Build it and they might not come: getting the delivery infrastructure right for TV 2.0
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Most new on-demand entertainment offers risk missing the future by mimicking the past.
Entertainment service providers are spending billions of dollars on new on-demand infrastructures to deliver a range of new digital entertainment services in what is expected to be a vast consumer market. But many of them are stuck in the old broadcast mindset of the last century: stick content on a shelf and let people watch it.
In the next generation of digital entertainment services – called TV 2.0 – this won’t wash. To gain critical mass, TV 2.0 will unequivocally be different, enabling a more web-like, engaging user experience for those that really want it, not just a ‘sit back’ one that looks just like every other TV service. It will be designed from the ground up to deliver the true interactivity and personalization Internet-savvy consumers have shown they want in their droves.
To win, service providers need to act more like retailers and less like broadcasters, able to tweak their supply chain quickly to respond profitably to inevitable and frequent changes in consumers’ desires.
Success depends on being able to:
- Quickly turn content assets into profitable entertainment products
- Save money through smarter buying and packaging
- Build a more nimble, scalable, multi-channel content business
- Provide an open infrastructure that delivers quality of service while allowing customers to explore new ways to enjoy and interact with content.
The opportunities are enormous, particularly for existing content players and communications providers, who stand to reinvent themselves as the digital entertainment brands for the on-demand world. But getting the business model wrong means burning a large amount of money to generate a tiny stream of revenues.
The good news is that most of today’s incumbents are extremely well placed to succeed. They either already own (or operate within) high quality delivery networks that enable them to control the digital entertainment services they deliver to consumers; or they have long-established relationships (together with the customer service systems that support them) with millions of potential customers because they’ve provided voice and broadband services to them for many years. (And some, of course, enjoy both positions.)
Despite these clear and potentially decisive advantages, many companies that have invested in the first generation of entertainment on-demand services are uncertain about the right approach to take. To be successful, they need to ensure they treat consumers as ‘TV 2.0 customers’ rather than as passive ‘viewers’ – and that they do so by embracing the recent lessons of social media and web 2.0 services that have changed our media habits profoundly.
Entertainment in a web 2.0 world
Today’s broadcast model is evolving into a new world of anytime, anywhere, highly interactive and increasingly personalized entertainment – whether it’s delivered to a TV, a PC or a mobile phone (or all three). Unlike yesterday’s entertainment business, it’s maniacally focused on delivering the right kind of content propositions to the consumer – on their terms.
The common blog has a lot to answer for in this respect. Since going mainstream the blog has inspired a variety of ‘user generated’ applications and media destinations that would have seemed outlandish at the time of the first internet bubble.
As a result, ‘the user is now in charge’ has become the mantra of many cutting-edge entertainment on-demand thinkers. To them, the ‘TV experience’ is already dead, the role of the broadcaster is marginalised, and editorial choice is now completely in the hands of the viewer. Joost and Babelgum are good examples of IPTV service providers that play to these kinds of user values. Both are delivering new functionality ‘over the top’ of a traditional viewing experience – such as IM (instant messaging), and content rating and tagging – and their innovation is sure to have a profound near-term effect on how the wider on-demand market will deliver its services to customers.
At the other end of the spectrum, there are a wealth of other providers that represent the first wave of on-demand entertainment services. Unfortunately, many of these have been rushed to market with very little focus on long-term openness or flexibility. As a result, most are guilty of a cardinal sin: they lock their content to their delivery mechanism and are not flexible or open enough to support newer flavours of web-centric services or more progressive on-demand entertainment products.
It’s a small, seemingly technical decision that has had dramatic business implications – but it means most of today’s mainstream on-demand services are built on foundations that…
- Make it harder to create new content propositions and launch new services
- Restrict the ability to package, promote and cross-sell
- Obscure visibility into what is actually owned and licensed
- Severely limit content exploitation opportunities
- Waste money on inefficient back end processes
- Inhibit responsiveness to the market
- Put a ceiling on growth
- Make it difficult to integrate kind of web-based services that the market wants
Clearly this position is untenable given the rapid shifts in service delivery models and customer expectations that Joost et al are promoting. We all want more content, more flexibility and more functionality, on our terms.
As it stands, the only sensible position for on-demand service providers to take today is to hedge a little in terms of the way platforms are built and services are delivered. This is because the old adage (taken from the movie ‘Field of Dreams’) that ‘if you build it, they will come’ will never be true for new on-demand entertainment service providers. The market moves too quickly and too unpredictably to place long term bets in this fashion.
As such, this paper discusses what service providers need to do to adapt to the new world of consumer interactivity and build the kind of open and flexible TV 2.0 infrastructure that will succeed, and allow them to:
- Get their content to market faster and at lower cost
- Deliver compelling, differentiated experiences for increasingly knowledgeable consumers
- Respond quickly to new marketing and advertising ideas and opportunities
- Actively sell content instead of waiting for users to buy
- Grow their services in an open and flexible manner, enabling them to respond quickly to new service and functionality opportunities
The rise and rise of IPTV
Today’s key battleground for TV 2.0 centres on the deployment of IPTV services.
Analysts are predicting that there will be around 50 million worldwide subscribers for IPTV services by 2009, delivering up to $40 billion in revenues. Infonetics Research, for example, says capital investment in IPTV is expected to increase by almost 1,400% over the next four years.
In their new IPTV Global Forecast – 2006 to 2009, MRG (Multimedia Research Group) argues that Europe is surging ahead with a large number of strong IPTV deployments that include France Telecom, Free, Neuf in France, Telefonica in Spain, FastWeb in Italy, BT in the UK and a number of strong competitive offerings in Scandinavia. According to MRG, IPTV set-top boxes will dominate the capital spending for IPTV services and account for two-thirds of cap-ex spending.
It expects that global IPTV subscribers will grow to as many as 53 million by 2009, and that in the meantime service providers will invest rapidly increasing amounts on IPTV content and transport equipment. Another analyst, Infonetics, expects that in 2009, $26 billion of worldwide service provider capital expenditure will be devoted to building IPTV networks – and, whilst they agree with MRG that Europe is leading the way right now, Infonetics predicts that IPTV subscribers in North America will expand more than 40-fold between 2005 and 2009.
Predictions vs reality
The opportunity is clearly huge. But this rampant optimism is yet to be fully matched by consumer reality. The largest IPTV service anywhere (nowTV in Hong Kong) has just passed 500,000 subscribers and most of the rest have fewer than 100,000.
Building a TV 2.0 infrastructure
What service providers are starting to learn is that to deliver on the promise of TV 2.0 they need infrastructures that can easily and quickly:
- Turn content assets into profitable products – quickly, easily and at lower cost
- Save money – by efficiently buying, packaging and delivering content products
- Make money – by creating, promoting and cross-selling compelling offers
- Be open and flexible enough to integrate 3rd party applications and content from other service providers
- Build a more profitable, scalable content business – that’s differentiated in any channel and ready for new channels
In the past, interacting with the TV meant using the remote to change channels. Today you can record multiple programmes at the same time. Soon you’ll be able to set preference rules so the right content can seek you out, and find out what other viewers think of things before, during and after you’re watching.
TV 2.0 transforms today’s one-way TV experience by remixing it with a variety of web-like experiences that we’ve all come to know and love. Imagine choosing to watch the latest James Bond movie, using IM to communicate with Bond-philes throughout the film and, when it’s finished, then opting to view a ‘Director’s Commentary’ bonus feature as well as various out-takes from the film. In this way, TV 2.0 offers the potential not only to personalize user content but also to embed advertising as well as permitted interaction with a vast array of supporting user- and service provider-generated content.
The test of a TV 2.0 infrastructure then is to deliver:
- Interactivity – where consumers can control what they consume, comment on what they like and listen to others (‘more Internet, less TV’), and mix media, such as watching video while chatting on MSN or browsing Facebook
- A personalized experience- not providing the same set of packages to everyone
- Integration across channels – allowing consumers to set preferences via an EPG on a mobile phone and watch over set top box and comment via IM with a like minded community
- Convenience – allowing consumers to watch what they want when they want to in whatever form they want
- Transactions – permitting hundreds of thousands of people to buy different things rather than providing a few undifferentiated packages
- An on-demand, mix-and-match environment – ie, not ‘broadcast’
Return on Content
The winners will be the brands that can stand out from the pack, deliver great experiences, actively sell content instead of waiting for people to buy, and enable seamless integration of third party applications and services (often straight from the web). Service providers are already investing a fortune creating and licensing the hottest films, games, music and video content. They need a platform that will help them play smart, be agile and adapt to viewer demands and new ideas, trends and opportunities.
They must be able to:
- Create compelling, differentiated content experiences
- Get content to market faster
- Better manage the supply of content
- Create new products and bundles easily and cheaply
- Respond faster to what works and what doesn’t
- Cross-sell more effectively
- Deliver to new channels without re-inventing the wheel
- Integrate third party applications and services into their programming
- Deploy content assets in multiple propositions from day one
- Create new advertiser opportunities
- Maximise advertiser value
Introducing AssetFactory
AssetFactory™ from AssetHouse is a new Digital Proposition Management software solution that helps service providers acquire their content assets more effectively and turn them into profitable on-demand products quickly, easily and at lower cost. We call it Digital Proposition Management and it approaches the on-demand content business from a retailer’s point of view.
Unlike the passive, hard-wired model, AssetFactory™ lets you step outside of delivery ‘silos’ to actively sell, cross-sell and merchandise differentiated content products, promotions, packages and price plans.
AssetFactory™ also helps you drive inefficiencies out of buying, packaging and delivering your content by enabling you to deploy your assets in multiple service propositions: for example, concurrent streams and themes (entertainment and news), multiple channels (PC, TV, phone) and different delivery models (subscriptions, PPV, ad-based).
AssetFactory™ enables you to:
- Buy time: think like a retailer and plan and research your on-demand markets, products, pricing and promotions before negotiating your content deals. Is that Spiderman Trilogy tie-in really a great idea? Know the facts before you buy the rights.
- Buy smarter: become a better negotiator by bringing your product research to the table. Know what content you already have on the shelf, where it is and what rights you have for its use. Know exactly what you need, where you need it and for how long in order to turn content acquisitions into profits quickly. Don’t buy blind again.
- Make money faster: once you’ve acquired your content, get it to market quicker, and in a more profitable, productized format. Deploy your content with more agility: build new service bundles and pricing packages that reflect new customer trends and opportunities. If you’re holding a smash hit, stretch it in new ways – make Sex and the City work harder as part of a ‘Sex on a Sunday’ stream.
- Reduce risk: Plan, productize and promote. Start small and scale fast as demand increases. Employ a ‘beta’ mentality so you can test, tweak and repeat new service packages until you create the winners. Then back them with confidence.
- Maximise ad value and opportunities: deliver better data alongside better products and promotions and demonstrate more value to your advertisers. Find niche markets with targeted products and monetise them through new branding opportunities. Create new, channel-specific, advertising-led services that deliver new opportunities for your advertisers – and get them on board at the earliest possible stage. Carling may own Premiership football, but Budweiser may jump at the chance to back PC-delivered Euro 2008 goal packages.
- Maximise content profitability: content assets are worth twice as much in AssetFactory™ – because once they’re inside your inventory you can really make them sweat. Quickly redeploy them into other products and services to create more value for customers and more revenue for you. Benefit fully from brand Beckham – redeploy his latest LA Galaxy goal into a Spice Girls trailer, on the fly.
- Find (and profit from) your ‘Long Tail’: exploit the interactivity of IPTV and help your customers to locate the value of your content inventory. Make it searchable, and make everything available on-demand. Let your customers create their own interactive products and services…. and learn from them so that you can increase the value of your advertising and deliver new services. From Seinfeld to Sergeant Bilko – know an archive trend when you see one and act fast to productize it.
- Reduce operational costs: automate your key scheduling and inventory processes. Do more with fewer people. Know what you have, where it is, and what state it’s in so that you can deliver new services at speed and with low overheads.
- Increase reach: deliver new services quickly via new channels. Outflank your competition by getting there first. Own the customer via as many touch points as possible – phones, TV, PC and beyond. Feeling the pinch of the TV Set Top box in certain markets? Then grab your audience by the web instead.
- Reduce churn and maximise customer revenue: increase the value of your services by improving the customer experience. Deliver products in a personalized, easily accessible format. Productize better – provide customers with other related services, such as exclusive catch up and preview facilities. Promote your content in smarter ways, with value-added content assets. If your most loyal customers are Daniel Craig fans, then show them his ’Actors Archive’ – and deliver the option to view Layer Cake straight to their Home Page, along with e-commerce deals on the soundtrack).
How it works
AssetFactory™ is a browser-based software solution that integrates key content processes into a comprehensive product development and delivery environment:
AssetFactoryTM is a browser-based software solution that integrates key content processes into a comprehensive product development and delivery environment:
Content and Advertising Inventory Management
Manages the catalog of content (including advertising) and attaches metadata to describe the content to make it easier to package, promote, cross-sell and deliver.
Contract Management
Centralises all contract information and adds essential metadata tags (such as price, license window, usage rules, etc). Eliminates double-licensing, off-strategy purchasing and expensive contract breaches.Product, Pricing and Schedule Management
Enables editors to create schedules, place orders, develop promotions, set price packages and run service trials and pilots.Publishing Management
Ensures content is dispatched in the right form for the target delivery application.Quality Management and Reporting
Ensures content is properly encoded for its destination channel, checks final product assembly and establishes accurate in and out points. Provides viewer, contract and advertising data to enable editors and to create analyse all the relevant KPI’s.
Metadata (attaching key attribute tags) lies at the heart of the AssetFactory™, streamlining communication between components and delivering all relevant information to the point of decision.
Conclusion
Unless service providers can build the right kinds of open and flexible infrastructures for the new world of on-demand entertainment, they risk losing their current (old world) advantages. In effect, the ability to bring viewer benefits like interactivity, personalization, choice and additional ‘over the top’ supporting services are likely to be more critical success factors than all of the things that their current business models deliver so well.
Think about how today’s entertainment on-demand brands are being built: are web-savvy consumers taking call centres, customer support capabilities and network reliability into account when making their entertainment choices? Or are they more concerned with finding and experiencing the services that they really want here and now?
Our money’s on the latter. So should yours – because consumer loyalties are being built, but not necessarily on your current terms.
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