Bringing TV to Life Issue III: TV is All Around You

Over the Top Television (OTT-TV) and the digital consumer is here. The battle for the digital consumer is on as sleeping giants awake to take on digital newcomers in OTT-TV.

Latest Accenture point of view on the models and capabilities that will underpin success in the fast-changing OTT-TV market.

Things move at lightning speed in the online world. Nowhere is this more visible than in OTT. New entrants to the market have made a big splash very quickly across consumers’ connected screens, challenging established broadcasters and cable companies for viewers’ time and money. But if the old giants were caught napping they’re now waking up and engaging for the contest ahead.
 
In just a few short years, the collision of consumer demand and technology innovation has dramatically altered the television industry landscape. Not only are consumers moving away from time-boxed viewing, they are moving away from the box itself – to a world of multiple screens operating in a fast changing digital ecosystem.

Adoption of OTT is being driven by increasing broadband penetration coupled with the wide array of internet-enabled devices available to consumers today. And OTT is no longer a niche offering in the hands of early adopters. Viewing figures and content volumes are growing at astounding rates. In Accenture’s 2012 Video-Over-Internet Consumer Survey, 92 percent of respondents say they watch video over the internet, with an increasing number of people watching long-form video on devices other than television. Of these people, over 23 percent have paid through subscription and 11% through a pay per view mechanism.

This point of view, the third in the “Bringing TV to Life” series, explores the aggressive growth of new entrants to the OTT-TV world, examines how broadcasting incumbents are responding, and outlines the capabilities required to tune into the digital video consumers of the future.

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While traditional TV business models were predicated on captive viewing, the advent of new technology means that viewers no longer have to be home at specific times to watch their favorite show. And they are no longer exclusively reliant on broadcast television to provide home entertainment – the internet and games consoles are also competing for viewers’ attention – alongside the digitally native OTT-TV providers.

In response, most traditional broadcasters have launched OTT propositions in one form or another to create an initial offering to meet the needs of the digital consumer. Broadly, their responses to date fall into four categories: Innovators, Followers, Extenders and Diversifiers. While each of these has its own merits and challenges, none are yet likely to provide everything that the digital video consumer is looking for.

The market remains highly fragmented, but as it develops and matures the key goal will be to create a customer proposition that is compelling enough to attract and retain the digital video consumer of the future. Getting this right will determine which companies will be industry leaders.

Success in the OTT-TV market will depend on building a number of complementary assets and capabilities. Content remains king, but is not enough to rule on its own. OTT-TV players will need to ensure that they can:

• Maintain a wide catalogue of attractive, differentiated content – delivered within the right consumer context.

• Create a compelling multi-screen / multi-device proposition.

• Offer a different quality of service (QoS) for different types / premium levels of content.

• Effectively manage the extension of OTT services to the TV.

• Develop a number of different pricing models and approaches according to quality and premium content.

• Embrace the possibilities of social media to create unique interactive and communal experiences.

• Develop a compelling, intuitive user interface to ensure an excellent customer experience.

To achieve these objectives, the winners need to ensure that they develop a number of critical capabilities. These include:

• Building strong IT and technology skills.

• Developing understanding and mastery of the requirements of a range of new devices (smartphones, tablets, set-top boxes, connected TV sets).

• Having a clear content and rights strategy for the digital multi-platform world.

• Re-organizing around the consumer with a single view of the customer directing the organization.

• And all this needs to be done at ever greater pace than before.