BRINGING

TV TO LIFE VII

CHARTING THE COURSE TO SUCCESS

OVERVIEW

This year’s report, “Charting the Course to Success,” the seventh edition of Accenture’s acclaimed “Bringing TV to Life” series, comes at a time of almost unprecedented disruption and intense competition among a growing array of players in the video industry. There’s a lot keeping digital video providers up at night, including:

NEW PRICING MODELS FROM DIGITAL DISRUPTORS

RISING COSTS OF CONTENT

CREATING NEW SERVICES RAPIDLY AND AT SCALE

TRANSFORMING TO BECOME DATA-DRIVEN BUSINESSES

DRIVING ENGAGEMENT ACROSS DIVERSE DIGITAL PLATFORMS

READ THE FULL REPORT

DIGITAL NATIVES ARE REWRITING
THE RULES OF COMPETITION.

They position themselves as innovators, with platforms that enable other businesses to innovate alongside. Platform economics allows them to enter new markets quickly and at scale, and to monetize original content rapidly. Through their data-driven operating models, they deliver rich and compelling video experiences to consumers.

Incumbent video companies need to attack the digital market in a manner that allows them to continue to grow their traditional business while leveraging their advantages in the new. That means pivoting eventually from the growth curve of their existing business to a new growth curve for the digital era. This strategy can transform the core business to fuel growth while enabling the company to launch new services.

The report provides specific recommendations for two types of providers:

Content aggregators—organizations that operate a traditional aggregation platform such as a cable company
Content distributors—organizations that own or acquire content rights such as a programmer or broadcaster

KEY FINDINGS

DIGITAL DISRUPTERS
DISRUPTERS ENJOY SEVERAL ADVANTAGES IN THE MARKETPLACE:

Digital disrupters position themselves as innovators, with open platforms that enable other businesses to innovate alongside.

Disrupters can operate across industries, aggregated around specific consumer use cases, and into several adjacent markets (retail, search advertising, etc.).

Disrupters’ platforms can serve multiple business models economically.

Disrupters are investing heavily in content; they increase competition among traditional and internet platforms to succeed with local content.

TRADITIONAL INCUMBENTS: CHALLENGES AND OPPORTUNITIES

DISTRIBUTORS:
Distributors are threatened by the shift in consumer behaviors. As customers fragment their media consumption, the channels-to-market of a distributor are also fragmenting. This means that distributors need to figure out how to monetize these audiences.

AGGREGATORS:
Aggregators will need to live up to their name: They must be the easiest and most engaging place to find the content that consumers love across a number of distributors and digital native providers.

Distributors need to focus on driving engagement to increase loyalty. To do so, they should diversify into a number of direct-to-consumer digital businesses, and also increase their understanding of content performance.

Aggregators have a different imperative: They need to deliver the easiest and most engaging experience to increasingly demanding digital video consumers. To achieve this, they should consider two actions: become a more data-driven organization, and use their strong in-home footprint to anchor new business models.

RECOMMENDATIONS:

INCUMBENTS SHOULD USE THEIR STRENGTHS TO LAY FOUNDATIONS FOR THE "NEW" TO DEFEND AND EXTEND VALUE:

ORIGINAL CONTENT PRODUCTION

EDITORIAL VOICE AND BRAND POWER

STRATEGIC USE OF TECHNOLOGY TO AUGMENT CURRENT ADVANTAGES AND BUILD NEW ASSETS

CONTROL OF THE ACCESS POINT— THE HOME FOOTPRINT

NAVIGATION
STRATEGIES

Incumbents must navigate an “S-curve,” growing the core while enabling the new. They must eventually “pivot to the new,” making a leap from the growth curve of a traditional business to a new growth curve of a digital business.

1
TRANSFORM THE CORE
Drive optimization to fuel growth.

Divest capabilities that are no longer strategic:

AGGREGATORS: logistics and infrastructure for broadcast stream aggregation

DISTRIBUTORS: broadcast equipment and IT for traditional supply chain

Shift investments to more agile platforms that enable a direct relationship with the consumer.
2
GROW THE CORE
Release trapped value to sustain growth.

The importance of data: Use analytics to optimize spending

Leverage usage and consumption data to inform marketing and customer-retention activities:

AGGREGATORS: Draw on data from consumer relationships to tailor and personalize interactions

DISTRIBUTORS: Use data to address niche audiences with a highly curated content offering

Better cooperation between aggregators and distributors: a flow of content, metadata and curation in one direction, matched by a flow of revenue, data and insights in the other

Achieve organic growth through increased distribution

Maximize ad revenue by targeting the individual
3
SCALE THE NEW
Respond to headwinds in legacy by leveraging advantages in new models.

Redefine the business:

AGGREGATORS: Create a platform that allows new business models to be introduced to customers

DISTRIBUTORS: Determine how their content skills can strengthen their relationship with consumers

The investments from growing the core should help create the foundation for building the new
4
MAKE THE PIVOT
Industrialize and scale the new business model.

Invest in assets that allow you to make the most of the advantages you already possess as you create new business models

Making models platform-compatible can deliver greater power in the value chain

There needs to be a time when the new business model is embraced, industrialized and scaled:

AGGREGATORS: The pivot is complicated because consumer ARPU may decrease with an expectation that ecosystem revenue will make up for the erosion of revenue

DISTRIBUTORS: The choice is (1) abandon B2C aspirations and only embrace affiliate partnerships with highly innovative content production initiatives, or (2) “double down” so that their operating model is fully informed by their digital channels

LEAD
AUTHORS

Bringing TV to Life" series explores the technology and business trends and market drivers that are radically reshaping the video industry. Our perspective reflects our experience with players across the ecosystem and makes use of Accenture’s primary industry surveys. Our series aims to help all the players in this rapidly evolving space to accelerate their journey as high performance businesses.