The "TV Everywhere" Executive Seminar at the 36th annual DigiWorld Summit helped shed some light on new viewer behaviours, the possibilities opened up by hybridisation and cloud technologies, and how they will impact video watching down the road, both inside and outside the home.
TV Everywhere becoming an habit
On-demand viewing has become one of the most widely adopted new behaviours, whether via catch-up, TVoD or SVoD. IDATE nevertheless underscored that on-demand access to content can be limited by regulatory or contractual restrictions, especially when it comes to feature films.
Accessing video content from anywhere is not yet commonplace behaviour, particularly for users on the move. This can be explained in part by technological constraints in certain locations, and by the fact that TV service providers do not make all of their content, particularly live programmes, available for mobile viewing.
• Any device
Despite the proliferation of new screens and the rapid rise in viewing on smartphones and tablets, most users still watch their programmes on their home TV, even in the most mature markets. To achieve a convincing “any device” viewing experience, service providers also need to address the issue of continuity/handover between devices.
François ABBE (Founder & CEO, Mesclado) recalled that Disney had signed an agreement with Google and Apple, thanks to which a Disney video purchased from the iTunes store could be played on an Android device, and vice-versa, which is a good first step towards providing users with a seamless experience.
The television will be the source of different challenges, depending on the broadcaster and their specific distribution issues. Vincent FLEURY (CTO and Deputy CEO for New Media, France Medias Monde), whose core challenge is to deliver the same services to all users, sees the TV as “just one screen among others,” whereas Laurent FRISCH (Vice-President Digital, France Televisions) and Valery GERFAUD (General Manager, M6 Web) believe the television remains the screen of choice for watching live programmes, and for catch-up or time-shifted viewing.
• Any Content
Because the ways for accessing video products are so fragmented, and given the glut of content available, consumers today appear more willing to pay for services that can meet their need for more structured and personalised solutions.
For IDATE, one of the biggest challenges for video services is to deliver personalised content that also takes the viewing device and situation into account. Here, the issues surrounding big data and recommendation engines are especially crucial.
Didier LEBRAT (CTO, Sky) also stressed the massive investments that Sky has made in content, and in improving quality to create a sense of value for its customers, and noted that Sky+ On Demand users now watch more pay-TV content than free to air content.
Hybridisation and new video distribution configurations
Vincent GRIVET (Group Head of Broadcast Development, TDF) reminded us that all-IP for video is not yet possible, but that on-demand viewing is on the rise. The two trends thus require hybrid solutions to be deployed. If HbbTV is expected to provide a response to this demand, it does not appear to be quite as hybrid as what was being promised three years ago. Vincent FLEURY believes the industry expected a lot more from connected TV and that, today, it is much easier to access the Web on a TV set via ISPs’ boxes and mobile solutions. His main focus is on bringing connectivity to locations that are today without it.
Darko RATKAJ (Senior Project Manager Technology & Innovation, EBU) focused on the needs of today’s users, and drew a parallel between classic TV viewing, which remains a shared experience, and on-demand viewing which is still a sort of top-up. He believes the issue is knowing whether a video platform truly meets users’ needs, in terms of both quality and coverage – the latter being not just geographical but demographic as well. Ratkaj says that hybrid solutions do exist, but not in the sense that a specific network or a technology can solve all the problems. What is important is delivering the right service under the right conditions, not whether it is delivered over a broadcast or broadband network.
Yves BOUDREAU (VP Mediacom Technology Strategy, Ericsson) has been watching the “prosumer” phenomenon develop: if vendors do not design solutions tailored to users’ behaviour, prosumers will create their own "Frankenstein video" solutions. Broadcasters, programmers and technology providers need to join forces to create products that satisfy consumers’ new demands, even if it means running the risk of it being the solutions provided by Internet giants like Google, Amazon or Apple that gain the upper hand.
We are seeing hybridisation develop around broadcast networks that have no native return path. But the momentum depends on the TV service’s business model:
• pay-TV providers such as Sky or DirecTV are capable of defining the user experience thanks to their DVRs, and so meet customers’ new demands efficiently;
• for free to air TV, the problem of standards currently appears to be a real obstacle to the development and adoption of truly viable hybrid solutions. Broadcasters need to make sizeable investments in developing their applications, which is a direct result of the huge technological fragmentation of application ecosystems. Laurent FRISCH pointed out that, in the multitude of technologies that exist today, not all are equal. TV networks are not necessarily taking a position, but rather waiting for a solution to take hold as the industry standard. Without a single or unified solution, Smart TV will not take off.
Jean-Hubert LENOTTE (Director of Strategy, Eutelsat) notes that network operators are also taking initiatives in the arena of hybridisation, spurred by the fact that, while consumers still watch a great deal of linear TV, the time spent doing so is not increasing, whereas the time spent watching on-demand and time-shifted programmes is on the rise. So market players need to be able of providing live interactivity to boost the appeal of programming. If clients such as Sky and Canal+ want to keep control over their viewers and develop their boxes and products themselves, Eutelsat is developing a smart LNB solution for other clients, in other words two-way LNBs that make it possible to integrate a return path directly in the user’s satellite dish, and so do away with the need to connect the STB to the Internet. He also reminded us that satellite makes it possible to deliver on-demand content in HD and even UHD to locations with no broadband coverage.
For TV channels, hybridisation also means the development of new business models and new partnerships:
• for Didier LEBRAT, marketing the Now TV OTT service allows his company to target consumers who want a lot of flexibility, and do not necessarily want to subscribe to BSkyB’s satellite TV plan;
• Vincent FLEURY believes that hybridisation does not apply only to technical networks but is also a way to access new consumers: he underscored the importance of syndication, and recommended using the means made available by new video platforms such as YouTube and Facebook;
• according to Laurent FRISCH, broadcasters and new entrants will need to create new “hybrid” TV channels that combine linear and non linear programmes, to reinvent their value proposition;
• Valery GERFAUD reported that the percentage of ad revenue generated by catch-up TV for the M6 group is proportionate to the time spent watching the network’s catch-up TV (i.e. compared to their live programming), thanks to a solid monetisation of catch-up TV.
Lastly, Marc LE DAIN (Associate Partner, IBM Consulting Services) stressed that hybridisation also applies to customers whose behaviour differs depending on the type of programme being watched (his presentation on slideshare)
Uncertainties over switching to an unicast only model
Telcos’ and cablecos’ networks both have a return path that enables the development of advanced video products for their pay-TV customers. Plus, their point-to-point networks can use software-based security solutions that are cheaper than the broadcasting world’s conditional access systems.
Yves BOUDREAU reminded us that the Internet was not initially developed to distribute TV, and is currently not capable of taking over from free to air and pay-TV, if ever broadcasting networks were shut down in the near future. There are still lingering questions over how much telcos would need to spend to satisfy consumer demand, under a unicast-only model. For Jean-Hubert LENOTTE, the combination of broadcasting and broadband is still the most efficient solution today, especially from an economic standpoint.
Distributing TV services via LTE broadcast, thanks to eMBMS technology, is another possible new alternative for video distribution. Pierre-François DUBOIS (VP of Product Development, Orange Technocentre) pointed out that all LTE smartphones are already outfitted with an eMBMS chipset capable of receiving broadcast streams.
The technology has already been deployed commercially in South Korea, and expected to develop in other countries soon, even though uncertainties remain over the right business model, especially on mobiles. For Yves BOUDREAU, the combination between broadcasting and LTE does make it possible to create a product that consumers could be willing to pay for.
Cloud technologies’ growing role in video distribution
The development of cloud-based television and video distribution solutions is upending how all of the TV industry’s veteran players operate. Cloud TV technologies make it possible to move steadily to a more flexible model that enables swift rollouts for new services, and which alters the investment structure to an on-demand model.
nPVR technologies, for instance, make it possible to move the intelligence in operators’ networks, which would mean that STBs would no longer need to be equipped with a hard drive. Valery GERFAUD nevertheless pointed out that, should this type of solution develop, it could very well undermine catch-up TV revenue.
Cloud technologies also make it possible to solve new editorial issues tied to Social TV, such as Rising Star, centred around interactivity with viewers. According to Valery GERFAUD, incorporating interactivity into the very heart of a TV programme may be very popular with viewers, but it also creates new technical issues that need to be managed. Only the cloud enables broadcasters to handle such huge surges in traffic, from a flexibility and cost perspective. Mr Gerfaud believes that quality of service remains a very real problem, as users will quickly turn off a poor quality video, which means the provider loses money.
For Xavier POUYAT (Senior Program Manager, Azure Media Services), the cloud also allows content to have an existence that goes beyond the aired programme: e.g. for an interactive episode of the series "Bref", more than a million personalised videos were generated in three days, thanks to the cloud.
Source: Canal Plus
These technologies are also expected to be crucial in the coming years to enabling TV services to make the transition to ultra high definition, which represents both a technological and economic challenge, as Jérôme RENOUX (Regional Sales Director, Digital Media, Southern Europe, Akamai Technologies) reminded us. The introduction of new compression formats, such as HEVC, will no doubt also make a vital contribution to future developments, for both HD and UHD. Pierre-François DUBOIS hopes that, thanks to HEVC, 85% of Orange’s IPTV Orange will have access to HD programming.
They are also likely to play a major role in merging and streamlining workflow for TV industry players all down the line, to be able to tackle live and on-demand viewing on any device imaginable.
Not just a technical, but a legal issue as well
TV Everywhere and the cloud naturally create issues in the realm of user identification, and so of privacy and data protection.
While the trend around the world is towards monetising internet users’ personal data, Alain BENSOUSSAN (lawyer with the firm, Alain Bensoussan) reminded us that the notion of data ownership has no legal status: Facebook has thus given its one billion users a right that, legally speaking, does not exist, as no sovereign state recognises ownership of personal information.
In addition, while some 100 countries have adopted data protection and freedom regulation, it appears that, with big data, individuals have no control over the data that pertain to them, or do not know the data pertain to them. The important thing with big data is not knowing the name of the person behind the screen, but rather the ability to predict with more than 90% accuracy who is there and what they are going to want. So we are moving towards anonymous personalisation.
Lastly, Alain BENSOUSSAN introduced the concept of “privacy by design”, which consists of designing products and services with “privacy inside”, to reduce the anxiety-provoking aspect for users, which is one of Facebook’s chief selling points.
If you want to go further read "Live TV vs. on demand viewing: what does tomorrow’s world have in store for broadcasting?"
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Our guests' presentation are interesting you ?
> Here is the general presentation of Florence Leborgne, from Idate.
>Here is the presentation from Marc Le Dain (Associate Partner, IBM Consulting Services) : http://fr.slideshare.net/DigiWorldIDATE/tv-everywhere-41808106
> Here, you will find the presentation from Laurent Frish (Vice-President Digital, France Televisions) "TV + Digital").
Florence Le Borgne
Head of the TV & Digital content Practice, IDATE.
Can anyone compete against American on-demand vendors?
IDATE is releasing the latest version of its “TV and video services worldwide” market report and database. It provides readers with vital data on a market in the throes of major upheavals, analysing changes in viewer habits, TV access networks (terrestrial, satellite, cable, IPTV) and revenue sources (linear TV, pay-TV, DVD, Blu-ray, VoD) in more than 40 countries.
The report’s project manager, Florence Le Borgne, tells us that, ‘even though we are watching more video than ever before, revenue growth for the global video market is being stunted by the inexorable drop in video hard copy sales, and by the pressure that Over-the-top (OTT) distribution is putting on traditional TV business models’.
According to IDATE, television revenue worldwide will increase from 368.9 billion EUR in 2014 to 424.7 billion EUR in 2018, which translates into an average 3.6% annual growth, compared to the 5% reported between 2010 and 2013:
• pay-TV revenue is forecast to decrease dramatically over the next few years, with average annual growth dropping to 2.8% between 2014 and 2018, compared to 6.1% between 2010 and 2013. Despite which, it will continue to be the main source of TV revenue up to 2018, bringing in 195.9 billion EUR in 2018;
• advertising revenue is expected to enjoy more dynamic growth overall, in line with its trajectory in recent years: 4.8% a year up to 2018, compared to 4.6% per annum over the past four years, to reach 193 billion EUR in 2018;
• funding from TV licensing fees will continue to increase significantly: by an average 1.5% a year, to reach 36 billion EUR in 2018.
The revenue generated by video on demand (VoD) will climb to 34.4 billion EUR in 2018, thanks to a solid and steady increase (+131.5% compared to 2013) and will represent more than double hard copy sales (15.5 billion EUR in 2018) by that time.
• Online (OTT) video is expected to consolidate its dominance of the VoD market, accounting for more than 80% of on-demand revenue.
• VoD rentals will continue to be the central model on managed networks, generating 4.7 billion EUR in revenue in 2018, compared to 3.3 billion in 2014.
• The hard copy market will continue to shrink across the globe, losing close to a quarter of its value in 2014, despite the growth of Blu-ray.
TV revenue growth forecasts by market, 2014-2018 (billion EUR)
Source: IDATE, State of TV & Video Services worldwide, July 2014
Breakdown of TV revenue by source, 2010-2014 (billion EUR)
Video on Demand Focus: Increasingly competitive OTT players
• Despite the popularity of premium cable channels, Netflix now rivals top dog, HBO. Although subscriber numbers for the top premium cable channels in the US (HBO, Showtime, Starz) have remained relatively stable, and are even increasing for some – +13.3% and +14.2%, respectively, for Showtime and Starz between 2010 and 2013 – the real momentum today is behind OTT services, starting with Netflix whose customer base grew by 71.4% between 2010 and 2013. At the end of June 2014, Netflix had 36.2 million residential subscribers, including 35.1 million paying customers, compared to 28.6 million subscribers for HBO in the United States.
• Will the top American SVoD providers dominate the global market? As of October 2014, Netflix is present in 46 countries, and reporting a base of 13.8 million subscribers worldwide. This means that it alone controls two thirds of the globe’s subscription VoD customers. By way of comparison, HBO is present in 61 countries in Latin America, Asia and Europe, and has more than 35 million subscribers, of which a growing percentage to its HBO Go service. Meanwhile iTunes leads the way in electronic sell-through (EST), earning 65% and 67% of movie and TV programme sales revenue, respectively, in 2012. Virtually all European countries have access to the company’s video rental service, while residents in eight countries – Germany, Austria, Spain, France, Italy, Ireland, the UK and Switzerland – can also download to buy from the iTunes store. Only smaller national companies are competing with these heavyweights. And while some are popular – France’s CanalPlay VoD service has 520,000 subscribers – one cannot help but wonder whether they can hold their own against these global titans.
• Also noteworthy is that Netflix outperformed HBO in terms of total SVoD revenue for the first time in Q2 2014: generating 1.146 billion USD vs. 1.141 billion USD for the premium cable channel.
Netflix share of the global SVoD market as of 31 December 2013 (%)
Source: IDATE, State of TV & Video Services worldwide, July 2014
American OTT video providers’ footprint in Europe as of October 2014
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Online advertising expected to account for 33% of all media advertising by 2018
IDATE has just released its report and database dedicated to the world online advertising market. This report provides an analysis of today’s key online advertising trends and technologies (including privacy issues, retargeting, VRM, new data measurement techniques, etc.) and includes an overview of the world leaders and their KPIs (Amazon, Apple, Facebook, Google, Microsoft, Twitter and Yahoo!). It takes a look at they key markets for monetizing online advertising, including search, display, mobile, RTB, social networking and video in 15 countries, including Brazil, China, France, Germany, Italy, Japan, India, Russia, Spain, South Africa, South Korea, Switzerland, Turkey, UK and the United States.
The global online advertising market will be worth more than 160 billion EUR by 2018, enjoying an 11.4% annual growth rate from 2010 to 2014. IDATE expects a steady increase in this market for the coming years: 9.7% annual growth up to 2018.
IDATE Consultant Soichi Nakajima, who managed the production of this report, points out that “we expect the breakdown of advertising formats to remain unchanged in the five coming years. Whilst the search market is already a stable market, largely dominated by Google across the globe, overall revenue for the display market is expected to increase slightly over time, with much more competition in terms of players fighting for market share.”
Global online advertising revenue (billion EUR) and its share (%) of total media advertising revenue, 2010-2018
Major trends in the advertising market include:
• Mobile advertising expected to account for 20% of online advertising by 2018 with an expected +50.1% annual growth rate from 2014 to 2018.
• Social advertising forecast to account for 14% of online advertising by 2018, with a +39.8% annual growth rate from 2014 to 2018.
• OTT video advertising expected to account for 9% of online advertising by 2018 with +21.8% annual growth rate from 2014 to 2018.
• Global RTB advertising market accounting for 30% of display advertising, thanks to an annual growth rate of 32.7% from 2014 to 2018.
Close-up on mobile advertising: mobile ad market an extension of the fixed
The tools and technologies of fixed online advertising can be re-used for mobile, which means that Google could easily carry its dominance of the fixed market over to mobile. On the other hand, in-app tools and technologies have to be created from scratch. In-app advertising, which is unique to mobile, makes up 20% of the current market. Plus a great many apps are games, promoting their paid services rather than displaying actual ads.
Current global market breakdown: search vs. display advertising on the fixed and mobile Internet, in 2014
- If you want to come to our seminar "TV Everywhere" during the Digiworld Summint 2014 wednesday november 18.
Head of "Video Distribution" Practice
IT services accelerating the transformation
The video distribution environment is changing at an incredible pace, with viewing habits becoming more and more individual and involving multiple screens. Added to which, the growing integration of IP-based solutions is only accelerating the pace of this transformation.
IDATE’s freshly updated TV and video database, and its accompanying market report, provide readers with a complete view of the latest market trends, delivering key figures for 30 countries on TV access modes (terrestrial, satellite, cable, IPTV and broadband) and connected devices (televisions, set-top boxes, home consoles, Blu-ray players, PVR, DMA/R, smartphones, tablets).
Traditional broadcasting networks are being forced to join this new environment to stay in the game. Up until now, competition between the networks had been based primarily on the rate at which infrastructures were being digitised, with satellite and IPTV leading the way over cable and the classic terrestrial network. The progress made by online video, enabled by the increase in user numbers and in connection speeds, has created a whole new ball game. One that will make it harder for digital TV to find new sources of growth.
Breakdown of TV access modes in Europe (million TV households)
A host of new, intertwined challenges are emerging for market players: the advent of new video distribution networks with fixed and mobile LTE broadcasting, the end of uncertainties over the UHD TV market and the integration of IP: an expanded market for CDN, flexibility of cloud TV solutions, creation of hybrid TV or possibly IP broadcasting solutions?
The change in users’ viewing device of choice (connected TV, streaming sticks, tablets, smartphones) only increases the threat of veteran TV providers being cut out of the loop, as Internet giants work to leverage their platforms to secure a central role in managing the user interface.
A selection of platforms’ users and subscribers in Q1 2014 (millions) and YoY growth (%)
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Yves Gassot Directeur Général, IDATE
‘‘Mobility reloaded” will be the central theme of the 36th annual DigiWorld Summit.
Following through on ‘‘Game Changers’’ (2012) and ‘‘Digital Gold Mines’’ (2013), this year’s theme will allow us to further our examination of current and future upheavals in the digital economy by exploring the issues from a specific angle: mobility and its impact on user behaviour and on the value chain for telecoms, TV, advertising, the Internet, gaming, smart cities, etc.
- What innovations can we expect from mobile Internet disruption?
- Are fixed and mobile superfast access interchangeable?
- What new players and business models will emerge from the Internet of Things and mobile advertising?
- Will mobile devices turn TV into a one-to-one business?
- How can Europe get back in the game?
IDATE Chairman François Barrault points out that, ‘If the cloud, big data and the Internet of things are clearly the major disruptions looming on the horizon, the momentum today lies in the mantra: mobility first!’
IDATE CEO, Yves Gassot, details the key points of this year’s programme: ‘What began with the swift commercial success of 4G is segueing into the spectacular technological leaps expected from LTE-advanced and, beyond that, the prospect of 5G, the widespread adoption of software-driven networking (SDN)… But questions also linger over the accelerated pace of the migration from the fixed to the mobile Internet, spurred by the massive popularity of smartphones and tablets, coupled with the surge of emerging economies. It goes without saying that a great many stakeholders are being affected by these massive changes in the landscape, which we have chosen to explore from three angles: How revenue is progressing for mobile operators and other players, from M2M to the Internet of things and beyond; How the massively mobile Internet will affect the advertising ecosystem; and how TV industry players are positioning themselves now that video accounts for an increasingly large share of mobile traffic’.
The 36th annual DigiWorld Summit will run from 18 to 20 November in Montpellier, France, and play host to a panel of international industry luminaries who will share their views with more than 1,300 participants from 30 countries. IDATE analysts will lend their expertise to the sessions that will be moderated by Digiworld Institute members.
DigiWorld Week: the DigiWorld Summit broadens its horizons
This year’s DigiWorld Summit will kick off DigiWorld Week: a new initiative from IDATE and its key partners to explore the many facets of the digital society’s core economic issues. A series of exciting events will be taking place from 16 to 21 November on either side of the core two-day Summit:
- The Connected Things Forum
- The Game Summit
- MIG (Montpellier In Game)
- Industry Oracles
- Economic Club on m-payment
> Find the latest programme updates at www.digiworldweek.com
More than 140 speakers on hand
This year, we are delighted to welcome speakers from the four corners of the globe, come to share their views on the future of mobility:
- Mikael BÄCK, Vice President Global Strategy & Portfolio Management of Ericsson will share some of the chief findings of the “Mobility report”.
- Jean-Michel FOURNIER, CEO & Co-Founder of BitGym, a San Francisco-based start-up and winner of the prestigious Auggie Award at AWE 2014, will talk about the “quantified self” phenomenon.
- Kayvan MIRZA, CEO & Co-Founder of Optinvent will unveil his approach to new generation smart glasses.
- Patrick PELATA, EVP & Chief Automotive Officer of Salesforce.com will speak with Thierry VIADIEU, New Mobility Program Director from Renault, about the future of connected cars.
- Christophe WILLEM, Senior VP of Strategy & Marketing at Thales Alenia Space, will tell us if drones, balloons and mini-satellites offer viable solutions for connecting huge swaths of the population to the Internet.
- Michel COMBES, CEO of Alcatel-Lucent will close the “Road to 5G” session, whose speakers include Selina LO, President & CEO of Ruckus Wireless, and Atsushi TAKESHITA, President & CEO of DOCOMO Communication Laboratories Europe.
- Pierre LOUETTE, Deputy CEO of Orange and Carlos LOPEZ-BLANCO, Global Head Public & Corporate Affairs for Telefonica, will discuss how telco business models will evolve in Europe, against the backdrop of market consolidation.
- Laurent SOLLY, Facebook’s Managing Director France, and Benny ARBEL, Founder & CEO of MyThings, a rising star in retargeting, will discuss the challenges that advertising faces as it makes the transition to mobile.
- Luc JULIA, VP & Innovation Fellow of Samsung and Co-authored Apple Siri's core patents, Erick TINICO, Director of Mobility at AT&T, one of the world’s most advanced telcos and Axel HANSMANN, Gemalto’s VP of M2M Strategy & Marketing, will share their analysis of new business models for M2M and the IoT.
- Fu SHENG, CEO of Cheetah Mobile, a growing mobile Internet powerhouse in China, with 340 million users.
- Abigail KHANNA, Head of Digital and Future Media Business Development at the BBC, Steve McCAFFERY, GM & SVP of sales for Europe Arris, Eric SCHERER, Director of Future Media, France Télévisions, and Valery GERFAUD, General Manager, M6 Web, will explore what the future holds for television, now that mobile devices are becoming users’ screen of choice.
- Guillaume de FONDAUMIERE, Co-CEO of Quantic Dream, Susan O’CONNOR, a writer whose script credits include the games BioShock 1 & 2, Far Cry 2, Tomb Raider and Star Wars 1313, along with Charles CECIL, co-founder of Revolution Software, creator of Broken Sword, are among our video game Oracles.
- Meng LI, Director of China Telecom’s Mobile Business Department Europe, will talk to us about the development outlook for mobile in its various forms in the world’s biggest market.
- Jean-Ludovic SILICANI will talk about his time as Chairman of France’s telecoms and postal regulator, ARCEP, and share his insights into key issues going forward.
- Vincent LE STRADIC, Managing Director of Lazard, will provide a financier’s perspective on the health of Europe’s digital economy. And…
- Axelle LEMAIRE, French Ministry of State for Digital Affairs will deliver the Summit’s closing remarks.
Published in COMMUNICATIONS & STRATEGIES No. 94
Conducted by Laurent MICHAUD, IDATE, Montpellier, France
C&S:How do you see the video game industry today?
Alain LE DIBERDER: The industry is facing a deep shift of its main business model. It’s not a problem of overall market size. Even if the macroeconomic environment is rather dull, even if the new mobile market works with very low price levels, most of the firms are able to adapt themselves to the new revenue framework. Instead the main issue is the changes needed in the corporate organizations. Yesterday, AAA products were king and the sales department was king of the AAA market. Today the whole process starting from an idea and ending in an actual consumer needs to be reshaped. Unfortunately marketing, technology and price policy are far more flexible than human behavior.
C&S:Video games are reaching their full potential online with multiplayer or massively multiplayer, social, viral, flash and ubiquitous components. What do these developments inspire for you?
A.L.D: All these technologies are impressive and improving very quickly. But I’m not sure that they actually drive the industry to a new era. Videogamers were “social” from the start, and videogames were “viral” far before Facebook or Tweeter. Even in the Eighties, schools and universities were an effective “social media” in which gamers and game reputations were debated, built and destroyed. And they still are. The new phenomenon is that the “social” dimension is now included in the code. And there are opportunities to make money with it. But the videogame industry, for the moment, is not able to catch the main part of this market, which is dominated by “transversal” companies like Facebook, Twitter, Apple and so on.
C&S:What are the effects of globalization on the creation of content, on the creators?
A.L.D:The videogame industry is probably the first entertainment business being born global. The movie industry was partly global relatively soon (say around 1910), but even today national and regional components remain important. It’s the same for music industry. The reason why the videogame industry is different is quite simple: during the first ten years of its history, there was barely no text inside the games. Remember Pong, Pacman, Space Invaders, or even the first Mario. Without any words the only text to be translated was the cartridge sleeve or the instruction sheet on the arcade cabinet. The need for text and localization only came with PC games in the eighties, but it was too late for local cultures: the industry DNA was definitively global. Even the word “localization” tells the truth. The industry can’t be more global than it was at its birth, and the only thing that could happen in the future is less globalization, not more. But it probably won’t.
C&S:Hardware vs. software: are home consoles set to disappear in favor of streamed games? More generally, won't hardware be reduced to a "stupid” screen?
A.L.D:I don’t believe that the console industry holds a strong future. Consoles are expensive, non-durable and challenged pieces of hardware. Competition from set-top boxes and mobile devices is stronger and stronger. But hardware won’t be reduced to a stupid screen. There is a bright future for hardware if you compare the specifications (and price) of a present smartphone to those of a home computer or a home console from ten years ago. Hardware is more and more smart, not stupid. In fact the new hardware standards and the telecommunication networks live together in an ecosystem in which smart networks need smart home equipments, not dumb.
C&S:Oculus Rift, Google Glass, holographic technology ... what do you think the next disruptive gaming experience will be?
A.L.D:I can’t see such a thing as a disruptive technology in the videogame history. Technology is an additive process in the videogame industry not a subtractive one. For instance when the home console began, in 1974, the arcade market didn’t disappear. The computer games started slowly at the end of the seventies and added their sales to the console market. When the PC market was mature, in the beginning of the nineties, the console market exploded too in the 16 bits era. Online games began to be popular before the web. I remember having wasted many hours playing Microprose Grand Prix on line in 1992 with a 14.4kbs modem. Today the online market is strong, but more than 20 years after, between 60 and 80% of the overall market, depending on what you consider as a videogame « sale » is still offline. We could also think of 3D games, Virtual reality helmets, streamed games and so on. But the truth is that during 40 years many technologies have been introduced, many have failed (especially with 3D, beware Oculus!) and many have contributed to the Harlequin suit in which the videogame industry is dressed.
C&S:What are the issues in which the French industry still needs to progress?
A.L.D:There are French developers, French magazines, excellent French videogame schools, some French companies, but the “French industry” doesn’t exist. Of course there is Ubi Soft. But Ubi began to develop games in Asia or Morocco 25 years ago, and regarding the workforce, is more a Canadian company than a French one. Vivendi invested in big US companies but they remained American companies reporting to French shareholders. And Vivendi sold the main part of the shares to Activision. Infogrames bought many British and American companies and the glorious brand of Atari, but it failed. From the beginning, the golden era of Ere Informatique or Loriciels, the French (little) companies have always sold more than 80% of their products in the world market. Almost all the titles, such as “Another World” or “Alone in the Dark” were in English, even in the French market. Many French guys have succeeded in the videogames industry, but as it’s a global industry, they were and still are involved in a non-national world. A national videogame industry is a nonsense, except maybe in Asia.
C&S:What remains for us to (re) invent in terms of gaming experience?
A.L.D:Maybe the next frontier could be the physical experience. The Wiimote and the Ki-nect were a first step, and now the “connected object” is blooming. It will probably take time, but I feel that the gamification of personal care is a strong trend.
Alain LE DIBERDER holds a Ph.D. in Economics. After advising French Minister of Culture Jack Lang (1989-1991), he moved to France Télévision under CEO Hervé Bourges (1991-1994) and then on to Canal + as Head of New Programmes (1994-2000), while he contributed to establishing several landmark cultural portals. He created Allociné TV, a channel devoted entirely to cinema, in 2010, and joined Arte as Head of Programmes on 1 January 2013. He has published several books and papers on digital technology and the media.
Deputy Managing Director
Director of TV & Digital Content Business Unit
While DVD revenue continues its inexorable decline, transactional video – i.e. streaming and downloading to rent (DTR) or own (DTO) – is only barely picking up the slack. Online video rental cannot single-handedly offset the drop in DVD sales and rental.
So studios are focusing their energy on creating a new distribution window just for Direct To Own, also known as electronic sell through (EST), which falls before not only VoD rental (Direct To Rent) but also two to four weeks before any type of DVD release.
They are also imposing a window between online sales and online rentals. This new approach, which was introduced in late 2012, appears to be giving EST a boost. While VoD rentals are growing slowly (no doubt due in part to competition from SVoD), online sales are enjoying a solid uptick.
Consultant at IDATE
TV households in the United States still watch an average of 17 channels, despite steady increase in the number to choose from.
The high price of cable pay-TV packages in the United States is justified in part by the huge number of channels they include, even with basic packages. This pay-TV model operates under a system of bundles, i.e. subscriptions to popular channels are usually bundled with a host of less popular ones.
Under this model, it can be more expensive and harder for a customer to subscribe to a single premium channel rather than a whole package. This especially interesting when we know that TV households in the United States only watch an average 17 channels from among the host available to them.
This stagnation in the number of channels that users actually tune in to underscores to some degree that specific content is more important than choice. Moreover, Internet technologies have bolstered the development of on-demand viewing. Now that users have more and more ways to access programmes, they also want to be able to access them on their own terms (à la carte) rather than be beholden to their multichannel video programming distributors’ (MVPD, aka pay-TV providers) commercially-motivated decisions.
To adapt to these new behaviours, MVPD are gradually starting to test new products that meet the needs of these “never cords” and “cord-shavers”. America’s leading cable company, Comcast, thus tested a temporary plan that included Internet access, access to its Xfinity Streampix streaming service and premium channel HBO. The plan was launched at around $50, which is well below the price that most users pay for a complete pay-TV package.
Deputy Managing Director
Director of TV & Digital Content Business Unit
At a time when Netflix is shaking up classic video distribution models, IDATE is delivering an analysis of ongoing disruptions in TV content distribution.
The television industry is having to contend with a major game changer, namely increasingly individualised viewing. This change is upending the industry’s longstanding mass media model, but also paving the way for new business models and a new period of growth.
Individual TV viewing also represents a dual opportunity: to transform the household market into individual markets, and to capitalise on the shift from mass advertising to more relevant targeted advertising.
This growing individualisation is part of the "cloudification" of the technical chain that makes it possible to better serve multi-network and multi-device behaviours, and of the process of adapting services to find the right interplay between linear and on-demand TV, to re-monetise catch-up TV, and to develop the SVoD and electronic sell-through (EST) markets.
IDATE has developed three scenarios to describe and quantify the potential impact of this tremendous change in video content markets:
• a growth scenario: "the new golden age" where the increasing individualisation of video consumption and Internet access leads to the creation of a market for individual subscriptions, and where video – both linear and on-demand – becomes a medium of choice for advertisers;
• a scenario of stagnation: “business as usual” wherein pay-TV plans remain largely monolithic, where on-demand products hold little appeal and TV’s ad revenue suffers from advertisers moving a portion of their spending over to the Web;
• a negative scenario of "commoditisation," characterised by an accelerated migration from a paid to a free model, and TV losing its relevance as an advertising medium.
The three TV/video market development scenarios applied to the US (billion €)
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Head of Consumer Electronics & Digital Entertainment Practice
Future set to play nice with smart toys: a sector forecast to climb to 7.4 billion EUR in 2018.
Smart toys, or app toys, consist of three interconnected elements: a video game, one or more connected objects and a distribution platform with a display. Smart toys now constitute a new market segment, at the cross-section of the video game and toy industries.
Tablets are proving to be a good platform for smart toys to recreate or adapt innovative game concepts and transform existing toys. Smart toys use several technologies that allow the toy to talk to the application: NFC, gesture recognition by camera, static electricity, sound pulses and Bluetooth.
The possible interactions between the three components of video games are inspiring games creators to create new, innovative forms of entertainment, which can be exploited by both video game developers and toy manufacturers in search of new markets. This is why leading toy manufacturers such as Hasbro, Mattel, Lego and Bandai, are gradually embracing them.
Also getting in on the action are video game market players, big and small. Activision Blizzard is one of the pioneers in this area, with its Skylanders series of video games and collectible figurines that interact with a fun app of the same name. As of February 2014, the franchise has generated 2 billion USD and more than 175 million figurines have been sold.
The range of possible combinations between app, object and display device means an equally wide a range of business models, depending on the smart toy creator's core business:
• A toy manufacturer will tend to focus on the object and the business model typically attached to it. This sector is showing no more than 1% growth, so their goal is to capture a share of the video game market by developing smart toys that make better use of the software component. One trump card already in their hands are the licences to popular products;
• A video game publisher and developers will tend to focus on the application, which will be marketed as free-to-play. They have already proven themselves in this segment, but smart toys could well materialize in other kinds of video game, such as sport and action/adventure titles. So there is no shortage of opportunity. Added to which, these new offerings will disrupt the video game value chain, which is dominated by digital content distribution;
• lastly, a pure player from the smart toy sector will opt for a combination of these two approaches.
The outlook for smart toys in this new gaming market is particularly promising: the sector’s worth could climb to 7.4 billion EUR in 2018, compared to 2.2 billion EUR at the end of 2014.
Backed by toy manufacturers, game developers hold the keys to success here, provided they deliver truly innovative gameplay, regardless of the target platform: tablet, smartphone, personal computer or home console.
If you want to discover our study in this new market.