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IABM Future Vision Report

Fri 19, 01 2018

John Ive – IABM, Director Strategic Insight

One of the toughest challenges is to predict future trends. Those who are successful often do so through trial and error. It can be a percentages game rather than absolute right or wrong.

When this project was started, existing trends were researched but quickly exposed that in times of discontinuity and disruption, projecting and extrapolating from the past may not be helpful. The only way in which the past can be used is to learn from previous discontinuities and apply some of that experience to this new wave.

One of the toughest challenges is to predict future trends. Those who are successful often do so through trial and error. It can be a percentages game rather than absolute right or wrong - IABM Future Vision Report Click To Tweet

So, without a bunch of historical data to work on, one alternative was to synthesise the views of people who represent a broad spectrum of backgrounds and are known to be grappling with the same issues.

The next challenge was the construction of meaningful questions without constraining free thought. Constraints were necessary to give the work focus but the door needed to be left open for surprises and perspectives that were not foreseen.

Ambiguity exists in the questionnaire, it is impossible to totally remove, the developments we are debating are not independent, they overlap and are co-dependent. Consequently, several respondents pointed out these overlaps and that ambiguity is fully acknowledged.

Despite the challenges, of the fifty-people approached forty-five came back with responses, which is a phenomenal return rate, for which I’m are most grateful. The makeup of the group was the IABM awards judging panel supplemented by executives approached at IBC and kindly agreed to participate.

To give you an additional independent “flavour” of the responses, I have included a word field of the most popular words in each relevant section. The one on this page aggregates all responses.

The following results may not come as a surprise, but if they align with your existing beliefs, then accept this as independent confirmation. However, if there are surprises, even better!

So, to the questions…….

Question 1 – What do you think will be the most disruptive force in the Media and Broadcast industry over the next 5 years?

This is of course a very open question and was therefore interpreted in many different ways. Some considered the consumer implications, others distribution and the balance production. By just looking at the repetitive themes in the answers certain phrases emerged:

  • Changing consumer expectations
  • Internet / OTT distribution
  • The Cloud and Virtualisation
  • Content and production remain important
  • Broadcast decline, cord cutting
  • Hardware to software
  • Transition to IP
  • Netflix, Amazon, Facebook etc.

All parts of the chain, production, distribution to consumers face, disruption. Many felt that, since consumers eyes have been opened to the full range of possibilities for creating and consuming media, there is no turning back.

All parts of the chain, production, distribution to consumers face, disruption. Many felt that, since consumers eyes have been opened to the full range of possibilities for creating and consuming media, there is no turning back - IABM… Click To Tweet

Several commented about the impact on margins, both in the consumer and professional space. Hopefully, increased usage will see volumes increase at those lower margins, making for a profitable business. It’s a business philosophy change that some companies may find hard to adopt. One specific reply which stated… “CEOs are regaining control of their facilities” meaning that as technology becomes more of a commodity and less a restriction, business rather than technical decisions increasingly take centre stage.

Question 2 – In terms of delivery of Media and Broadcast content to consumers, rank the following methods in terms of growth potential (5-10 years)

This question produced interesting results but the stand-out observation is the strength of perceived Internet growth. This could have been even stronger as several respondents were unclear about the definitiion of IPTV, with the subsequent assumption that some votes should be transferred to the Internet categoty, a few to cable and the balance remaining in place. IPTV is a specific case of managed services (TV, Internet and Phone) over a single phone line. It operates in a very similar fashion to Cable TV, using the existing telephone line and without a separate dedicated cable.

In contrast to the positive aspects of the Internet, the prospects for Terrestrial, Cable and Satellite are not favourable and the word “decline” was frequently used for these delivery services.

In contrast to the positive aspects of the Internet, the prospects for Terrestrial, Cable and Satellite are not favourable and the word “decline” was frequently used for these delivery services - IABM Future Vision Report Click To Tweet

Care is needed with interpretation because there are strong regional variations. For example, Cable is struggling in North America but there is a modest up-tick for Terrestrial. Due to lack of bandwidth, the future for Terrestrial in Europe looks bleak. However, in China IPTV is strong.

Missing from the list was wireless mobile, telco delivered. Clearly an important component of content delivery, however the real impact of 5G and what it will deliver is still unknown. To be officially launched in 2020, the realistic rollout for significant coverage is unknown. Adding to the uncertainties, is the use of high frequencies with limited range, needing a large number of “pico-cell” transmitters.

Bottom line is that doubts about the ability of the Internet to become a major content delivery mechanism have evaporated. Challenges still exist but money and resources and business potential exist to accelerate growth. Traditional delivery mechanisms Satellite, Cable and Terrestrial will remain important for several years but decline. The rate and ratio of decline between different regions of the world will vary.

Traditional delivery mechanisms Satellite, Cable and Terrestrial will remain important for several years but decline. The rate and ratio of decline between different regions of the world will vary - IABM Future Vision Report Click To Tweet

Question 3 – Rank the following technologies/developments in terms of industry impact for industry professionals (5-10 years) such as ourselves

This question highlighted three categories of interest, one outright winner, a bunch of technologies or developments seen as influential and a couple of developments, which are much talked about but seen as little influence.

Many respondents experienced difficulty ranking such a large number of disparate topics, many suggesting the rankings below the first 5 or 6 are difficult to call. Overlaps between categories added to the challenge. Despite these challenges everyone provided useful information. The rankings are purely relative, based linearly upon the incoming scores, there is no absolute measurement or scale.

Missing from the list (unintentionally) was UHD and HDR. A few commented on this omission, none saw it as a key technology driver. It seems the momentum from improved picture quality is receding.

The clear and runaway winner is the Cloud. This is of extreme significance for an industry previously focused on specialist hardware delivery. It drives and consolidates the technology supply industry move from hardware to software.

Middle ranking technologies include:

  • Network architectures. There is a long way to go before networks are configured for optimum performance and topology. So far many IP installations have preserved legacy workflows. This will change.
  • Personalisation (linked to Artificial Intelligence). This is an opportunity to maximise relevance and (for example) reduce wasted commercial time, putting fewer irrelevant ads in front of viewers. Through this mechanism revenues can be increased.
  • IP Interconnects. Already in place for much of the industry infrastructure but now practical for production applications. The last piece of the jigsaw is (almost) in place. This will accelerate several other categories including Cloud.
  • Mobile data in the bottom 4. The one category with the widest range of responses from irrelevant to a prime mover. Sceptics and believers. Perhaps the best way to categorise is high potential but long lead times before the impact is universally felt.
  • Hardware to software. This goes hand in hand with the Cloud and the other IP/Internet technologies. The influence will be profound with former hardware companies having to embrace a predominantly software driven world.
  • Data and Analysis – Links in to personalisation, artificial intelligence and several others. Good quality data from consumers, from processes, from databases will feed and be key to the success of many initiatives.
  • Commodisation came surprisingly low. One respondent said they marked it low because it’s a fact today and not a future influencer. That may explain the result. Lowering cost and increased availability is fuelling the explosion in second tier programming and channels, so I’m assuming we all accept this is well on the way!
  • Automation – Also linked to several other categories but especially artificial intelligence, is one way of managing increasing volumes without scaling up cost.
  • Artificial Intelligence, by definition, is replacing human decision making in certain areas. This in turn will increase productivity and help manage more in the face of reduced margins.

At the bottom of the scale are VR/AR and Internet of Things (IoT). Despite a lot of discussion, the impact on mainstream media and broadcast activities is seen as small. IoT is interesting because some large enterprises see more potential money in this sector and no doubt it will make extensive use of imaging and displays. So perhaps we may be beneficiaries of the technology investments. VR/AR gains more enthusiasm from gaming applications, so perhaps it will mature there first.

Question 4 – Will traditional broadcasting (live one to many with a programme schedule) remain the dominant viewing method for consumers? (5-10 years)?

A close to unanimous view on this question, the traditional broadcast schedule is in decline. Despite the bravado and denial of past years, the reality is the long-term view that one to many with a broadcaster led programme schedule will be a part but no longer dominant force in media and video. The timescale varied from; “it’s already the case” to ten plus years.

Interestingly, sport was cited as the last “bastion” of live programming but the question must be asked, is this enough to preserve live programming as we know it? And don’t assume today’s incumbents will be the providers of that programming tomorrow. Already we are seeing groups such as Facebook, Netflix and others looking to pay the sums of money needed to secure the leading events. Beyond that, the sports managing bodies are taking destiny in to their own hands, producing and delivering their content direct to fans.

Interestingly, sport was cited as the last “bastion” of live programming but the question must be asked, is this enough to preserve live programming as we know it? - IABM Future Vision Report Click To Tweet

A few respondents cited other genres such as news, concerts and other big events as additional content for live programming. Although these are perfectly valid live events, none of these represent a safety net to keep the tradition of broadcasters and the programme schedule dominant. An alternative term is “appointment television” but ultimately delivered, like everything else, via the Internet.

More evidence that the face of television as we know it is changing but the timescale remains the open question. The balance of responses suggests the transition, whatever form it takes, will be well on the way within five years and that our live sports may come from different providers.

Question 5 – The new emerging (younger) generation think differently, they have not grown up with traditional broadcasting, aerials on the roof. For them mobile phones, tablets, laptops connected to the Internet are their media devices of choice. We are living longer, so the older generation with money will remain important but eventually the minority. Do we have two separate media and broadcast societies that see the world differently?

The was a slim majority agreement with two camps, but all placed additional perspectives on the thought.

The single concept of generational differences was too simplistic for some, suggesting that there are several different groupings of consumers, of which generational differences is just one. Most felt that the current differences will reduce over time, not just for the obvious reason of a generation disappearing but because what is prevalent in one generation will be adopted by many over time, just more slowly.

The single concept of generational differences was too simplistic for some, suggesting that there are several different groupings of consumers, of which generational differences is just one - IABM Future Vision Report Click To Tweet

What is clear is the general trend away from traditional scheduled viewing, which is already a fact for one generation and increasing throughout.
References were made to early adopters, followers and reluctant adopters plus other similar combinations. While different generations can be mapped in to these categories, it’s far from perfect with overlaps and anomalies.

It was clear however that the younger generation has a different perspective on content consumption, as one person put it; “360 storytelling and 360 engagement”. This being fundamentally different and is not repurposing of traditional content, traditional promotion and traditional engagement.

Another important aspect was that of social groupings, recognising only certain sectors have the necessary money to spend. The younger generation focus on free (if they must pay themselves). Access to advanced services will be limited for any age group that doesn’t have the necessary income to subscribe. In this respect new technology and services might be socially divisive. Having said that some reports show lower income households spend more on entertainment in the home.

The concept that one broadcaster supplying all needs is seen as broken. Several commented on the fragmentation and specialisation of niche content. Consumers can increasingly focus in on what interests them specifically, rather than having to accept what is chosen by the broadcaster. Leading to the often-used phrase; “What we want. When we want. Where we want”.

So, in summary, the younger generation are pioneers having adopted the new content consumption approach ahead of many others. They will not go back to the viewing styles of their parents but gradually all generations will evolve away from traditional television. Perhaps more important is the concept that many different “societies” exist with niche interests and are being created.

Younger generation are pioneers having adopted the new content consumption approach ahead of many others - IABM Future Vision Report Click To Tweet

Viewing habits are also influenced by socio-economic factors, geographic factors and the ability on a global scale to opt in to special interest programming and content. This increased level of personalisation will disrupt subscription business models and traditional channel “bundles” dramatically.

Question 6 – Is there room for new emerging (currently unknown) companies to become future giants to challenge Apple, Amazon, Netflix, Content Creators, Distributors, Major Broadcasters etc. Any thoughts about where or how this might happen? (5-10 years)

A large majority responded “yes” to this question driven by the cyclical nature of companies that come and go. Companies find a good formula, stick to it but then the legacy and momentum they create becomes their own downfall. There are of course exceptions, one example given was Amazon who turned themselves around from a bookseller to a multifaceted and very successful mega company.

Several observations that a successful idea is no longer driven by technology, but more through recognising the opportunities that new enabling technologies (and the other success factors prevalent at the time) can offer. It’s more about the vision of what will be valued above other competing offerings, in both the consumer and professional space. It’s not just about competing products doing the same thing but consumers endorsing the vision of a new service.

Big money to invest in success was also seen as important, which led some to query whether our “little” industry would be overrun with even more companies who are already in other larger domains and can “buy” their way in.

Existing companies such as Amazon, Netflix, Facebook and others like them, were seen as having several successful years ahead of them. They are still “young” and the following they have created, brand positioning, the infrastructure and more, will sustain them for the foreseeable future. But not indefinitely, their currently “fresh” ideas and propositions will eventually seem “old school”.

Comments included the production and distribution of content, who will control it and make the money? The “jury is out” on this one. Broadcasters are struggling to secure the best programming. Some content creators want to sell their output directly to consumers (ex. Disney). Sport rights are also in limbo as some sporting groups attempt to take back control and management of their assets. Or will they fall prey to non-traditional companies with deep pockets that “buy” their way in to the market? No answers yet unfortunately.

A few references were made to the telcos’ and the thought that 5G and their financial power might be a gamechanger. But the real impact of 5G is not yet clear and although 2020 is quoted as the launch, the practical roll-out could take place over a decade or more, it’s not a simple system upgrade!

In conclusion, no-one is making specific predictions (some said they would keep it secret if they knew and invest) but a consensus that new mega-successful companies will emerge. It will be a clever use of technology coupled with a compelling business proposition or a must have user opportunity. This applies in the consumer and professional space. They will have a disruptive business idea, much more than packaging and promoting a new technology.

Question 7 – The broadcast and Media Industry supports many small technology companies providing niche and specialist products and services. Is there space for these companies in the future IT/COTS mass market landscape? (5-10 years)

Although some were pessimistic and predict a serious decline or consolidation, the clear majority supported ongoing opportunities for small businesses. The consensus indicated, whether it’s hardware or software, large companies leave gaps in their solutions that only small companies can address. In many cases it’s not financially viable for a company based upon high volume and declining margins to address niche or specialist requirements.

Small companies were often cited as the innovators and the emergence of software based products make entry easier. In fact, it is the software centric nature of the future, with defined interface specifications, that most majored on in their responses. The Apple and Android stores were cited as examples of Apps by small companies becoming a significant part of the new eco-system.

Agility and speed to market is also an important factor. IABM data confirms that in the short term, smaller companies are more responsive to change and new requirements, even though overall the larger companies eventually catch up.

Larger companies acquiring innovative and cash restricted small organisations are seen as a growing trend. This enables a company that has a product or service with large potential but without the resources or the brand name, to grow and is a positive opportunity.

The Cloud was also seen to offer opportunities for smaller enterprises by lowering the cost of entry. Large Cloud hardware infrastructures can be rented and solutions developed then quickly deployed to end users.

The Cloud was also seen to offer opportunities for smaller enterprises by lowering the cost of entry. Large Cloud hardware infrastructures can be rented and solutions developed then quickly deployed to end users - IABM Future Vision Report Click To Tweet

Although the future looks bright some remarked that IBC will look very different and evolve over the coming years. The balance of large and small companies will change and the display of heavy hardware technology will continue to decline. It levels the playing field for everyone, if the most important factor is connectivity to the Cloud, to demonstrate the latest innovative software application.

Around what might be termed the “Data Centre” where all the production and distribution processing takes place, there is still a need for “peripherals”. For example, the cameras and all the specialist support products including lighting, and physical hardware. The same is true for control panels, where the real operations take place.

As a service, integration of software products from third parties and system configuration, provide additional opportunities.

Question 8 – Where’s the money? What will be the major source of income for the industry and pay for all the new developments?

As can be seen from the word cloud, advertising in various forms is still seen as the major source of income going forward with growth in subscriptions following close behind.

But it was not all about making money, several commented that cost structures will need to change including big strides implementing improvements in operational efficiency.

Content remains king and great content commands attention, viewer eyeballs, which in turn creates revenues that sustain the industry. Distribution is more global than ever, which may put a strain on purely national services.

Content remains king and great content commands attention, viewer eyeballs, which in turn creates revenues that sustain the industry - IABM Future Vision Report Click To Tweet

The use of data and personalisation will enable more revenue to be extracted by ensuring there is always something that consumers are interested in watching. Traditional broadcasting attempts to provide programming that is broad enough to satisfy the entire audience. The same is true of advertising.

Much of this is not optimised for each consumer but with increased data and analysis about individual viewing patterns and preferences, the opportunities for personalisation increase. This can increase ad sales with different ads targeted at appropriate consumers and reduced waste from inappropriate delivery of advertising or programming. One consequence would be a declining interest for advertising spend on linear broadcasting, except perhaps from large universal brands.

Some felt that greater interaction possibilities will increase engagement and therefore increase revenue opportunities. This could be through social media, web, second screens etc. The assumption is, that we have not yet reached the limit of how much consumers are prepared to pay, if the goods or services match more precisely their interests or aspirations.

A few commented on spend for infrastructure, production and delivery. The need to replace or update existing infrastructures may occur before the natural replacement cycles. The opportunity cost of not having the right cost structure, necessary levels of agility and efficiency will potentially drive organisations to invest earlier rather than later. With margins driven down, efficiency will come high on the management agenda.

Back at the consumer level, payment options will become more diversified. Consumers offered more choice will not be willing to pay inflated costs for bloated programme bundles they do not use. They will also be tempted with new niche providers that appeal to their specific interests, for example gaming, music, second tier or less universally popular sports and so on. What has changed is that advertising can now permeate any or all of these channels and can be targeted to the interests of the viewer. Even International brands can spread themselves across the mega channels and the small players. This is something already happening on websites with both small local companies and large brands appearing depending upon what has been previously accessed.

Consumers offered more choice will not be willing to pay inflated costs for bloated programme bundles they do not use - IABM Future Vision Report Click To Tweet

In summary, greater diversity in programming with quality and relevance still important plus continued dominance of advertising and subscriptions but with new business models and ways of reaching consumers.

Question 9 – Overall, are you optimistic or pessimistic for the health of the media and broadcast industry going forward?

Once again as the word cloud shows, an overwhelming vote for optimism. But it was not optimism based upon continuity but a feeling of radical change, creating winners, losers and new opportunities, with the industry looking very different on the other side.

Producers of programming are seen as having great potential as long as they remain relevant to the evolved audiences. However, competition with be greater than ever.

Some respondents cited the human desire to be entertained, something that won’t go away and video/audio is a great way to satisfy that need. With so much content flowing through distribution channels, it is assumed there are business opportunities there also.

Several made it clear that they are not optimistic about traditional broadcast as we know it but more the newly defined media environment for content creation, distribution and consumption. The new-found flexibility and lowering costs of “spinning up” new services, encourages innovation albeit balanced by greater competition and a bigger challenge to be noticed.

A clear message that some will be left behind, there will be casualties but that’s the nature of progress and the need to adapt. Socially, a few expressed concerns that the explosion in opportunities and services for consumers may increase the divide between rich and poor, those who can access and those who cannot.

The cost of distribution has reduced, which was identified as a potential positive shift from money spent on delivery to more money available for compelling content. Reading through the responses I sense a feeling of renewal, that this is not an evolutionary update but a real chance to break with tradition. Compared to a few years ago, most feel that this process is already well underway and no longer in denial, that it’s a phase that will pass.

The cost of distribution has reduced, which was identified as a potential positive shift from money spent on delivery to more money available for compelling content - IABM Future Vision Report Click To Tweet

What did surprise me is the spirit of a cohesive industry remaining based around video entertainment. Very little discussion about overlaps or merging with other industries, the use of video for other non-entertainment based applications, for example education and information which is transformed by video. The identity of a niche media industry compared to Telco or IT however remains. Perhaps this is because the core differentiator is artistic creativity, the ability to make compelling programs that affect the human emotion. No longer held back by the former limitations of technology, hopefully creativity can be fully set free with a new era capturing the imagination of us all as consumers!

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