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Digital Content Consumption will Take over Broadcast Sooner Than You Think!

The global TV industry is in the midst of a digital revolution. Online video has been spreading like wildfire, empowering consumers to watch what they want, when they want it, sometimes cutting TV out of the equation altogether. Digital is capturing markets by reaching out to users globally and giving lots of opportunities to individuals and start-ups to create and distribute their product on digital platforms and monetize it.

2017-18 is the year which will cement the change in the industry. The robust fixed-broadband infrastructure that is needed to meet the demand for online video is now available in most countries. Internet connectivity and data consumption for consumers is becoming a necessity second only to food, water, and shelter. For users who are on the go, improvements in data connectivity have enabled greater access to digital content, and devices that can access mobile video have saturated the market. By 2017, the number of tablets and Internet-connected, or smart TV sets will be nearly one billion worldwide.

To take advantage, there are many broadcast companies who are setting up digital PCRs to reach users through social media and apps. When it comes to digital content users do not just have a single platform to consume content like they do on set-top boxes, they can consume the same content across multiple platforms which are often competing even amongst themselves. Another important point is that because there are no guidelines for digital distribution that exist for the broadcast industry, the content can afford to take liberties not possible on broadcast.

This rise of online and mobile viewing has had important implications for the traditional subscription-TV business. It has shaken the price-to-value relationship of the bundle, because less traditional viewing equals less value for the bundle. This price differential is progressively moving to digital consumption which is driving the quality and availability of online content. Traditional studios have begun to invest in online productions, allowing viewers to access a wealth of excellent programming when and where they want it.

Business Models

The online and mobile ecosystem is structured around three business models: advertising-supported video on demand, which provides viewers with free access to a large library of video content supported by advertising revenues; transaction-based video on demand (TVOD), which allows consumers to own or rent content for a one-off fee; and subscription-based video on demand (SVOD), which allows consumers to access a large library of content for a monthly fee. The models are similar to broadcast, as broadcast in India derives majority of its revenue through advertising, with subscription revenues contributing up to 30 percent of revenues depending on the genre of content.

Increased collaboration. Many content creators, networks, and distributors have collaborated to deliver their traditional, facilities-based services over the Internet through TV everywhere.

More competition. Cable, mobile, and satellite operators are creating on-demand services, building navigation layers, and enabling consumers to view content on multiple devices. All the players are also hence becoming content producers.

Higher value for exclusive sporting events, pageants.  To enable stickiness, networks are spending more for premium sports and entertainment content to provide unique content not available across other platforms.

As companies move deeper into the online and mobile landscape, their mindset should not be that they are making a transition from physical to digital. They will have to understand where the business provides unique value and build new business models that deliver on this value. Some aspects of the business will contract and die, and it may mean that companies will actively cannibalize themselves. But online, mobile, and nonlinear viewing are here to stay, and companies that can successfully restructure their business models to keep pace with evolving viewer preferences have much to gain. And, if history is any indicator, the many that do not restructure their business models will face the consequences of value destruction.

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