The platform debate
Trying to pick tomorrow’s “winning” platform may be a futile task. Internet content is spreading to broadcast TV and online content looks remarkably like TV output. Platforms are converging so rapidly that there may not be a definitive winner. The reality is that media is becoming more important than the platform on which it was traditionally characterized. As platforms converge or disappear the media it carries will survive. Newspapers are an excellent example — even as print versions disappear, the content persists in one digitized form or another.
Content wants to be free from platform restrictions; free to move around and follow the consumer. It’s a fallacy to compartmentalize consumers into mobile, TV or Internet users. At Nielsen we see that high-consuming individuals remain high-consuming individuals, regardless of the device or platform they’re using.
Content and service providers need to look at content and delivery from the consumer’s perspective rather than categorizing consumers by platform. Consumers tend to default to the best screen available to view the content they want. Customizing content for as many screens as possible will allow content and service providers to enhance the multi-screen experience and retain the attention and loyalty of consumers. Deploying a triple play service delivery architecture that can deliver multi-screen services is the key to quelling the platform war and staying competitive.
Convergence is real
Platforms and technologies are converging. The industry needs to think about how it can monetize new, advanced business models as content moves across platforms.
The trend away from platform-dependent usage is influenced by two main technology drivers. First, the digital revolution of the 1990s contributed delivery flexibility to the mix. This started the shift to IP-based networks and the growth of digitized media.
Second, increased household broadband penetration and the steady increase in bandwidth availability have made it feasible to download or stream rich multimedia content in the home. Mobile broadband has also added an extra delivery dimension.
Internet-enabled technologies are further influencing these usage shifts. Gaming consoles, the Kindle, the iPhone and the new iPad, just to name a few, are all raising the bar in terms of the quality of multi-screen experience and media richness. At Nielsen we believe there’s still more to come. There’s a gap in the market for a device that’s larger than a smartphone, but smaller than a laptop, and not a tablet PC. Internet-enabling devices such as the Xbox or PS3 are also developing into gateways creating more connected and converged devices. Convergence in the home is not fully here yet, but it’s not far off.
Fragmentation – the new trend
Today’s consumer doesn’t place a singular value on individual media; rather they place value on the way media are consumed. As consumers place different values on different experiences, content providers and advertisers need to adjust pricing strategies to reflect the value attributed to the experience.
The fragmentation of consumption preferences is most apparent among young consumers. Recent Nielsen research has found that children watch broadcast content online because they missed the original broadcast or forgot to record it, or because someone else is watching a different program on the TV. As well, fewer college students than before possess a TV and often watch TV online. Research is underway to understand whether this consumption pattern is driven by economic or social forces. That is to say, whether they can’t afford a TV, or whether they simply prefer to watch TV online.
Ongoing fragmentation of consumption patterns is almost certain. One example of this is consumers who, in future, would subscribe to a particular columnist rather than a publication. The content distribution landscape will become flatter in consumers’ minds, less hierarchical. At some point, TV will become an application, where consumers choose between pressing the TV button, the gaming button or the streaming video button.
All these trends toward fragmentation will have an implication for the content and service provider industries. However, even though the fragmentation will continue, the market is also growing. Media consumption across all platforms will continue to rise, as people make more time in their day to consume more personalized content.
Monetizing the multimedia opportunity
The transition from branded, platform-dependent content to multi-screen media and personalized content raises both technological (what format) and business (how do I sell it) challenges. Unlike the music industry where content can be created relatively inexpensively, it is extremely expensive to produce high-quality broadcast content such as TV and movies. To recoup costs, multiple delivery channels are required.
ESPN , CNN or NBC are examples of news networks in the U.S. that sell their content successfully in a multi-screen, multi-platform world, by tailoring their output to their audience and delivery channel. Content and service providers need to recognize that consumers will pay for content on new platforms because they are willing to pay for new experiences.
The big challenge is figuring out what should be charged for these new services, and ensuring that quality content is paid for, not pirated. A similar challenge has hit the games market, where the rise of the application store has disrupted the market with cheap apps and games compiled by stand-alone developers.
Content across multi-screens
Price pressure and fragmentation will increasingly be an issue across all service and application markets. Given these trends service providers need to think seriously about their multi-screen services portfolio. The way that content is displayed and performs can influence the user experience and drive consumer loyalty. Personalized content that leverages intelligent service delivery and converged content management will be the hallmarks of successful, profitable content delivery in the future.
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Note: This article does not necessarily represent the views of Alcatel-Lucent.
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