While broadcasters, cable programmers and multichannel operators have made significant progress in delivering more content to more devices, this year's biggest tech trends indicate that the development and delivery road ahead remains rocky and at times uncertain.
"It's all about mobile devices," said CNET editor-at-large Brian Cooley, when asked to name the biggest tech trend broadcasters need to watch at the 2013 International Consumer Electronics Show this week, and throughout the year. "Smartphones and tablets are where the action is in terms of innovation and in terms of finding new revenue streams for content."
Growing mobile revenue into significant businesses remains difficult, however. Even though mobile is now a mainstream technology, with some 160 million smartphones in the U.S. and mobile traffic approaching or exceeding traffic coming from computers, revenue has not kept pace. Magna Global estimated U.S. mobile ad revenue grew 78% in 2012 to $2.8 billion. That amounts to only 8% of U.S. digital ad revenue and 1% of the total, noted Vincent Letang, executive VP and director of global forecasting at Magna Global.
The best technologies for reaching mobile devices also remain in flux. Broadcast station groups backing the Dyle TV effort have launched mobile DTV broadcasts in 35 U.S. markets covering about 55% of the population. Another consortium, the Mobile 500 Alliance, is testing a similar service that uses broadcast spectrum to deliver live TV to mobile devices.
But only a small number of devices can receive those signals, and many broadcasters are also starting to stream TV news and programming over regular cell networks. That means 2013 will be a pivotal year for determining which approach will attract more viewers and revenue.
The Great Social-TV Shakeout
Last year saw hefty investments in social-TV companies. Yahoo's Viggle acquired GetGlue; Comcast NBCUniversal, Viacom and News Corp.'s BSkyB took stakes in Zeebox; and many major broadcast groups linked up with ConnecTV for second-screen apps tied to local newscasts.
As a growing number of social media companies battle to attract users, a number of multichannel providers have or will be launching second-screen apps. These apps eventually will use social media to recommend programs, then allow viewers to use their mobile devices to watch a show that might be trending high on Twitter or some other platform.
If this catches on and a significant number of people start using social- TV apps to figure out what they should be watching, networks will have to pay even more attention to social media and develop ways to get their shows to trend into these rankings.
Originals, OTT & Finance
While the rise of online video has provoked a number of proclamations about the end of TV, little evidence suggests over-the-top (OTT) video is affecting TV viewing (which remains higher than it was in 2008) or multichannel subscriptions, which are also larger than ever, said Jack Wakshlag, chief research officer for Turner Broadcasting System, citing data from Nielsen and SNL Kagan.
TV execs need to keep close tabs on a much quieter revolution, however: the huge investments being made in online video, either for original productions, or the fees being paid by OTT players for movies and shows that might have once gone to TV. The financial clout of these OTT players became apparent in December, when Netflix beat out Starz for exclusive rights in the pay-TV window for Disney movies.
Less immediately threatening -- but possibly more interesting in the long run -- is an explosion of original online content. Today, much of this is less-expensive fare or niche programming that poses little threat to TV programmers. But as online video advertising grows from about $3 billion in 2013 to $7.5 billion in 2016, according to PricewaterhouseCoopers, investments by Amazon, Google YouTube, Hulu, Microsoft, Sony, Netflix and others could lay the groundwork for more serious competition.
"I don't think the production of original online content has gotten the attention it deserves," said Anthony Wood, founder and CEO of Roku. "Amazon is producing original content. Netflix is producing original content. The OTT brands [are] branching out from back-catalog to original content. It isn't clear how this will impact TV incumbents....But it will certainly produce more choice for consumers."
TV Everywhere 2.0
Big investments in original online content highlight the importance of the TV Everywhere initiative to make content available on computers, smartphones, tablets, smart TVs, gaming consoles and other devices connected to the Internet. Most would agree this has gone slower than major industry players would like. "TV everywhere is really not everywhere and the shows I want to watch may not be necessarily there when I want to watch," says Vivek Khemka, VP of product management at Dish.
Operators stress this is changing as more programmers jump on board. But as they work to add more content, they are also working to improve the user experience in a way that will ultimately change the way people watch TV.
Matt Strauss, senior VP of digital and emerging platforms for Comcast Cable stresses that they are looking to add more live TV channels to the on-demand content they already offer; improve and personalize their second-screen apps to make it easier to find content; streamline the authentication process; and work with programmers to find ways to create new ad revenue from the content being delivered to multiple platforms.
Broadcast Equipment Vendor Bender
The fact that many of the biggest tech trends impacting TV come from outside traditional broadcast technologies highlights some huge challenges facing vendors of broadcast equipment in 2013 and beyond.
As more broadcasters move to IP- and IT-based infrastructures that are less costly and better designed to distribute programs to Internet-connected devices, traditional broadcast equipment vendors have been working to expand their product range, touching off a wave of mergers and acquisitions.
Thanks to those changes, the investment firm Silverwood Partners estimates that companies producing over half of the broadcast equipment industry's revenue were involved in mergers or acquisitions in the last 18 months. More deals are likely over the next year as bigger companies buy out smaller players for their technologies and other money-losing operations shed assets.
That means broadcasters will have to take an even closer look at the future of their equipment suppliers. Do they have the financing to weather this storm and continue to support the products they're selling at NAB in the future? And equally important, are they developing technologies that will help broadcasters make the difficult transition into this IP world?
E-mail comments to email@example.com and follow him on Twitter: @GeorgeWinslow
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