Yet, the New Year comes with disruptive news that promise to change the shape of the industry. So, it’s convenient to start new actions in order to adapt to the new order of things. Here you’ll find the key questions --and their answers-- to consider for making right decisions at NATPE Miami 2019.
1. Is the future of the media market already defined?
Yes. It is. At Mipcom, a Hollywood executive emphasized: ‘The future, that’s it’, speaking about On Demand with ‘top control by the user’, downplaying HD, 4K and other technical developments: ‘The On Demand market is arriving, with all its perks included’.
Those with kids may verify this just by watching the way they consume content. I have three of them: two boys, 17 and 14 years old, and a girl, 11 years old. To all of them, their mobile phones are the most important device, for chats with friends and watching videos through Instagram and YouTube.
Then, the boys devote a lot of time to playing their Sony Playstation, their third option is TV on Demand. They have recently discovered Netflix, replacing time with the first two options by watching movies and series. The girl has downloaded Netflix to her mobile phone and applies it to watch old television series she cares about, being able to watch The Walking Dead seasons time and again.
The computer is still another option, when they feel bored by their top three choices. The girl lights up her tablet when her mobile phone runs out of battery. Linear TV, free and Pay, are used only for events they are particularly interested in, such as football (soccer) games. But, nowadays it is difficult to gather the entire family, and especially the elders, to watch a movie or a TV series.
2. How will the new On Demand industry be defined?
According to Tomas Yankelevich, chief content officer at Turner Latin America, there will be ‘about 8, no more than 10 big media groups, that are nowadays taking shape. They will have they own OTT platforms in order to reach directly the audience: AT&T with Warner Media including Turner, Disney with Fox, Viacom with CBS, NBC managing DreamWorks, Telemundo and more. They OTT services will cost between 7 and 15 dollars, handling just part of the top content; it will be the opposite of the current picture, where the major conglomerates intend to have everything. The user, in order to be able to access all the content, will have to subscribe to 5 or 6 of them, paying about 90 to 100 dollars per month, roughly the same amount being paid now for linear Pay TV’.
This explains the mergers and acquisitions that took place in the recent past, in particular Disney absorbing 21th Century Fox. But, 2019 will witness big changes: Disney-Fox ending its deal with Netflix and launching its streaming service to compete directly with Netflix. It is said that this will happen during the second half of the year, once it takes shape, others will start following the trend. This year will also witness the full merger of AT&T and Warner Media, turning into the first ‘big titan’ will all media integrated.
3. What’s the next thing for Netflix, Amazon and the like?
The large OTT’s know --of course-- what the intentions of Disney-Fox and the other mega-groups are. Their answer will be to focus on original and local content, through a mesh of alliances with producers and local players per territory. In fact, in 2018 Netflix changed its structure from having global heads dealing with fiction and entertainment to local leaders at every important country. Following the e-tailer’s own words: ‘We want to be one more linear TV outlet at each market’.
This wording has generated discussion within the industry, even feeding the theory of ‘Everything comes back’: Netflix wants to be a linear TV player while the linear TV players want to be like Netflix. What this e-tailer executives mean is that, when it comes to mainstream product, they want to be one of the closest and strongest players anywhere. If you think about it, this is the top asset to achieve from now on.
Taking again my family as example, we recently gathered all together to watch Bird Box, the Netflix original movie with Sandra Bullock. It is an excellent thriller, looks like a theatrical hit from a Hollywood major studio. It has been heavily advertised, we saw many billboards touting it on the street, and a trailer in a sports website I usually visit. The kids stressed it was already available... and we proceeded to watch it. It resulted in a full blockbuster experience, but in the instant OTT times.
4. What VOD models will win?
The S-VOD model has been the most successful one so far, with Netflix heading the trend. You pay a monthly subscription and watch whatever amount content you want. Under the ‘total control to the user paradigm’ it could be assumed that the future would be the T-VOD per transaction mode, similat to the old Pay Per View options from the linear Pay TV operators. However, now we watch the A-VOD as the service growing most: watching contents for free by agreeing to watch advertising.
This works very well for the online news websites, and is gaining ground at OTT’s featuring movies end series. In order to watch something for free, you fist must go through a sponsoring spot of 20 to 30 seconds. People prefer this to paying for watching; the scheme is similar to what is happening with Wi-Fi at public spaces; at the beginning you had it for free, they it turned to paid, or with passwords that made it difficult to use. Now, people at airports, shopping malls and other places are offered an option requiring registration and watching a spot as a condition to access very good connectivity.
The risk with registration is that you may be later invaded at home by promotional emails and messages. But, for the moment, the situation is generally being well managed. Again, you have the ‘Everything comes back’ picture, where the on-demand service adopts the ad-supported model of free commercial television. Is this the major VOD option for the future? It won’t be the only one, for sure. S-VOD will continue to be very strong. But, in 2019 many A-VOD serv ices will be launched at large territories... Amazon is pushing one, for instance.
5. What about Linear TV, then?
Linear TV will continue strong, although as every media it must evolve according to the new times. The famous Antoine Lavoisier rule ‘nothing is lost, nothing is created, everything is transformed’, applied for cinema theatres and radio stations in the past, runs very well under the new environment. In fact, free TV has huge assets to maintain its power: it is the main free and massive TV option, and all consumers are fully used to watching it.
Let’s return to the day in-day out people: while kids stick to On demand, the 30+ year old audience consumes linear Tv above other options. They do chat and watch videos on the mobile phones, and many grown-up binge watching series, but most of the continue choosing the couch and just click the remote control. Regarding ‘non scripted’ content, nowadays people switch between free TV and pay TV, the first because of its talent shows and gossip programming, the latter to watch factual content, from real people going through real situations, to millionaires exhibiting their house, various sports and much more. In this mix, there is a large flow of content that free TV won’t lose.
Of course, the free TV channels do not stand alone anymore, they are part of media group where Free TV, pay TV and OTT options live together. From now on, we will see local, regional and global media groups competing at all sizable countries; each of them may win or lose according to its approach to that market. For gathering a family to watch strongly local or event programming, free TV will remain a good recipe.
6. Which is the starship strategy nowadays?
Major media groups as Turner, but also the large free TV broadcasters, are launching at this time the same strategy: they are migrating from ‘TV channels’ to ‘multiple screen studios’. In Latin America, the same is happening with the launching of Viacom Studios, Televisa Studios, Caracol Studios. What does this mean? They will be content factories for their own channels and also for third parties, choosing the media, the partners and business models depending on the project.
This strategy is just starting to be applied, but to the future it means that a good part of the oncoming content production will be for third parties: for Netflix, Amazon, for other countries. At a first stage, screens owned or controlled by the producer will be mainly involved, but the situation will change when the model goes further. To achieve this, the new ‘studios’ want to be very dynamic, open production hubs in several countries, handle different content and a lot of 360, digital development.
The synergies seen when a big series is launched --involving a free TV channel, a Pay Tv group and an OTT-- are part of this move. Though they are chosen depending on the project, partner communities are sought to assure an efficient commercial chain: production, exhibition, distribution... Disney Latin America often works with BTF, as an example.
Well, let’s go ahead with Natpe Miami. “Who moves earlier, reaches first” is a rule that never changed.