The media consumer goes the digitallyconnected way

Erik Dejonghe

December 2010

Value chain of traditional media delivery

Content aggregation has been the most powerful element in the delivery chain of Printed media (publishers) recorded music (record companies) radio & television (broadcasters), Film (movie companies).

Content creation was in many cases integrated (or controlled) by aggregators. In the case of broadcasting, the aggregators being distributors at the same time.

Power of consumer was limited to the choice of aggregated product.

Creation Aggregation Distribution Local Access

Digitizing the delivery chain (1) Printed media: electronic delivery via the internet

Mainly in support of printed delivery Generates additional cost, but also (some) additional

advertising income (balance?) Accessible to non-subscribers of printed delivery

Recorded Music: disruption of the Business Model ‘Hit single’ too cheap to generate profit promotion for

album Album format under pressure from P2P delivery Music as a service

is (still) booming Artists go/return

to the stage …

Digitizing the delivery chain (2) Radio: digital delivery as single service failed

Proliferation/integration FM-receivers prevents ASO of FM LT simulcasting DAB and FM: no sustainable BM Digital radio flourishes as side product of DTV, FM prevails

DTV: adoption supported by technology and regulation Transport capacity x 4 - 8 broader choice, stable signal Increased competition between distributors Technological synergies between CE and ICT equipment

Film (and television Series?) Conflict in value chain slows Electronic Cinema down DVD becomes main contributor for revenue P2P delivery picked up, forcing shorter

release windows

The traditional consumer of digital content

Digital divide for media was lower than for ICT Skills: Complexity STB comparable to VCR; Internet

browser has intuitive graphical user interface Attitude: No (or hardly) different content Access: Low price barrier

Broader choice for viewing, listening/reading iPod started as Walkman with more capacity Newspaper website extended time/location for reading

Free content via the internet became the (unwritten) rule Digital music became ‘free’ due to # uncorrelated factors

(Open cd format’; MP3 coding; storage cost, BB speed …) Perception cannot be reversed,

due to past ‘dubbing’ practices

Changing the rituals, disrupting the business models (2000 onwards)

Net books and media laptops Age of individual internet access down from 18 to 13 Adoption of wireless networks (2010: 80% of pc families) Adoption centralized storage/individual cloud storage

Media enables smart phones Combine music, images, PIM, and mobile media access

with speech and SMS Cloud synchronization over Wi-Fi replaces PC

synchronization over usb Arrival of media ecosystems (Apple, Android, System 7

(?), CWM (?)

Changing the rituals, disrupting the business models (2000 onwards)

“Full Quality” media/internet access via tablet devices Apple succeeded where Archos & UMPC failed

(Apps concept, fast start-up & simple app switching) Tablet fills the gap between phone (fast reaction) and

net book (slow start-up) Early ‘battle of the giants’ (Apple against Samsung)

makes competition hesitant

The Connected Media Consumer re-inspirers DTV

Why iDTV failed Shared screen (and sound!) does not match with OTT

individual content access Video viewing distance >> information reading distance Data entry via wireless keyboards is not work in

convenient in front of TV screen Why DTV puts pressure on (some) broadcasters

Multichannel creates more competition for local channels Time shifting allows to view more than one ‘hit show’

during prime time Risk of Ad skipping (more in US than in Europe)

TV content moves to other media

TV content moves to new media

From viewing/working/conversation devices to platforms

Preserve the main screen for shared content Watching TV still implies sharing emotions in familiar surroundings Second choice moves from secondary location to individual screen Metadata (teletext) move to RSS/ fast internet access mobile screen

Preserve Individual screen for individual needs Individual ‘catch-up’ needs more location flexibility laptop Media multitasking: ‘listen’ to news while ‘scanning e-mails’ laptop Media & work: ‘Follow’ sport event while doing ‘light’ administrative

tasks laptop

Use mobile screen (via Wi-Fi) for real-time metadata Individualized (slow) ‘channel mosaic’ on smartphone (tablet?) Interactive participation/conversation via applet connection with

broadcaster We tolerate individual addressing/tracing via

‘walled garden connection’ if we receive individualized information in exchange

Observations 2010(11?) DTV has widened the gap between ‘broadcast hits’ and ‘channel

sub tops’ flexible viewing on individual screens can create important off-prime market

DTV has shifted income balance from ‘passive’ channel advertising to service subscriptions meaningful services related to television content can create more income for broadcasters and service providers (detrimental to printed media?)

The ‘digitally connected media consumer’ will enjoy more flexibility in viewing time & location and will have more control over ‘quality of delivery’ (low resolution on individual screen, full resolution on main screen) and ‘quality of experience’ (advertising and delivery buffering on OTT television, preview access and interrupted viewing on premium channels)

More choice will create a richer TV experience for the consumer community.