Bringing TV to Life, Issue II

The race to dominate the future of TV

Accentures Point of View series Bringing TV to Life focuses on the fast developing world of Over-the-Top TV (OTT-TV). The convergence of the Internet and TV is revolutionizing the broadcasting industry and has the potential to transform the market for every playerboth established and those that are just emerging into this exciting and dynamic environment. In creating this series, our goal is to analyze the dynamics driving OTT-TVs rapid evolution. We aim to build an understanding of the market drivers and the technology and business trends that are radically reshaping the video industry. Our perspective reects the experience matured with different players at all points of the OTT-TV eco-system. We also make extensive use of Accentures primary industry research and surveys that offer vital insights into fast changing consumer behavior, wants and preferences. In this second Point of View in the series we focus on outlining the new competitive environment that is forming around OTT-TV. We examine some possible scenarios that may emerge as a result of the competitive trends we see in the market. And to complete the picture, we draw on dedicated OTT-TV research to understand how consumer behavior is exerting a powerful inuence, reformulating traditional thinking and industry approaches to shape a new and very different world of TV, full of opportunities and challenges. Our series aims to help all the players in this rapidly evolving space to get fully up-to-speed. Watch this space.
Bringing TV to Life 1

Dispersion2 = 2.70

Introduction

6.0

Netflix, 5.92

How Over-the-Top TV is reshaping the video industry

The box in the corner of the room is breaking out. The impact of the Internet on TV is only the beginningbut its already changing everything. Consumers are taking control of their own viewing, creating personal schedules and using different devices to dip into video when and where they want. The Internet has grabbed the remote to control a whole new world of TV viewing. And everyone in the industry needs to tune in.
TRS Monthly Values

5.0

4.0

3.0

2.0

1.0

CBS, 3.61 Sun TV, 3.07 ITV, 2.83 TWC, 2.75 RTL, 2.71 Antena 3, 2.22 DirecTV, 1.93 TIF1, 1.84 Dish TV, 1.80 BSkyB, 1.62 Comcast, 1.61 Televisa, 1.49 Nippon, 1.45 Mediaset, 1.41 Canal Plus, 1.33 Tokyo Br, 0.91

0.0 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Mar 10 Apr 10 May 10 Jun 10 Jul 10 Aug 10 Sep 10 Oct 10 Nov 10 Dec 10 Jan 11
Pay TV Segment Free-to-Air Segment

Figure 1 Accenture Shareholder Value analysis: the broadcasting industry The broadcast sector (both pay and free) is emerging from one of the toughest periods in its history. During the recent recession macroeconomic forces combined to provoke panic within the industry and drain investors condence. While the upturn in the economy has given traditional broadcasters some nancial stability, the current bounce should not obscure some of the more structural trends and issues that still threaten to overwhelm media businesses that do not embrace and speed up their digital transformation journey towards a multiplatform digital era. The performance of Netix versus the more traditional pay and free-to-air broadcasters clearly highlights the different expectations that nancial markets have about the sustainability of traditional broadcasting business models, and the potential of truly interconnected business to consumer models to gain traction and generate value at scale. IPTV and Internet TV are often confused with one another, but in fact they are quite different. IPTV has matured (in the few countries where it has been able to grow) into another form of pay TV, and involves the delivery of high quality video content to a captive consumer device over a managed network. Internet TV (or Over-the-Top TV), dened as the distribution of video content to a wide range of IP-enabled devices (TVs, PCs, mobile phones and tablets) over the unmanaged Internet, has the potential to shift the existing balance of power within the broadcast sector and the wider communications industry. Back in the late 70s a very popular song celebrated the golden age of a radio industry that was then on the brink of demise at the hands of TV. Internet Killed the TV Star could be a potential hit in the charts of 2015. We have entered a new era, an era where even if TV remains the primary screen for video consumption, the long-term fragmentation of the audience will challenge traditional TV business models in yet another example of media meltdown. Deep convergence between television and Internet has nally arrived and as a result media companies can no longer ignore fundamental differences in the underlying business models and in the enabling technologies design principles. Some of the sources of competitive advantage of the traditional broadcast model are being questioned: Proprietary and vertically integrated distribution networks are being challenged by open broadband distribution and linear top down programming (complemented by catch-up and video-on-demand). Moreover, the traditional rights windows, which gave broadcasters almost monopoly over quality content, have multiplied, and business-tobusiness revenue models are now being questioned by potentially superior business models that are based on a deeper and more direct relationship with the end consumer. In the rst Point of View in the Bringing TV to Life series, issued in 2010, we focused on dening the Over-the-Top TV (OTT-TV) phenomenon and understanding its differences with IPTV and its relationships with the online video space. In this latest installment of the series we will focus on:
understanding outlining

the increased competitive pressure brought to the broadcast sector by Internet TV with players from different backgrounds attracted by a multibillion dollar industry segment with high price earnings ratios; and

presenting

the drivers behind the acceleration of Internet TV and identifying some of the enablers and challenges that could facilitate or limit its mass adoption;

some potential end state scenarios for the industry and the key capabilities that successful Over-the Top providers need to build.

2 Bringing TV to Life

Bringing TV to Life 3

Vision and reality

The once pristine vision of convergence between broadcast and broadband technologies is being overtaken by the messy reality of conflict and volatility with little clarity about what lies ahead. The outcome of this volatility is uncertain at best and will clearly vary across geographies and different regulatory frameworks.

The TV screen is both a gold mine and a mirror in which broadcasters can take stock on a daily basis of the need for change in their business models. A direct attack on that screen by players coming from outside the TV industry (electronics companies, Internet aggregators, telcos, and so on) will raise and is raising, attention levels and driving reactions. In this paper we will argue that these reactions will need to be built not on the traditional sources of broadcasting competitive advantage but instead on new elements that are derived from the Internet experience, and will include the need to ensure: and ubiquity across platforms rather than walled gardens built on proprietary devices and networks;
standards

seamless

integration across linear and non-linear TV, broadcast and broadband;

the

ability to partner with other industry players rather than attempt ing to rebuild vertical integration in the industry value chain;
a

Clearly the threat of new players entering the broadcasting space by leveraging Internet TV is real, is happening now and is a major issue. But we argue that if Google can become a broadcaster then the new order could also see a broadcaster becoming a Google. Amid all this uncertainty, however, one thing is sure: todays video consumers have never had it so good!

true multi-screen approach;

not

just content (which could become a king without a crown) but consumer content services that leverage the effective use of different screens to build consumer stickiness and loyalty; and established players having the humility to recognize that they need to invest in new capabilities (such as consumer insight, service creation, and application development).

large,

4 Bringing TV to Life

Bringing TV to Life 5

The winds of change are blowing

The Internet has become a mainstream news and entertainment medium, but its path to such scale has been far from smooth. On the way it has met resistance and disrupted many long standing media businesses, publishing being one of its first victims.
Germany UK

Average USA: 31 min 35 min

86.5% Total: 258 min 13.5%

33 min

88%

Total: 275 min

12%

Spain
31 min
88.2%

Total: 265 min

11.8%

France

24 min

90%

Total: 236 min

10%

Italy

20 min

92.4%

Total: 266 min

7.6%

Linear TV (2010 avg)

Online Video (Dec. 2010)

Figure 2 Average daily online video consumption in EU-5 and United States Generally speaking, the Internet disrupts media businesses in three ways: It removes barriers to distribution, which previously provided the basis for monetization. It provides an abundance of free content that shapes consumers expectations that content should always be free and therefore undermines models based on scarcity. And it grabs a larger share of the time that consumers devote to other media. The current reigning champion of Mediatelevisionhas thus far remained relatively unaffected by the rise of the Internet. Three pieces of evidence offer proof that:
Television

broadcast rights continue to command world class price tags (NBC recently agreed to pay US$2billion for 2010 and 2012 Olympics); paid programming on cable and satellite has recently provided some of the only bright spots for recession-battered TV companies;

Consumer

But there are a number of strong forces driving unprecedented change in the broadcast industry. Broadband penetration is on the rise across the world. In the EU, the five most connected countries have an average broadband penetration of 50 percent, and 80 percent of those connections are of sufficiently high bandwidth to support OTT-TV consumption.2 Gartner predicts that by 2014 broadband connections globally will number 644m.3 And all this connectivity means online video consumption is on the rise. In the United States in December 2010 there were 88.6m unique daily online video consumers and almost 179m in an average month in 2010.4 Usage is also increasing considerably as figure 2 shows, although, and this is very important since it reinforces the need for seamless integration between the two worlds, this is not at the expense of linear programming.

Although

skyrocketing, online video consumption seems not to be at the expense of linear TV but instead is incremental and additive.

1 Gartner Industry Research, Two Roads to TV 2.0, March 24, 2009. 2 Source: e-Media Institute Web-TV Intelligence & Strategies, March 3, 2011. 3 Gartner, Emerging Technology Analysis: Broadband-Connected Televisions, Consumer Technologies, September 23, 2010. 4 Source: e-Media Institute Web-TV Intelligence & Strategies, February 22, 2011.

Patterns of video consumption are changing fast and the new video consumer has become a complex, multifaceted user whose needs and wants require a customized approach. The active vs. passive differentiation has become less relevant only because active consumption has become more mainstream and has spilled from young people to other demographic segments. Consumers are increasingly used to viewing content on their terms and not by appointment. This means that loyalty is increasingly directed towards content brands rather than channel brands. Understanding how consumers find and access content is becoming critically important. On-demand services, catch-up TV, recommendations rather than electronic program guides, social networking applications, convergent services, which follow the consumer across devices (watch on PC, continue on TV, receive advertising and extras on iPad) are all key to remaining relevant in this new and rapidly evolving space.

Time spent watching TV is still rising, even among the younger generations, and live TV is by far the largest component of video consumption, especially in Europe. According to Forrester research, even in the most sophisticated digital markets such as Sweden and the UK, more than 70 percent of the total hours spent watching TV each week are devoted to live broadcasts. But the multiscreen audience is growing and the share of the European consumers who exclusively watch TV on a TV screen is decreasing fast. In 2009, only 63 percent of European internet users watched TV only on TV, down from 80 percent in 2007.5

Last, but by no means of least importance, Gartner estimates that by 2014 manufacturers will produce over 70 million broadband connected TV sets worldwide.6 If we add to this the number of Internet-enabled gaming consoles and set-top boxes it soon becomes clear that we are close to seeing mass adoption.

5 6

Forrester Research, The European Three-Screen Audience Is Growing, But TV Still Reigns, April 22, 2010. Gartner, Emerging Technology Analysis: Broadband-Connected Televisions, Consumer Technologies, September 23, 2010.

6 Bringing TV to Life

Bringing TV to Life 7

A battlefield or a chessboard?

Even though it is still only in its formative stage, the emerging world of Internet TV already has a fairly well-defined set of players. We see a number of distinct groupings of these players emerging, each with their own distinctive sources of competitive advantage to deliver video content to consumers from outside the traditional paths of linear programming (terrestrial, satellite and cable). These players can be grouped around four main sources of power: content, service, device and cloud.

others do not take over their position. In recent years, broadcasters have seen their monopoly over auto-produced content eroded. Rights holders (such as the football leagues) and the major studios hold the vast majority of the much needed on-demand content and could themselves have the same ambitions as traditional broadcasters.

Service power
Represented by the telecommunication companies who act as consumer and service provider aggregators (triple play/four play). These companies serve as single point of contact and a common user interface to the consumer over any device and in most cases owning a content delivery network (CDN), which can guarantee the much needed quality of service.

and widgets on which to host or provide on-demand services. On one hand they clearly have great consumer traction and the ability as global players to negotiate global content acquisition deals, but on the other it is hard to envision a world of proprietary standards in which consumers decide which TV set to buy based on the content it carries. (However, it should not be forgotten that one of the leading manufacturers, Sony, is also one of the largest original content producers and distributors in the world.)

Content power
Represented by the traditional broadcasters (free and pay) that see Internet TV as a way of delivering new consumer experiences directly to consumers without being intermediated by telecommunication companies and IPTV providers. While they see Internet TV as a great opportunity to evolve towards becoming consumer companies, they also need to take care that

Cloud power
This group introduces a new concept, encapsulating the ability to deliver cloud-based infrastructure and services for management and distribution of video to any Internet connected device. While this group may lack the needed media market expertise to strike significant content deals, they have developed a critical ability to intercept and manage the needs and behaviors of the online consumers.
Bringing TV to Life 9

Device power
Manufacturers of TV sets, PCs, and hybrid set-top boxes who have the opportunity to become access gateways and develop their own platforms

8 Bringing TV to Life

Co nte nt

r we o P
Sports Leagues/ Rights Holders Studios FTA Broadcasters

Clo ud
r we Po
Google Hulu Amazon.com Video Consumers Netflix

Cable/IPTV Operators

STB Manufacturers Electronic Manufacturers

Po

we

v De

Figure 3 A competition framework Now, what are the key success factors and the new capabilities that will be required to succeed in this new competitive environment? There is a wide range of both adapted and wholly new forms of behavior and abilities that players will need to acquire in order to be successful. These include:
The The

ability to create the future platform for content consumption. The video market is the evolution of a platform that connects content creators, advertisers and consumers. Successful players in the past managed to define unique platforms (NTSC, PAL, SECAM) and adapt the ecosystem to it. The same thing will happen to online video consumption. This implies the need to be present across non-proprietary devices and platforms, in particular connected TVs and gaming platforms, the latter being the next big thing in terms of competing for the time and attention of users on the TV screen.

need to provide seamless integration across linear and nonlinear services on hybrid broadcast and broadband devices. As mentioned before, linear TV remains the largest component of video consumption and VoD and catch-up services become even more indispensable on the back of a strong linear and live programming.

The

experience and insight to shape and successfully deliver partnerships across the industry value chain in a context where traditionally vertically integrated value chains are fragmenting and exploding. ability to attract and aggregate content and value-add services from a multitude of sources in a way that consumers find easy to use, and identify and present them with relevant, personalized content.

The

The

ability to understand CDN-based and cloud-based content distribution mechanisms and platforms. capability to leverage consumer insights in order to develop tailored and personalized video services across all IP-based platforms (vs. traditional top down programming schedules) to build loyalty throughout a 360-degree consumer experience and, crucially, to monetize them.

The

10 Bringing TV to Life

ce

Po

Telecommunication

TV set Manufacturers

we

Se

r vi

ce

Bringing TV to Life 11

Making the headlines

Creation Aggregation
Right Dealers Program Packagers Content Aggregators

Distribution
Network Operators Access Providers

Consumption
Devices Manufacturers Users

Value Chain

Right Holders

Content Creators

Description

Includes music, movies, news, sports, television programs, and video production and adoption to web video (User Generated and Professional)

Content Management Content Aggregation Content Scheduling Content Transcoding Content Presentation Standards Conversion

Provides the video distribution network DTT/Cable/IPTV/IP Satellite Next-Gen Wireless 4G. LTE

Render content 2-way IP communication Integrated media ingestion (OTT-TV/Linear) through consumer electronics

Movement Trends

FOX, BBC, Disney, MGM, Paramount, NFL, Warner Brothers, Sony BMG, Universal

ESPN, ABC, NBC, Discovery, HBO, FOX, CBS, CNN, Vudu, Veoh, Google, BBC, iPlayer, Hulu, Netflix COX, Time Warner Cable, Comcast, CableVision, Verizon, AT&T, Dish

Cisco, Sharp, Apple, LG, Samsung, Motorola, Roku, Sony, Vizio, Intel, Tivo, Microsoft, Panasonic

Figure 4 The emerging OTT-TV value chain Since the birth of commercial television, TV broadcasting has been dominated by a limited number of stakeholders (the networks, the TV manufacturers and the advertisers) and has been ostensibly local in nature. Today the future of TV is clouded by an overabundance of stakeholders, most of whom have a defensible position in televisions future. New stakeholders such as telcos, web search engines, portals, new media titans such as Apple and Microsoft, and other electronic manufacturers are all looking for a significant stake in the future of TV, even if revenue models for next generation broadcasting remain a mystery to most of them. Some of these players are truly global in nature, this means that for the first time competition is becoming extra-territorial, and with that change comes a whole new mindset. Over the last twelve months we have witnessed a wide array of public announcements and a number of service launches. Every player in the industry value chain is clearly marking their territory and planting a flag in the future landscape of television. However, very few of these launches are real industry plays. Most of them tend to be individual efforts in a very fluid and complex environment. We believe that rather than an all against all battlefield (which is what the competitive landscape looks like today) the situation will come to resemble a chessboard, where alliances, partnerships and commercial collaborations across different players will become key imperatives for success. Speed to market and agility are must have qualities in this space, but so increasingly is the ability to assess and understand the complementary capabilities of competitors and reward them accordingly to ensure a larger slice of the overall pie.

12 Bringing TV to Life

Bringing TV to Life 13

Center of Gravity

Fast forward: What scenarios in the future?

Rather than a clear future scenario in the medium term, we see the coexistence of several business models and value chains, depending on local market conditions, industry structure and regulatory frameworks.

Expanding
Right Dealers Right Holders Creators Program Packagers Content Aggregators Network

Dominating
Access Device Manufacturers Users

Scenario 1 Content is king

Traditional Telco Center of Gravity Dominating

Right Dealers

Expanding
Content Aggregators Network Access Device Manufacturers Users

Right Holders

Creators

Program Packagers

Scenario 2 Devices drive users

Center of Gravity

Traditional Telco

Dominating
Right Dealers Right Holders Creators Program Packagers Content Aggregators Network Access Device Manufacturers Users

Scenario 3 Aggregators rule

Traditional Telco

No Explicit Center of Gravity

Right Dealers Right Holders Creators Program Packagers Content Aggregators Network Access Device Manufacturers Users

Scenario 4 Scattered playing field Besides the current all-against-all scenario (which is not sustainable in the long term) we envisage four main scenarios: option to negotiate a carriage fee, trying to extend their role to locally relevant functions such as content delivery, content encoding and digital right management (DRM) settlements, local front end/shop management, local support, and digital home integration. Over the years, broadcasters have progressively lost a significant degree of control over content and increasingly rely on specialized/independent producers. If they do not act swiftly in the Over-the-Top space by developing compelling multi-screen strategies, they could face a considerable loss of relevance in the on-demand world, succumbing to the fast growing content brands and being disintermediated by them in relationships with consumers.

Traditional Telco

2. Devices drive users

This scenario sees users buying content through the walled gardens that device makers manage to establish (i.e. an extension of the iTunes model to devices and operating systems), with content rights holders sharing revenues with the device makers. There is a substantial failure to build a unique platform (as is presently the case in the gaming business), and the role for broadcasters and carriers changes:
Broadcasters

3. Aggregators rule
To some degree, this is the natural extension of existing business models, with a complication owing to the fact that the platform to deliver video services may not be unique (as currently happens with broadcasting). In this case users still prefer specific shops to consume content, with the difference that jumping from shop to shop does not require cord cutting. This is more like the mall model, where the success of retailers is determined by their ability to provide the best personal user experience, shielding the user from complexities derived from technology, devices, and payment models. In this scenario, there is a role for most of the players in the ecosystem:

Aggregators: focused on content acquisition, best user experience, commercial relationship with the customer; Platforms: focused on service enablement, technology complexity, device support, content lifecycle, security (this role may be taken by both aggregators and carriers); and Carriers: focused on content delivery, user support, digital home enablement. This scenario sees broadcasters fighting for relevance and position against the Internet aggregators, such as Netflix and Google TV. Hybrid devices, seamless integration with linear programming, ubiquity in terms of platforms and the ability to provide multi-device services with specific value proposition, rather than just replicas of the original TV service, become key capabilities in order to succeed.

4. Scattered playing field

In this scenario, participants across the entire ecosystem fail to create partnerships and value chains remain highly fragmented across geographies and types of content. Unresolved conflicts of interest between industry participants mean few major deals and the opportunities from OTT-TV are not fully realized. A lack of standardization across devices and content formats means consumers have to engage with different content providers and create multiple, overlapping relationships. In this fragmented scenario (which most closely resembles where the market finds itself today) there are no clear winners with content from many sources on many different devices. Telecommunication companies could play an enabling role, helping consumers to connect up all the services, devices and content they need.

1. Content is still king

In this case, content rights owners manage to create a unique platform for content consumption that seamlessly supports most devices. Disintermediation is pushed to the limit, letting users establish a direct link to the major shops, and the leading brand is the content brand. User choices are driven by content rather than other factors, and business models are extremely shortened. In this scenario, traditional aggregators have a reduced role in the best case (i.e. the cord-cutting nightmare), and carriers have the

could try and build strong customer relationships leveraging better customer insight and providing a more localized user experience. This would require the support of all devices, so that users can access the same branded experience across all of them.

Carriers

should try to build the underlying platform that unifies the user experience across devices, addressing technological complexity and supporting aggregators in the multi-screen play.

14 Bringing TV to Life

Bringing TV to Life 15

The ultimate stakeholder: The consumer

The era of broadband video is here, and its influencing the viewing behaviors of more than just younger generations. According to new research from Accenture, high percentages of consumers of all ages around the world are now watching video content over the Internet via a PC or TV.

50% 40%

40%

30% 24% 20% 14% 12% 11%

Having interactive/ social networking functionalities

10%

0%

Catch-up TV to pause and watch at leisure

Personal Video Recorder (ability to store and watch whenever)

Surfing the web on your TV

Ability to watch the content on other devices

Total

US

Brazil

UK

Germany

Italy

Spain

Australia

Figure 5 Most important video-over-internet service feature: total and by geography In this environment of overwhelming market potential its more important than ever for all players in this space broadcasters and content providers as well as network operators and other kinds of communications companies to have a better understanding of changing consumer behaviors and interests, so that they can direct their investments effectively. To give companies deeper insights into their target customers as they launch or extend broadband TV and video capabilities, Accenture has conducted a global survey of more than 6,500 consumers around the world across major geographiesthe United States, United Kingdom, Australia, Brazil, Germany, Italy and Spain. The results of Accentures 2011 Video-Over-Internet Consumer Usage Survey provide companies with a view not only of current trends, but also of where those trends are leading, both in terms of video viewing habits and where revenue growth may most likely occur. Although traditional linear TV offerings still dominate consumer viewing habits, that dominance is already open to question. The results from the survey show how the new consumer is evolving: They are using multiple devices to watch video content and they are multitasking while watching video on a traditional TV set (over 48 percent of respondents use a laptop while watching TV, and with tablet penetration set to reach mass market levels, this is clearly going to increase). They are also looking for an anytime service on TV through catch-up rather than hardware based personal video recorders (PVRs). And they are very clear about the role of each device and how each of them connects together. They also see the PC as an extension of the TV set to watch or record programs via their laptop. Whats more, these behavioral traits are not specific to the Millennial generation (the 18-24 age bracket) but are rapidly spilling over to older generations.

70%

60% 49%

50%

40% 27%

30%

14%

20%

10%

0%

Quality of service (i.e. clarity of the picture, speed of content delivery)

HD (high-definition viewing)

User interface and ability to find and manage video content

Total

Male

Female

1824

2534

3544

4554

5564

Figure 6 Most important video-over-internet technical feature by gender and age

16 Bringing TV to Life

11%
Quality of recommendations of videos/ shows I might be interested in viewing

Bringing TV to Life 17

Consumers strongly indicate that they are ready for a true multi-device experienceone that goes beyond simply replicating traditional TV on another device, and instead creates a new experience where content is important, quality is critical and personalization of the service is a must. Over-the-Top TV can succeed if companies understand and embrace these new consumer behaviors.

Core beliefs of Over-the-Top TV

Broadcasting Companies
TV set as primary screen
The TV Set remains the primary screen to generate revenue and win the customer PCs, Tablets and Mobiles are additive, having a key role as companion devices

Web experience
The key value of bringing the internet paradigm to the TV is around content discovery, recommendation, relevance and social not browsing the web Span linear and on-demand content, immediacy of content experience, no deep menus

Anytime before anywhere

Customers value time shifting over place shifting and three/four screen delivery

Content is king has been a standard phrase of the broadcast industry for many years. The statement remains true but in addition the quality of technical delivery of that content is now on the minds of many consumers. Asked to name the most important technical feature of Internet TV, about one half of the consumers we surveyed around the world (slightly higher in the UK and Australia) cited quality of service, clarity of the picture and speed of content delivery. This statistic is almost uniformly consistent across all age groups, too.

Different types of companies are experimenting with video-over-Internet services, and savvy players are learning both from past mistakes and current stumbles. Original IPTV offerings, for example, did not meet expectations because they tried to imprison consumers in proprietary, walled gardens. Mobile video has struggled with overcoming the restrictions of smaller screens and devices.

In general, openness is becoming an important marketplace characteristic, and also a key to success. Today, many players are jockeying for position in the Over-the-Top space. New stakeholders telcos, web search engines, portals, device and software giants, and more are looking to play a key role in how the industry evolves. This is now a wide open and increasingly global playing field.

Telecommunication Companies
Access as key unique selling proposition
To be successful in the OTT-TV space, telcos need to leverage their core USPs around access, network quality and customer proximity

Aggregation and indexing

Any aggregation play should aim for an open delivery platform that allows combining aggregated (i.e. own hosted) and indexed (i.e. referenced) content

Closing window
Window of opportunity to seize market and eyeballs is now and closing fast Set-top boxes are key now, but will disappear within years

The ultimate stakeholder, however, is the consumer.

18 Bringing TV to Life

Bringing TV to Life 19

Conclusion

The heat is on
Technological and business innovation is having a decisive impact on established distribution mechanisms in the video industry. And that creates major risks for the incumbent playersincluding broadcasters (both free-to-air and pay) and telecommunications companies (cable and IPTV) in what is now a mature market.

In response to these emerging risks, companies in both sectors are moving fast. But rather than pursuing tactical and ambitious product launches and new services, they need to make the transition to a more structured and collaborative go-to-market strategy. The need to collaborate arises from the lack of relevant knowledge, experience and capabilities that each has in vital areas of the video industry. Generally, broadcasters do not possess the required experience and knowledge of devices/access and of managing content delivery networks.

Telecommunication companies struggle to control content and package seamless multi-device linear and non-linear services. However, the requisite endto-end capabilities could be delivered through deeper cooperation between broadcasters and telecoms businesses, with each playing to its strengths. In this new space, vertically integrated business models are a thing of the past. Instead, broadcasters will move towards becoming true business-toconsumer operators, establishing a presence across all devices and providing seamless linear and nonlinear services. Telecommunications companies will not be relegated to merely acting as dumb pipes but will have the opportunity to provide much needed cloud-based multitenant capabilities in an enabling role (hosting, management and delivery of content) and in the connected home.

There is clearly no single recipe for how each market will develop; geographic differences, regulatory frameworks and different industry structures all create very different competitive contexts. But what is clear is that engaging in direct competition with one anotherand ignoring the benefits of collaborationwill simply make it easier for outsiders to enter the market. And as we have seen, there are powerful newcomers on the horizon.

20 Bringing TV to Life

Bringing TV to Life 21

About the Author

Francesco Venturini is the Global Lead for the Broadcasting and Entertainment Practice. With over 10 years of experience within Accenture, he works with major international media and entertainment companies and in particularbroadcasting companies. Francesco leads complex projects around Over-the-Top TV (OTT-TV) and Digital Terrestrial TV (DTT)helping his clients launch new innovative services, restructure existing businesses, and achieve operational excellence. He is a regular speaker at international industry conferences and an author of many strategic whitepapers around the topics of Over-the-Top TV, Rights Management, and Shareholder Value Management for Broadcasting.

Copyright 2011 Accenture All rights reserved. Accenture, its logo, and Accenture High Performance Delivered are trademarks of Accenture. This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative.

Contact us
To learn more about how Accenture can help your company achieve high performance by deploying services, content and infrastructure for advanced broadband video solutions, please contact: Francesco Venturini Global Broadcast Lead francesco.venturini@accenture.com Angelo Morelli Product Innovation offering area Lead angelo.morelli@accenture.com

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 215,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.6 billion for the fiscal year ended Aug. 31, 2010. Its home page is www.accenture.com.