By Carol Wilson, VP and Industry Head – Communication, Media and Information Services for UK & Europe, Tata Consultancy Services
We’re currently experiencing a quantum leap in the provision and consumption of video content. As providers use the internet to stream directly to their viewers, bypassing traditional platforms, including broadcast television, their popularity is creating huge challenges for telecoms companies.
Wider internet penetration, faster connectivity and rising sales of smart devices mean viewing habits are changing rapidly. These easy access to video services, known as “over the top” (OTT) services, are particularly popular among young people.
So far, there’s a clear age divide, with older people continuing to tune in to scheduled programmes, while younger viewers are much more demanding about what they want to watch and when they want to watch it. As this mindset spreads to traditional audiences, the seismic changes in the industry will be even more greatly felt.
Harnessing new technology
This underscores how much technology is reshaping every aspect of business and the way we consume goods and services, a trend Tata Consultancy Services (TCS) calls Business 4.0
Shifting viewing habits are redefining the revenue streams of telecoms companies and TV channels, as diluted demand for scheduled TV waters down opportunities to generate advertising revenue and as OTT players offer messaging, voice and video over IP at a lower price.
For the incumbents, it’s a case of partnering with their OTT rivals or competing to survive, and harnessing emerging technologies can help here.
Creating new content accounts for almost 70% of the operating cost of an OTT video streaming service. Here analytics and AI can help streamline processes, reducing those costs and helping improve commissioning. The top players are already embracing such methods, with Netflix, the leading streaming service, estimated to spend around 14% of its annual turnover on analytics.
Understanding the audience, how they’re consuming and what they want will become a key focus. With innovations like the Internet of Things connecting more and more aspects of our daily lives, the best industry players will be the best informed.
For producers, creating successful content isn’t the trial-and-error process of old. Content analytics is a valuable tool to help them better understand their audience, to discover what is popular with viewers, and on which devices they prefer to play it. Analysing the relationship between devices in a household and the people using them takes much of the guesswork out of commissioning new programmes.
Innovation gives a boost
Video streaming’s influence will also be given a boost as innovations like 5G enhance its speed and quality, giving viewers a seamless, near real-time experience. Virtual reality and augmented reality will also place further pressure on the traditional TV format.
Even so, regional differences will affect the pace of the rollout of such innovations, with mature markets like Europe, North America and Canada leading the way. Many countries, particularly in the developing world, still rely on older networks, making global access to the latest technological advances uneven.
Even in developed markets there are differences in infrastructure investment due to factors like regulation. Less rigid legislation in North America encourages bigger investment than the tighter framework in Europe does, for example.
For video-streaming services to work, they need to tailor their content for each market, another area that can be aided by technology. This need for a highly localized approach means telecom companies are likely to continue pursuing joint ventures with local production partners or buying capacity to become content producers. Scaling streaming services is no simple task, and the disparities in technological advancement around the world should ensure that scheduled TV programmes won’t disappear overnight. Even so, many view streaming as an existential threat, constantly diluting the influence – and therefore the profitability – of traditional television.