Imminent disruption of the broadcast TV industry

I wrote this piece for the Irish Times,  which was duly published 29th July last.  In it I note that the Irish Government has just produced a 5 year projection (they call it a “review”) of the public sector broadcasting sector in Ireland.  I believe that the traditional broadcast TV sector is ripe for disruption,  and mention a few indicators – not least Boxfish.   This article was also written just before the announcement of Chromecast….

Five years ago, in July 2008, who would have predicted the precipitous decline of the PC business? For the prior year, industry analyst Gartner reported that 271 million PCs had been shipped worldwide; by 2012 this had risen to 353 million. However, the PC business is now in serious decline, and some are predicting perhaps less than 300 million units for 2013  — a decline of at least 15 percent from 2012.

Back in July 2008, the iPhone had been shipping for about a year. The first Android phone was not sold until October 2008. The iPad was not launched until April 2010: it has since made the internet accessible to the non-PC literate, including many young and seniors. Who knows what the next five years will bring ?

It is intriguing therefore that the Minister for Communications, Energy and Natural Resources, and the Broadcasting Authority of Ireland, have attempted a five year “review” of public service broadcasting. It is not a retrospective of past events, but a commentary on the prospects for the next five years for RTE and TG4, and especially their future financial sustainability.

The Minister notes that the commercial income for RTE has fallen €84m (or 35 percent) from 2008 to 2012. RTE currently receives 46 percent of its funding from commercial sources, and TG4 only 8 percent. The BAI and its consultants observe that economic growth and advertising spend are linked, so that economic growth over the next five years should increase advertising spend. While they expect online (internet) advertising to continue to gain ground, they believe that “TV is still the most effective way for advertisers to reach large audiences quickly, and to build brand value, and will remain so for some time.”

If there is an industry about to profoundly change, it is TV. The commercial model for TV is absolutely ripe for disruption (actually, this is true for other media industries too, but that is for another article!). Ad breaks are increasingly irritating, seen by a diminishing set of eyeballs, and rarely relevant. It is difficult to assess their impact on consumer purchasing. TV may soon not be a very effective way to reach large audiences quickly and, as strident meretricious junk-mail, TV adverts may even damage brand value.

The technology industry has been attempting to break into the TV industry. Whilst TV companies produce programs, TV distributors place that content to consumers. In the US, Time Warner Cable and other pay-TV firms are now reputedly trying to make certain content exclusive only to the cable companies. A recent blog post at the Wall Street Journal observed that Intel’s lengthy discussions have stalled because of resistance from the the US cable TV industry. Google has been in similar discussions for some considerable time. Meanwhile the dynamics of the industry are changing: a start-up, Aereo has been providing low cost internet access to broadcast TV across New York and Boston via personal antennae. So far Aereo has won legal challenges by the established TV industry.

Apple has been rumored to be licensing TV content but also offering to itself pay the TV industry to not insert advertisements. Bloomberg News reported earlier this month that Apple is now close to a deal with Time Warner Cable. In the face of potential disruption by start-ups such as Aereo, doing a deal with a major technology company which will guarantee payment and revenue is perhaps prudent. Apple used similar dynamics with the record labels when Napster threatened the music industry.

Interestingly, Apple now has 56 percent market share of dedicated video streaming devices. One can imagine the grip that Apple may obtain on the TV distribution business if only Apple-endorsed content becomes available in the home, via an Apple-controlled set-top box and video stream player.

Meanwhile, out in Silicon Valley, Eoin Dowling from Tralee and Kevin Burkitt from Athenry are making waves in the industry with their start-up Boxfish. Boxfish analyses, in real-time, the caption streams (eg for those hard of hearing , or for noisy public areas) broadcast alongside TV content. Using these text streams, they enable rapid search for keywords, trends, and topics of both live TV and archived TV content. In turn, this means any consumer (via a tablet or smart phone) can rapidly jump right straight into the middle of a TV programme to “zero-in” on a particular conversation or event of interest. If viewers can browse and immediately select precisely only those TV segments of specific interest, what future for advertisements and the traditional commercial model for TV?

With the internet, the music industry unbundled its traditional package of CDs into individually purchasable tracks. With technology like Boxfish, what will happen to the bundled channel model of operators like Sky TV and UPC, and indeed the bundled content of a TV programme and its adverts (like the world’s longest running chat show  The Late Late Show) when they are now automatically dissected into just the interesting parts ?

A new model for the TV industry is coming. Content producers – such as RTE and TG4 – may need to provide unbundled access to both live and archived content with an appropriate micro-payment model. The traditional in-stream advertisement model is almost certainly collapsing. Product placement within content, ad-free sponsored content, and contextually aware online retailing are some of the potential replacements.

Five years in the technology industry is a very long time. It will be an interesting time for public service broadcasting.

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About chrisjhorn

https://chrisjhorn.wordpress.com/about/
This entry was posted in business models, Dail, economy, Enterpreneurship, IPTV, Ireland, Irish Times, media, politics, TV. Bookmark the permalink.

One Response to Imminent disruption of the broadcast TV industry

  1. Hugh says:

    Coincidentally I attempted to watch something on RTE Player last night – between parts 1 and 2 of the show I was forced to watch an Ikea ad, no way of skipping it having watched the ad in its entirety at the very beginning of the show. Nothing against Ikea, but being forced to watch it a second time caused me to stop watching the show. That policy is highly irritating and certainly lost me as a watcher.

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