Sometimes, the most important sign that an industry is being disrupted is that no-one can agree on exactly what is changing, where things are going next, or in fact whether anything is changing at all. Like the music and publishing industries before them, the TV industry is currently working itself up into a storm of comment, analysis and denial about how the internet is changing its industry. Unlike music and publishing, TV has been experimenting with digital strategies for over a decade, but its only recently that mainstream audiences have started to change their behaviours at scale.
There are so many ways that disruption could play out in the TV market that its foolhardy to make predictions. There could be an orderly transition as broadcasters move the bulk of their commercial income from display ads measured by BARB/Nielsen to digital metrics measured by authentication. We could see a shift to new gatekeepers if Amazon, Apple, Google or Facebook ever manage to transfer their huge networks of authenticated users into the living room. Or we could see a crazy hotch-potch of services delivering genre-specific services, like MLB.tv or Youtube’s new Original Content Channels.
The drivers behind any disruption over the next five years are very complex – from emerging patterns of user behaviour to product/device innovation, the growth of talent as networks and the unpacking of existing rights models. So rather than make any predictions, here’s three things that are pointers for the ways things are going. They aren’t the destinations, but they’re worth pointing out on the journey.
Josh Sapan’s Keynote at MIPTV
Thanks to Jody Smith from Channel 4 for pointing this out to me – an excellent keynote from Josh Sapan , President and CEO of AMC, on how they see this emerging landscape. There’s lots of great stuff in here, from a recognition of emerging ‘binge-watching’ patterns around drama, to the shift from ‘appointment TV’ (driven by scheduling) to ‘connection TV’ (driven by fans desire to watch the shows they love when *they* want to) and the role of Netflix in driving interest in new seasons by letting people binge-watch past episodes. Well worth 30 minutes of your time:
Sky Now launches in the UK
The UK payTV market is very different from the US, where the success of a range of cable and satellite companies created competition that Sky has never really faced over here. In the States, all the talk is of ‘cable cutting’, and users moving to streaming services like Netflix and Hulu. Sky’s announcement of Sky Now is a remarkable pre-emptive strike against Netflix and LoveFilm in the UK, which have barely even got started over here.
They don’t face anything like the competition that the cable/satellite companies have in the US, and have a near-monopoly of premium TV, Sports and Film content, yet they’re voluntarily undercutting their premium satellite service by offering an online pay-as-you-go deal for non-subscribers. This seems like a brave move, but if you see the coming battle as a fight for customer acquisition and retention, then the opportunity cost of a non-Sky subscriber building a relationship with Netflix or LoveFilm is much greater than any potential loss by undercutting your own products. And once they’re in the family, its easier to scale users up to other products, such as broadband, phone and finally the full triple-play package. This is a very, very smart move from Sky.
Kickstarter launches in the UK
This is my favourite chart at the moment (and yes, I do have favourite charts):
The chart shows the effect that the game project Double Fine Adventure had when it raised over $3.3m on Kickstarter.The green line shows the point when Double Fine ended, and the bars show the number of other video game projects *not including Double Fine* that were supported on Kickstarter. In other words, this chart shows around 67,000 new people coming to Kickstarter, learning how to support a video game project, and then deciding to support other projects. Once they’d learnt the behaviour and created an account, it was easier for them to support other projects, and the huge bars on the right are a sign that they did this in large numbers.
This is important for two reasons. First, it’s an illustration that behaviours are one of the most important things to track in this fast-changing environment. If you don’t look for new things your audience are learning to do – like contributing to hashtag memes on Twitter, joining campaigns on Facebook, playing online games synced to live broadcasts, or funding projects they love on Kickstarter – then you won’t be able to see how this affects their ‘traditional’ relationship with your tv programme/film/book. Until someone else comes along with a product that ties these new behaviours to your content, and suddenly you’re out of the loop (as the Kindle did for publishers).
Secondly, Kickstarter is a really fascinating experiment in defraying risk in cultural production. When people are in denial that their industry is being disrupted, they usually go through a series of reasons why their position in the production/distribution of culture cannot be challenged. It normally starts with scale (“We’re the big company in this industry – these upstarts are *tiny*”) and when that isn’t true, it moves to a dogged belief that audiences never change their behaviours (“People are happy with how they currently buy records/read books/watch TV – only a minority will change”). Finally, the last position of denial is that making content is so expensive and specialist a task, and so risky, that only huge companies can make it financially viable.
It’s this last problem that Kickstarter solves so effectively. When you have to make something and put it out there before you know if its a hit, then this it’s true – only a big studio or TV network can possibly be in the game. But when you can put an idea out there, and get audiences to give you a firm commitment to buy (and the start of a relationship that you can use again in the future) then the amount of risk involved is trivial. More than anything, Kickstarter is disruptive because it radically shifts the risk of making and distributing culture, and very few networks or publishers have come up with a response to that yet. If I was at a company like Sky, or Channel 4, or even the BFI, who have recently taken on the task of investing in UK film that the Film Council used to own, then I’d be looking at creating a ‘follow-on’ fund for Kickstarter projects, and using that platform to take out some of the risk of investing in new talent. Sundance are already doing it, and I can see more and more companies using Kickstarter or similar tools to defray risk in the future. Of the three things here, I think this is the one that could potentially have the most disruptive effect in the next 10 years.