Has the era of linear TV broadcasting come to an end? Does the future belong to the OTT stars? There’s no denying that watching TV and flipping through channels is an act of the past. The future is digital, and mobile content consumption is the new norm.
Meanwhile, ‘cord cutting’, which was once dismissed as a fallacy by the cable industry, is now perceived as a serious threat. In 2010, the number of households with Pay-TV reached a peak of 105 million, but has recently dropped to approximately 82.9 million (Variety). According to a report by eMarketer, the number will drop to 72.7 million by 2023. Now it’s linear TV’s turn to be on the ropes – fighting for its life.
Until recently, cable accounted for a large portion of the media & entertainment industry’s revenue. The big networks made money for the conglomerates, which is why the parent companies were so keen to expand their channel portfolio. ESPN was the main reward when Disney acquired ABC in 1995. By 2001, cable distribution had become so profitable that Disney paid $5.3 billion for the Fox Family Channel, which had been rebranded as ABC Family before becoming Freeform. Because of its channels, Viacom was viewed as a safer investment option when CBS and Viacom separated in 2006.
According to Reed Hastings, CEO of Netflix, video streaming will become mainstream and would be the preferred option for viewing TV, with cable and traditional channels evolving or dying in the process. He also believes that in the next 10 to 20 years, everyone will be watching television via the internet.
We’re about to enter the fourth generation of television. First there was black and white, then colour, and now we’ve reached the end of the satellite era and are transitioning into the internet television phase. OTT (over-the-top) is the way content will be distributed in the future.
Is this the end for linear TV?
Not everyone is convinced that the set-top box will survive the transition. According to Suranga Chandratillake, founder of Blinkx, a video search engine and aggregator, every device will come with an internet connection as default, as is presently the case. At this point, we can assert that set-top boxes are a passing fad.
According to Rob Hodgkinson, chief operating officer of TVPlayer (by A&E Networks), traditional television networks’ demise is being exaggerated. According to data released by Enders Analysis, by 2025, 80% of UK viewing will majorly consist of broadcasters’ content.
Finding the right content to watch on the OTT platforms is a major challenge. The long-term goal is to develop a universal search bar that works across all platforms, as well as a data-driven content recommendation platform. Viewers face huge difficulty in searching what to watch and spend hours jumping from one platform to another.
Traditional broadcasters appear to have a strong hold on viewers who want to watch locally produced live television, whether it’s sports, talent contests, or soap operas. However, the biggest, most lavish, and dramatic shows, on the other hand, will be created for the internet.
Can OTT and TV co-exist?
The future of broadcasters has been hotly disputed due to the growth in demand for OTT services. In developing countries, due to existence of underpenetrated households, television still has room to develop. While the stakeholders of media & entertainment ecosystem are certain that television will not go away anytime soon, they also agree that broadcasters must reconsider their strategy.
What OTT offers to the viewers is high level of personalisation and segmentation, as well as the ability to find content at one’s convenience, which sets it apart from traditional television. That isn’t going away anytime soon. Consumers will demand more and more of it.
Now, the question is, under such transformational circumstances, how can broadcasters defend their turf?
A majority of people believe that linear TV is here to stay. The joy of sitting and watching TV with your families in the evening is something that people still want. Adding to this, people predict that OTT and TV will co-exist in the coming 10 years. In countries like India, watching TV with three generations and conversing is quite significant and because of that TV viewing in the country is only going to increase.
However, it should be kept in mind that, in the face of ongoing changes in the M&E industry, consumers are now comparing the content quality of TV and OTT platforms. As a result, TV networks will need to adjust their course in order to provide content on linear TV as engaging as OTT.
What is the future of sports content?
The business models of varied media & entertainment companies are undoubtedly different, but their goal is the same: to purchase the rights to sporting events to draw people/users to their platforms and turn them into commercialised assets. Some questions such as ‘what is the best strategy for becoming a major sports media network/player in ten years? Will sports content only be available on demand? Will the owners of the rights become media platforms themselves?’, are still unanswered.
In the realm of sports media, there has never been a more exciting time, with so many various approaches: the emergence of rights holders OTTs following the strong American-led movement of the NFL, NBA, and UFC; the sports vertical strategy Discovery appears to be realising in golf and cycling; heavy investments on DAZN (world’s first truly dedicated live sports streaming service) or also known as ‘Netflix of sports’; Disney’s attempt to deliver premium sports content and non-sports content in a bundle, and many more.
In the United States, one traditional sports media brand has already made the transition from linear TV to OTT: ESPN is presently balancing between maintaining a strong traditional TV brand and providing a distinct offering for all internet users with its ESPN+ offer. ESPN has built a strong digital footprint in a short amount of time with its OTT offering, reaching 2 million subscribers ahead of the company’s goals.
Exploring the sports media landscape, there are a plethora of innovative ways to attract viewers, and traditional broadcasters, with their expertise and enormous knowledge, can build a myriad of excellent offerings to reclaim their market share in this battle to win the audience — they just need to take a chance and look ahead. Utilizing the current digital infrastructures, strive to be content pioneers, and building solutions that offer value to the viewer and the M&E sector should be the path forward.
Conclusion
The entertainment giants are trying to straddle a widening cliff, maintaining one foot in the old media while investing more in the new, as they place their bets on their new OTT platforms, which include the recent launches of Disney Plus, HBO Max, and Peacock. However, will linear TV eventually fade away? The industry has started to witness a decline which feels irreversible. The M&E companies are trying to continuously analyse the market trends and re-align their strategies accordingly. By 2022, 55.1 million people will have abandoned regular pay television (Crawford).
While the cable industry’s narrative has shifted drastically in recent years toward internet, the fact remains that cable is losing television consumers at a rapid pace. According to MoffettNathanson, cable companies have lost 4 million customers in the last two years as their combined market share has dropped from 51 million in 2018 to 47 million in 2020.
