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tv market data TV Market Data / TV 3.0 - The Future of Television (2009)

November 2009 | External LinkArthur D. Little
The Future of Television: The End of TV as We Know It?
Facing challenges and capitalizing on opportunities

The TV landscape is undergoing dramatic changes. For more than seven decades, traditional television has been dominated by network broadcasters. In recent years, however, a range of new market participants, such as web players and telecom operators, have entered the landscape with ground-breaking platforms and innovative formats that utilize evolving technologies, and are impacting viewer consumption behavior. Consequently, both the overall TV value chain and existing revenue models appear increasingly destabilized. In this process, traditional players as well as new players need to carefully leverage their capabilities to derive appropriate business models for this newly developing eco-system. While telecom operators were busy setting up IPTVIPTV platforms, internet and TV started to integrate with common services on multiple devices. This has not happened over night but is the result of three major development stages:

• Stage 1: PC and mobile devices become a means for watching TV – more and more content is either streamed or downloaded onto PCs or mobile devices using a variety of different service platforms.

• Stage 2: Set-top boxes and gaming consoles provide internet-based video access – Set-top box manufacturers such as Roku or Syabas as well as major console manufacturers like Sony and Microsoft include software in their products which allow direct access to the internet and online video platforms.

• Stage 3: TV-sets include internet connectivity – Major consumer electronics manufacturers, such as Sony and LG, have started to include web applications in their classic TV sets, allowing the web to come to the living room.

Figure: Blurring borders in the TV-eco-system
click to enlarge
External Linkclick to enlarge

Even though the traditional linear TV market is still dominating, it is significantly diminishing in importance. The introduction of HDTVHD resolution has given traditional linear TV another push but will it be sufficient to revive long-term viewer interest? Will the highly increasing demand for iTVpersonalized TV and Online TVon-demand video lead to the end of linear TV? If so, how will this affect the relevant players in the television industry and how should they respond to these changes? Looking at successful players in the new TV ecosystem we believe, that players who want to be present in this new arena need to address three key dimensions as follows:

• 3-screens: Pay attention to presence on multiple devices and ensure "TV everywhere" as well as a best in class interfaces

• Content: Identify key content, integrate different formats, bridge content sources and complement linear TV with interactivity

• Hybrid business model: Focus on a mix of free and paid services leveraging existing content as well as user/usage data and re-inventing advertising

This summary is based on the report "Future of Television" by Arthur D. Little. If you are interested in the full report, please contact Jόrgen Morath or Dr. Karim Taga, both External Link Arthur D. Little.

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