Brave New World: Succeeding in the Digital Arena
Foreword by: Arash Amel,
Head of Broadband Media at Screen Digest©‚
After many false starts, the convergence of video platforms has finally arrived and promises significant growth in the coming years. The many flavours of digital delivery – online, mobile and interactive TV – create new revenue opportunities for content owners, broadcasters and distributors to extend the reach of their content assets and deliver additional value to existing customers (see Becoming a Multichannel Operator: BSkyB© Perspective).
Video convergence has opened the door to new revenue streams – whether from expanding advertising sales to digital platforms or identifying new business models. The unlimited shelf-space provided by digital storage offers content aggregators a way of monetising archived or niche content in a way they never could before.
Unsurprisingly, it’s not just the old broadcast and entertainment sector vanguard that has its eye on this opportunity. Alongside established entertainment content providers are computer companies, Internet start-ups and even supermarkets competing against one another for a piece of the digital pie.
But the move from physical to digital delivery of content is not without its challenges. These range from the technical (how to share content across platforms) to the commercial (how can profit-driven media companies compete with public broadcasters such as the BBC©, which can give away content for free?).
Some lessons have already been learnt: movie executives, for example, are keen not to make the same mistakes as the music industry which wasted too much time on trying to fight the pirates and too little on developing new online business models (see Winners and Losers of the Digital Divide). More importantly, in a market increasingly dominated by the hardware manufacturing giants such as Apple®, the key question for new entrants without premium content will be how to be unique and avoid the pitfalls of the digital ghetto.
Finally, let’s not discard the TV set too readily; it’s still the main attraction for content distributors and the reason why Apple is investing so heavily in Apple TV™, and Amazon© has partnered with TiVo®. The battle for digital supremacy in many respects will be for the large screen TV in the living room, not the PC screen.
In any event, the shift from physical to digital content won’t happen overnight. Video convergence might be here now, but there is no magic bullet and it’s only by watching this space over the next few years that we’ll find out who the winners and losers will really be.
Winners & Losers of the Digital Divide
Comparing Web Adoption of Digital Content Delivery Strategies
Publishing has a great history of innovation going right back to the ninth century and the first dated example of block printing. It is not surprising therefore that the industry became one of the first to successfully embrace the digital delivery content model. By contrast, the music industry – at the cutting edge of technology in so many areas – has endured a painful transition to the digital arena, characterised by a fitful start. Here we highlight an opinion on the differences between the two industry approaches to identify what factors contributed to one sector’s success and another’s challenges.
From the written word on the page……to a downloadable chapter online.
1. Publishers embraced the digital arena as a new opportunity to generate revenue and customers
2. A robust online infrastructure and business model has increased market retention and profit margins 3. Publishers moved fast to segment content and re-package and re-use material to create new revenue opportunities
4. Publishers were quick to adopt information sharing on the web – creating communities and reducing production costs
5. Publishers have retained a direct relationship with the online consumer
6. A subscription revenue model is preferred to an advertising-driven model
7. Publishers adopted intuitive access control and billing technologies from the start to prevent material being pirated or shared illegally
From the CD album sold in store……to a downloadable single track.
1. Music perceived online distribution to be a threat and held onto the physical distribution of content
2. CD album sales are in decline. While legal track downloads are on the increase, they’re not yet offsetting this revenue drop 3. Legal music sites are limited. iTunes® is the most established, but its arrival has disrupted the relationship between music label and customer
4. Music alienated its potential online community by suing digital distribution sites and consumers
5. Music has retained a channel model of digital delivery
6. Music has been slow to adapt its revenue model to single track sales
7. Consumers found a way to illegally share music online in the absence of an alternative
Becoming a Multichannel Operator
The BSkyB Perspective
“As a content aggregator, broadcaster and distributor, it made absolute sense to distribute our content assets across as many different platforms as possible,” Giles Godart-Brown, R&D Programme Manager at BSkyB and Chairman of the Digital Video Broadcasting Project’s (DVB) Copy Protection commercial group
The proliferation of digital consumer devices heralds significant opportunities for content providers and, of course, broadcasters. However, the move from a single content delivery platform (satellite TV) to a multi-platform environment delivering content via digital TV, the PC and mobile, is not without its challenges. Crossing this digital divide and embracing new channels of delivery has seen BSkyB face a host of technical and commercial issues to ensure we remain at the forefront of this evolution.
The business model:
Our current business model has had to change to enable us to embrace these new opportunities:
• Deliver content (news, movies, sport etc) online to Sky subscribers at no additional cost to give extra value to the subscription package
• Additional revenue from advertisements on websites and digital TV channels
• Mobile subscribers pay a monthly fee to receive a bundle of channels with live content (such as news, sport and Big Brother footage)
Digital rights management is paramount in the new multi-channel environment:
• Sky Digital (content protected by NDS, a conditional access system)
• PC (content protected through Windows Media) • Mobile (content protected by a variety of means)
In addition to the commercial challenges, we faced technical issues. For example, PCs have fairly well defined software standards, but with mobile phones there are still different network operators, models and capabilities. As such, ensuring the service runs on all types of 3G phones across the different networks in the UK and Ireland was no small task. You must also account for the extra risk when approaching the mobile platform – in schedules, and budgets.
Broadcasters must be agile and capable of adopting new technologies to distribute content across new platforms as they emerge. They must have the ‘new media’ expertise to integrate these new technologies into existing systems.
The business benefits are clear. As a content aggregator, broadcaster and distributor able to deliver our content assets across as many different platforms as technology permits, BSkyB offers a more flexible method of access for consumers and enables us to reach customers outside of the traditional satellite service.
The market will see a wealth of content being delivered – much more so than before through the PC – especially with the proliferation of increasing broadband speeds and penetration.