Thoughts on the Future of TV and Video

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4Q 2018 | IN-5250

Whether many of us (at some deep-down unconscious level) are fatalists who believe our destiny lies in ruin or perhaps we simply have a case of schadenfreude, we often gravitate towards negative news, and as a result have a tendency to look at the larger picture illuminated by this negative light. While a healthy dose of skepticism is valuable, we would be remiss to ignore alternate pathways that produce more favorable results. This is especially true of the TV and video market. Take, for example, the arrival of YouTube and how the media and many within the industry reacted. For a period, individuals started sounding the death knell for pay TV because no one would pay for cable if everyone could get it for free, on their schedules and whenever (and eventually wherever) they wanted. If we look at pay TV subscriptions in the United States, however, we see a very different result.

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Adapting to Changes in the Video Market is Difficult, but Opportunities Await

NEWS


Whether many of us (at some deep-down unconscious level) are fatalists who believe our destiny lies in ruin or perhaps we simply have a case of schadenfreude, we often gravitate towards negative news, and as a result have a tendency to look at the larger picture illuminated by this negative light. While a healthy dose of skepticism is valuable, we would be remiss to ignore alternate pathways that produce more favorable results. This is especially true of the TV and video market. Take, for example, the arrival of YouTube and how the media and many within the industry reacted. For a period, individuals started sounding the death knell for pay TV because no one would pay for cable if everyone could get it for free, on their schedules and whenever (and eventually wherever) they wanted. If we look at pay TV subscriptions in the United States, however, we see a very different result.

ABI US Pay TV Subscriptions

It took 8 years before total pay TV subscriptions in the U.S. market declined and 10 years before the market started to see a consistent erosion of pay TV subscribers. The sky didn’t fall (just as people still pay for music today), and, as is more often the case, the transition to new platforms and services (or technologies) is more gradual than jumping off of a cliff (even though the latter would inevitably generate more press). While traditional pay TV numbers continue to decline, some of this is offset by the emergence and growth of vMVPD subscriptions (e.g., DirecTV Now, Hulu, PlayStation Vue, etc.). This more gradual shift, however, still poses problems for some companies within the video value chain (e.g., suppliers of specialized hardware), and this should raise some flags.

There are companies that view the market and its transitions through a lens that sees the proverbial pie shrinking no matter the outcome, but in many cases, there is a redistribution of value that is happening outside of these companies’ typical competitive landscape. The shift from specialized to commoditized hardware driven by software is certainly shifting the opportunities to different players, and virtualization is going to continue. Digitization and content moving to the cloud also opened the doors to TV Everywhere and mobile video, and this further created angst among traditionalists who saw a future where everyone just watched video on their smartphones or tablets. Next, people started to prep to ring the bell on the TV itself. We all know this hasn’t happened, but this does beg the question of what does the future of video look like?

 

Ubiquity of the Video Feed

IMPACT


The industry, of course, has had other extreme cases where the sky was expected to start falling (but didn’t, at least not yet): case in point, as much as people have believed that set-top boxes would go extinct (and some have tried to make this happen), these devices are still found in consumers’ households. One more recent area is VR or, more broadly stated, XR. Going back as recently as 1 year ago, VR and 360 video were generating significant buzz at conferences and within the industry, but step forward to 2018 and it’s as if a switch was simply turned off. For some, VR has earned itself a similar reputation to 3D TV—something that really did fizzle out to insignificance—and discussions with a significant number of companies supporting video workflows mirror similar sentiments. It is, however, early days, and if we were to draw a parallel, the XR market is not too divergent from the nascent smartphone days, when it too was best utilized within the enterprise space before it became the essential piece of tech it is today. It is too early to say if XR will (or will not) become the next great compute platform (but something will inevitably serve in this role), but one common thread in a growing number of video prognostications is a near ubiquity of displays.

If consumers simply migrated all viewing to mobile devices, the ubiquitous display would loosely be true, via one display that is always on the user. Mobile video continues to grow, but connected CE is growing at a faster rate, and some value chain players are already projecting that it will become a dominant platform for streaming media (and monetization opportunities). Clearly, the market is more complex than following one simple early trend and extrapolating it throughout a forecasting window. Ultimately, consumers still prefer viewing longer periods of video in the lean-back experience, and the TV remains well-suited for this role. With the TV’s future secure for now, the expectations for the ubiquitous display(s) takes on a different look.

Some expect numerous displays within the home, fueled by new display tech like transparent and/or flexible panels and displays in common surfaces (tables, mirrors, walls, windows, etc.). Other upcoming technologies, like autonomous vehicles and 5G, extends the touchpoints for content and for all cases drives home the importance for connectivity and information/data. A user’s digital footprint coupled with their social networking, calendar(s), virtual assistants, etc., will all more seamlessly work together to help bring bridge the divides between currently disparate viewing experiences. This is also an area where XR can play a role: instead of a multitude of physical displays, XR could convert any surface or open area into a virtual display. Regardless of how we get there, content (and the ways we monetize it) will diffuse into more areas than we see today.

New Tech Means New Opportunities

RECOMMENDATIONS


Rather than dwell on the potential negatives or pain inherent with change, we need to focus on the opportunities created by these new pathways. For example, ATSC 3.0: while 2.0 didn’t make the splash that some had hoped, version 3.0 could play a significant role not only in the TV space (and among cord cutters/cord nevers) but also in mobile. With a return channel, this will enable more opportunities for dynamic advertising, and if mobile device manufacturers include an ATSC 3.0 tuner, then a larger role in mobile video as well. The latter seems like a win-win, but for those operators that still generate additional revenue from tiered data plans, the prospect of moving the largest consumer of data to OTA could damage this revenue stream. ATSC 3.0 is still at least a couple of years away, but then again other technologies like mainstream XR, 5G, autonomous vehicles, etc., are still sitting on the horizon as well.

Investing in these new opportunities today does not necessarily mean a company has to have a VR app or start building out its support for video on every potential screen that might exist. Many of the building blocks are only starting to get laid, and there are opportunities in the here and now by laying these foundations. Dynamic advertising and ad tech are hot topics and a vital component of any future vision of the video space. Addressing areas like low latency, even if it is only matching broadcast levels, is worthwhile today not only to provide a better UX but also to push the conversation forward to prepare for a future where more types of video could require ultra-low latencies. AI/ML is another hot topic, and while much of the dialogue today is around gaining efficiencies (e.g., automating metadata collection) or optimizing workflows, these technologies will play a larger role in integrating different platforms and experiences beyond the traditional video-centric channels that we use today.

The future of video might look different and reach viewers via different means, but in the end, all of the things that we value and enjoy about the video experience will still be with us. The sky won’t fall, and while there might be some growing pains along with occasionally awkward moments, the end result will be an industry better suited to meet the needs and demands of its viewers and ready to take on whatever plans the future has in store for it.

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