Digitization and IP-based networking of all sorts of data, media and communications channels have unleashed the forces of creative destruction across economies worldwide, an ongoing trend that continues to shake up the U.S. television, cable and film industries.
In its “2015 State of the Broadcast Industry” report, multi-screen data and analytics provider Ooyala assesses conditions and players in the broadcast industry and offers insights regarding how the advent and growth of digital video technologies is giving consumers greater control of the content they watch and radically changing industry economics and business models along the way.
“The broadcast industry continues to change rapidly, and where 2014 may turn out to be the true tipping point for digital video, 2015 again promises to be a watershed year,” Ooyala contends. “Changes in every aspect of the business are in store as key forces are converging. Never before have audiences had so much power over their content experiences.”
Mobile Online Video Viewing
Rapid development and deployment of wireless broadband networks and consumer uptake of smartphones and tablets have been crucial enablers of broadcast, cable and film industry change.
As Ooyala highlights in its report, “mobile broadband over smartphones and tablets are [sic.] expected to drive broadband availability to over 50 percent of the world’s population by 2017.”
Moreover, mobile’s share of time spent by viewers watching online video rose to 30 percent, a year-over-year increase of 114 percent, Ooyala highlighted in its Q3 2014 Global Video Index report. Ooyala believes over half of all online video views could take place via smartphones and tablets as early as 3Q 2015.
Millenial TV Habits
No surprise, young adults ages 18 to 34 – Millennials – are the leading agents of change. “Millennials are leaving TV and not coming back – if they were ever there at all – to enjoy a world with flexibility in viewing and lower costs,” Ooyala writes in its report.
That said, it was viewers over 35 who registered the fastest growth in digital video consumption in 2Q 2014 according to one market research report, Ooyala notes. That includes Gen X’ers “who are most likely to shave the cord they were weaned on, even though they may end up paying more by assembling their own content packages across all distributors.”
According to another market research report Ooyala references, over 706 million households around the world – almost half the global total of TV households worldwide – “will be watching online video globally by 2020.” That’s up from 374 million forecast for 2014 and the 197 million households wherein online video was watched in 2010.
Market Implications
Another disruptive impact of consumers’ shifting to OTT video channels and all the technological change is the “splintering” of the broadcast industry’s “advertising-driven machine,” Ooyala points out in its report.
Though market research studies have revealed what seems to be something of a symbiotic relationship whereby growth in OTT viewing is leading to growth in viewing across all video media channels, “the networks can’t seem to find them because mobile and digital views aren’t being accurately measured by the traditional network ratings system,” Ooyala says.
Ooyala highlights market data showing that many of the leading entertainment-focused cable networks experienced large ratings declines in 2014. Similarly, broadcast channel ratings have been on a downward slide, as have advertising revenues.
“Further, it’s not just the typical ups and downs that the industry generally sees; a transformation in viewing patterns is affecting the networks, driven by younger audiences moving to OTT platforms, Ooyala points out.
The result, according to Ooyala: “Look for the rise of multiplatform ratings and programmatic buying to be game-changers that will drive the broadcast and digital advertising businesses toward integration and consolidation… Look for refined ratings and analytics as major drivers of advertising conversations, dollars and convergence in 2015.”
