Media companies “have to fight hard and innovate” to keep up with video industry

UK broadcasters and TV providers are going to face steadily increasing competition for television revenues from disruptive OTT services and technology companies, according to a major new report from Red Bee Media, a specialist in media management solutions.

The study predicts that both pay and advertising revenues from online video services will quadruple by 2020, increasing by 320% from 2010. Non-traditional revenue sources are also expected to become increasingly significant, with 58% of UK television executives polled by the study predicting that product placement and ad-funded programming will become important income streams.

However, this growth will also mean that competition for these revenues will intensify further in what is already one of the world’s most competitive TV markets. Increased competition is expected from the technology industry in particular, as major Internet businesses and device manufacturers ramp up their investment in the market.

Around two-thirds of respondents (64%) believe that the growing influence of digital gatekeepers like Apple, Google, Amazon and Facebook is the most important challenge facing their company through 2020. The importance of new platforms and IP-enabled devices is also expected to be a key factor: respondents expect nearly a quarter (23%) of adults to watch video through games consoles by 2020, up from 12% in 2010.

There will also be a “gold rush” for content, including more competition for premium sports and film rights, as new players go head-to-head with broadcasters: three-quarters (72%) of respondents believe that competition for premium content will intensify dramatically by 2020, as more companies seek to acquire rights.

A whopping 57% of those polled believe that a major technology company like Google, Apple or Samsung will acquire a package of live rights to Premiership football. Just under half (46%) of respondents expect YouTube to invest over GB£ 100mn (US$ 158mn) on commissioning original video in the UK by 2020.

Bill Patrizio, CEO of Red Bee Media commented: “From talking to the industry, it’s clear that technology and internet businesses are fast becoming significant players. The question we need to ask ourselves is whether the innovations brought by these new entrants are going to sustain or disrupt our industry in the years to come. Will the internet be the industry’s friend or foe? And what role will regulatory bodies play in determining the impact and pace of change?

“If the last ten years have seen the convergence of broadcasting with broadband, it’s likely that the remainder of the coming decade will see a collision and competition between business models driven by consumer demand and expectation and changing patterns of media consumption,” he added. “Media companies will have to fight hard and innovate in a fast changing, technologically driven landscape if they are to make the most of this flourishing market”.

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