Broadcasters meet applications

Thanks to a world of ever-evolving smart applications, television viewership has become a multiscreen experience. The disruption has become the new industry norm, and applications have not only reformed the traditional business models of broadcasters and pay-TV providers, they have also resulted in the rise of a new class of suppliers who leverage the power of the internet through mobile or web applications to reach end-users directly.

Today, broadcasters have a tough choice to make – if they don’t adjust their operating strategies, they are likely to fall prey to companies born on the internet.

To remain afloat and healthy, broadcasters need to consider how to sustain their businesses by leveraging TV-Everywhere applications. What new opportunities will these applications bring?

TV-Everywhere Applications

There are a large number of TV-Everywhere apps, from broadcasters, cable and satellite providers and standalone OTT operators. These include HBO Go, Watch ESPN, Cartoon Network, CNBC, Syfy, Comcast’s Xfinity TV Go, Time Warner Cable’s TWC TV and Dish Anywhere. The majority of these applications were launched within the last three years and provide authenticated access to full episodes of the broadcaster’s programming.

These applications are now approaching mainstream usage in the West as they steadily gain the rights to stream more content and continue with a heavy marketing drive that began a year or so ago. The main selling proposition is to offer a distinct user experience, built around an intuitive UI and complimentary content, intended to provide a deeper level of viewer engagement. To put this into perspective, Adobe’s State of the Industry Report 2014 states that TV-Everywhere viewing in the US increased 246% compared to 2013, driven mainly by interest in sports. Mobile video viewing saw a year-on-year increase of 57%, while overall online video was up 43% with more than 35 billion viewings.

In the Middle East, despite the popularity and high consumption of online video, monetising the opportunities has remained a huge challenge for all stakeholders – broadcasters, pay-TV providers and OTT operators. Content rights at the device level, a natural reluctance to pay for content and piracy have had a detrimental impact on the uptake for TV-Everywhere services, meaning services like OSN’s Go, Etisalat’s eLife, STC’s myInvision, Mobily’s mView and Icflix have seen only limited success. Nonetheless, these applications still provide new avenues for broadcasters to reach their customers anytime, anywhere. Going forward, we are confident that big data and social media will allow broadcasters to target customers with specific content based on user profile and preference, transforming this potentially lucrative market into a significant source of revenue.

Operational Boundaries

Broadcasters and other content providers need to keep in mind that content is still king and that programming represents the primary value to the end-consumers – TV-Everywhere applications are not just an added expense, they are an additional channel of distribution and an added stream of revenue. The goal is to keep subscribers happy by giving them access to content wherever they are. This means forming partnerships with multiple stakeholders to attract a wider audience and delivering via multiple channels, including smartphones, tablets, web and TV.

Partnerships with device manufacturers:

The popularity of the internet-based economy and the growing prevalence of OTT services, coupled with stiff competition, has forced device manufactures to look beyond their hardware and software and focus more on applications to entice customers. Broadcasters could partner with device manufacturers to preload their equipment with the relevant apps and offer subscriptions to premium services. Broadcasters will be able to take advantage of the manufacturers’ strong distribution network and marketing to attract new customers, while increasing propensity to pay among customers who have already tried their premium TV-Everywhere offering. Icflix, a UAE-based video OTT provider, recently used this approach through partnerships with Samsung and LG for their Smart TVs.

Partnership with telcos:

Regional telcos are constantly looking for new revenue streams and are incrementally looking to target 100% of their subscribers’ communication budget. One clear opportunity for broadcasters is to partner with integrated operators for delivery of their content through IPTV offerings. However, uptake of the IPTV services has been slow for most of the region’s telcos because of the limited reach of their fixed-line infrastructure, the high popularity of free-to-air TV and the high subscription cost. Recently introduced hybrid box solutions, which feature OTT to deliver content over fixed or mobile broadband, can help broadcasters significantly expand market reach. Another area where broadcasters benefit from partnerships with telcos is mobile apps on handsets, which has become  a key distribution channel. Although not yet standard in this region, operators around the world tend to pre-install certain applications on their smart devices. This is clearly an opportunity for regional broadcasters to not only increase their customer touch points but also introduce special tariff plans with free or fixed data allowances for TV-Everywhere.

Partnership with independent OTT providers:

Globally, independent video OTT providers such as Netflix, Hulu and Amazon Prime are becoming a key source of online video consumption, with their ability to offer large libraries of on-demand content attracting new users. Netflix alone has more than 50 million subscribers in nearly 50 countries. Broadcasters cannot afford to overlook the growing popularity of OTT providers, as they have the ability to rapidly scale up and gain market share. It’s interesting to note that Netflix already partners with cable providers to extend the reach of its services and facilitate the merger of linear with OTT television. Although video OTT providers are yet to have the same level of impact in the Middle East, their services are becoming increasingly popular, a message to broadcasters that they need to be prepared and prompt in developing partnerships.

These are indeed exciting times for the industry, with applications continuing to cross traditional business boundaries, innovation cycles incrementally diminishing and continuous service enhancements essential to delivering a superior user experience. In this era, having the right mobile application strategy is essential for broadcasters, as the success of a business model is defined not just in financial terms but also by the ability to continually engage customers and deliver innovative propositions in the market.

Meghali Sharma is Competitive Intelligence Manager – Strategy and Corporate Development at Intigral.