiple subscriptions with different providers and brands.

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6 — TECHNOLOGY AND OPERATIONS

How to support efficient delivery of video services across your business?

Data and technology are recognised priorities for the broadcasters and pay-TV operators looking to improve audience measurement capabilities, support targeted product development, optimise content and distribution strategies, and inform a broad range of commercial decision-making. As they progress with integrating data and technology more deeply into their businesses these players must consider:

• How can data and technology developments help my business deliver greater value?• What services are available on the market to support my commercial objectives?• What approach to technology will allow me to stay up to date, in control, and flexible?• What skills do I need in my organisation to realise these targets?

TECHNOLOGY AND OPERATIONS: KEY DIGITAL TRENDS

IT services are outsourced unless the appropriate solution is not available on the market

IT and data services are commonly outsourced to external providers or third parties. These provide targeted efficiencies and access to new competencies (such as data processing capabilities) to specific parts of the business. Ongoing reliance on third parties is driven by the need to ensure that broadcasters and pay-TV operators are accessing up-to-date market technology, and can retain flexibility and control over their systems. Internal expertise and understanding of these technology systems can also be limited so use of external providers is an expedient route to integrating technology. However, where the appropriate external solutions are not available, investment is being made to build solutions in-house.

Transitioning to cloud solutions is a priority but is only a part of digital transformation

The transition to cloud solutions (such as cloud hosting and computing) is acknowledged across the industry as a strategic priority that offers access to transformation across business processes (including editing and data analytics). Smaller organisations, in particular, benefit from access to software and services that can improve their operations and help them achieve scale efficiencies. For all organisations, transitioning to cloud solutions offers business agility and flexibility. The shift to cloud-based services is seen as a small step in overall digital transformation, providing access to up-to-date services and applications being developed on cloud platforms.

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SUCCESSFUL DIGITAL TRANSFORMATION: PRIORITIES AND FUTURE CHALLENGES

What should broadcasters and pay-TV providers focus on as they embark on their digital transformation journey? What should their development roadmap look like for the next three to five years?

The analytical framework created for this project provides a structured way of approaching the challenges associated with digital transformation, but there are also a number of overarching themes for companies to consider, as follows:

Data and analytics tools can enhance all areas of the business, notably monetisation

Broadcasters and content providers are recognising the value that data and analytics tools can bring to all aspects of their business. For companies now building direct relationships with consumers, developing a holistic view of their consumers involves a steep learning curve, but the benefits of prioritising data and analytics tools and the potential for maximising revenues via hybrid monetisation are now becoming clear.

Collaboration and partnerships to build scale will be key to future success

In the face of competition from global players, broadcasters and pay-TV operators are looking to scale their businesses by forming partnerships or alliances with peers in their own market, or even across other markets. New alliances — such as Salto in France or the multi-territory European Media Alliance — can deliver scale, but will require a new and flexible approach from the partnering companies. It is also likely that such alliances, rather than relying on incumbents’ own solutions, will look to third-party technology providers to deliver solutions that can work for all parties.

Re-think internal structures and processes, but focus on culture too

The requirement to develop consumer-friendly products and services means that broadcasters and pay-TV platforms must ensure that they are delivering operational efficiencies within the rest of the business through a focused approach on transitioning to IP. While companies must re-tool and restructure in order to compete in a multi-platform and diverse market, this change must go beyond technology or strategy. If a company’s culture fails to evolve, no new strategy can succeed.

Look beyond the current business for future growth

As companies embrace digital transformation, they should focus on continuing to drive scale, driving distribution across multiple platforms, and delivering operational efficiencies. However, they should also focus on finding new sources of value creation for the longer term.

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ABOUT COMCAST TECHNOLOGY SOLUTIONSComcast Technology Solutions, a division of Comcast Cable, serves the advertiser, content provider, global operator, and technology markets with a complete portfolio of products and capabilities to meet the evolving needs for content distribution and monetisation in a multi-platform world. Built on Comcast’s robust media and entertainment infrastructure, Comcast Technology Solutions offers an unmatched breadth and depth of expertise, spanning twenty years in broadcast and digital, to help customers deliver engaging experiences and forge new business models.

For more information, visit www.comcasttechnologysolutions.com

ABOUT FREEWHEELFreeWheel, a Comcast Advanced Advertising Company, is the industry’s most complete advertising management solution. Purpose built for the New TV ecosystem, we enable our collective client base across all key industry segments to manage and monetise their premium video inventory in the brand safe ways they require. Our leading technology, unmatched service and guidance, and collaborative advocacy power the advertising businesses of the largest media and entertainment companies in the world, including AOL, DIRECTV, Fox, NBC Universal, Turner Broadcasting System, and Viacom in the U.S., and MTG, Sky, Canal + and Channel 4 in Europe.

For more information please visit www.freewheel.tv

ABOUT MTMMTM is an international research and strategy consulting firm, specialising in media, technology and advertising. MTM helps clients around the world understand and respond to digitally-driven change, providing award-winning consumer research, industry analysis, strategic advice, and support for new ventures, business development, and organisational change and transformation.

For more information, please visit www.mtmlondon.com

ACKNOWLEDGEMENTSThis paper was written by MTM based on a series of interviews with industry executives from broadcasters and pay-TV operators from across the globe. MTM and Comcast Technology Solutions would like to thank all those who contributed to the research for their input and insights.

The opinions expressed within this paper are solely those of the authors and reflect MTM’s judgment at the time, based on the available information. These views do not necessarily represent the views of the interviewees and contributors, or of Comcast Technology Solutions. Any errors or mistakes are entirely the responsibility of the project team.

FURTHER READINGTV Futures Initiative: Business Model Innovation in a Multi-Platform World https://www.comcasttechnologysolutions.com/resources/tv-futures-whitepaper

Sports: The New Battleground for Premium OTT https://www.comcasttechnologysolutions.com/resources/sports-new-battleground-premium-ott

http://www.comcasttechnologysolutions.com

http://www.freewheel.tv

http://www.mtmlondon.com

https://www.comcasttechnologysolutions.com/resources/tv-futures-whitepaper

https://www.comcasttechnologysolutions.com/resources/tv-futures-whitepaper

https://www.comcasttechnologysolutions.com/resources/sports-new-battleground-premium-ott

https://www.comcasttechnologysolutions.com/resources/sports-new-battleground-premium-ott

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