Kate Bulkley, Media Analyst.

Content is still King

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By Kate Bulkley

Digital TV Europe.net

For Digital TV Europe.net November 03, 2014

Kate Bulkley assesses the threat of a “Convergence Bloodbath” as Millennials grow up.

The march towards convergence has been going on a while but it has taken the digital darling of the moment Vice Media to remind TV executives that “millennials are now a bigger group than baby boomers” and that anyone not embracing the new audience and appetites is facing extinction.

Well, maybe. The remarks were from iconoclastic Vice founder Shane Smith, never shy to express a self-aggrandising opinion, speaking at the Guardian Edinburgh TV Festival. His view is that the traditional media faces a “convergence bloodbath” as it tries to keep up with more nimble online folks like Vice. This is both a thinly-veiled appeal to traditional media players to work with – or invest in – Vice as much as a reminder that tech-enabled, younger viewers act a lot differently than audiences in the past.

Maybe Smith’s most interesting warning was not to discount the appetite that younger audiences have for “real stories” as long as they are presented to them by peers and not in a condescending, “old media” manner.

Broadcasters would do well to heed warnings. In the UK, BBC broadcast TV viewing dropped by 8% in the second quarter of 2016 compared to 2015, according to Ofcom. In the same period, viewing fell a staggering 18% among those aged 16 to 34, which was driven in large part by the BBC Three TV channel becaming online only. Interestingly, BBC iPlayer online viewing was only up by 4% in the same period.

Meanwhile, online giants like Facebook and Twitter are adding live video to their social media platforms, while Yahoo has recently teamed up with eSports company ESL to offer live streams of ESL-produced gaming tournaments. But who has taken a big stake in ESL, betting that eSports is at least one of the next big things? The answer is traditional media outfit Modern Times Group. Both Turner and Scripps Interactive Networks are investing in eSports as well.

Vice has itself attracted the attention of old, traditional media companies, including Disney, 21st Century Fox and A+E Television Networks. And it is interesting to note that, although its video output was born online, the youth-oriented business is now embracing “old” distribution, with the rollout of a linear TV channel. Viceland aims to be up and running in 50 countries by next year. Many of those launches will be in partnership with more traditional media companies with local connections, including The Times of India and Greece’s Antenna Group.

Hedging your bets is a good idea. All media companies with any sense are doing the same, because although the times they are a-changin’, there is still a lot of money and branding potential in linear TV channels. Traditional TV companies know that having the best content is key and the best content includes exclusive content and, in the future, high-value 4K UHD content.

Sky has known this for a while now – the joining together of its three European TV operations under one content chief, Gary Davey, is all about creating programming that will work across its operations. Meanwhile, Liberty Global has unveiled its first original series deal with its part-owned All3Media.

So everyone agrees that having the right content is key, which is good for producers and consumers living in a world of nearly infinite choice from a variety of sources. Hence the predictions of a “convergence bloodbath” as companies jockey for position.

A sharper picture

4K UHD content is increasingly seen as a key differentiator. Despite recent surveys like one from Irdeto and SNL Kagan that found that 64% of video service providers and 73% of content producers believe that consumers are willing to pay 10%-30% more for access to 4K content, there is still a lot to do to make it mainstream, including creating enough content to drive screen purchases. On the plus side, the Consumer Technology Association predicts that 2016 will see 4K UHD TV shipments reach 15 million units in the US.

There is a danger, however, that 4K resolution could be superseded and leapfrogged by 8K. Given that both Panasonic and Sony have planted the 8K flag in the ground in partnership with NHK, and given that the next Olympics – always a driver for consumer uptake of new tech – is in Japan in 2020, maybe there is a case for delaying 4K and waiting for 8K. Japan plans to begin full-scale 8K broadcasting as early as 2018.

Liberty Global boss Mike Fries is taking a wait-and-see approach to 4K because he is concerned there isn’t enough 4K content available to make it a strong selling point. However Liberty’s new set-top boxes will be 4K capable. Perhaps some of that original content Liberty is commissioning from All3Media will be in 4K. Given that attracting consumers is a key strategic ambition in a media landscape awash in choice, that’s not much of a leap.

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