IP&TV News talks to Brett L. Sappington (Director of Research, Parks Associates), about micropayments, multiscreen, and more. Brett will be appearing at this year’s TVXperience (October 13-15 , Convene Center, New York), for booking and more info go here.
IP&TV News: Hi Brett. How big a future do you think micropayments have in the multiscreen ecosystem?
Just as micropayments have made inroads into games and mobile apps, I think that it will have a place in multiscreen. However, I think that multiscreen interfaces will need to see improvements in order to unlock that revenue. Currently, consumers cannot easily tell if they have already paid for video content or not. If a consumer wants to watch a show, they have to check through multiple interfaces in order to see if the show is already available for free through the pay-TV provider, broadcaster, or OTT services that they subscribe to. Rather than facing that hassle (or paying again for a show that they already get but cannot find), consumers are likely to simply choose among the options that they can easily find in their favourite app from their favourite provider. When interfaces begin to solve this problem, consumers will be more likely to spend a small amount to watch a new show or episode.
Do you foresee the ultimate demise of the current pay-TV model? If not, how much do you think it will change?
I don’t see the current pay-TV model dying off in the near term. However, the current model is facing several challenges, and I do think that we will see a notable shift over time.
The strength of the pay-TV model is in its content and its revenue inertia. Pay-TV offers consumers content that is more current than OTT services can provide and of greater variety and quantity than individual broadcasters. Pay TV is also big business, passing along significant revenues to the content ecosystem through license fees and/or ad revenues. Until other options come along that produce equal or greater revenues, the ecosystem will continue to support pay-TV.
That said, I do believe that consumer viewing habits are changing. Those changes will ultimately force the video industry to change – in many cases to change substantially.
You’ve mentioned the necessity of a “paradigm shift” in this area. How could that shift come about?
Consumer habits are clearly shifting to on-demand and to multiscreen viewing, particularly among the youngest segments of consumers. As a result, several aspects of the industry face notable change. Advertising methods, delivery, and pricing will have to adapt to an on-demand rather than a linear viewing world. Interfaces and discovery of content will be different. Ultimately, these changes will also impact licensing revenues and the business of television.
What new opportunities does multiscreen here?
Multiscreen is an important part of the future strategy of pay-TV providers. Many understand that their future as an entertainment service provider must include delivery to multiple screens in order to maintain customer interest and stave off competition. In fact, the content and current revenue advantages of pay-TV providers puts them in a great position to capitalize on changes in consumption habits. Can pay-TV players move quickly enough to capture this opportunity?
For broadcasters, multiscreen is the key to being able to remain relevant as a direct-to-consumer content outlet in an increasingly on-demand world. Multiscreen services allow them to offer on-demand access to content and to reach new audiences.
Do you get the sense that all of these seemingly disparate technological advances are gradually presenting a unified business model for the future of TV?
Advertising and fee-based services have long been the mainstay of the TV industry. I think that new, emerging technologies are bringing about several new potential business models for television. None will provide a wholesale replacement of current models, but they will impact the bottom line in the long term. Linear TV advertising will remain important, but targeted, personalized advertising will also have an essential role. Interfaces that provide search and recommendation across service platforms will affect which sources of content are relevant and will impact transactional and subscription business models.
You’re appearing at TVXperience later this year – besides T-commerce, what do you think are the most exciting advances in the multiscreen ecosystem and why?
As I said above, I think that changes in the interface will be an important aspect of unlocking new revenues. I am interested to see how quickly HEVC is implemented across markets and the impact that it will have on network traffic. 4K is impacting the CE industry and the television industry substantially. Also, I am highly interested in new authentication technologies. As the world becomes more mobile, solutions that can make usage seamless for consumers will be critical.