1、1NextGen Video:Winning in the New Video EnvironmentNextGen Video:Winning in the New Video EnvironmentThe TV market is going through unprecedented changes.Our global study assesses this disruption and sheds light on new business models.1NextGen Video:Winning in the New Video EnvironmentUnprecedented

2、UpheavalIn the 90 years since the public saw the first television,the industrys evolution has been punctuated by periodic technological breakthroughs,including satellite transmission in 1962,the VCR in 1972,and digital terrestrial television in 1998.However,video-capable high-speed broadband Interne

3、t access is triggering the industrys first revolution.With almost half of the worlds population now online,up from 29 percent in 2010,and with the cost of connectivity and connected devices dropping,the pace of change is accelerating.Moreover,the global nature of the Internet has turned an industry

4、that has been largely national and occasionally regional into a global battleground.Traditional TV service providers have been making a flurry of organic and inorganic moves to protect their market positions and target new opportunities.While some moves show early promise,many do not appear to be an

5、chored to a long-term strategy and intended market position.Without new business and internal operating models to support them,these ventures into unfamiliar territory could destroy value.With almost half the worlds population now online,and the cost of connectivity and connected devices dropping,th

6、e pace of change is accelerating.To assess these market dynamics and formulate viable and sustainable models,A.T.Kearney conducted a global study,using more than 80 surveys and interviews with executives from pay TV providers,telecoms,cable companies,broadcasters,and online video providers.This pape

7、r draws insights from this comprehensive research into the mind-sets of industry leaders as well as from A.T.Kearneys experience and knowledge of the industry.We explain how the video ecosystem is changing and anticipate the rate of change by market.Finally,we recommend where and how pay TV provider

8、s should play to win in this new video environment.A Disruptive EcosystemYouTube has launched linear pay TV bundles.Netflix and Amazons combined content spending is expected to surpass$10 billion in 2017.Apple is moving into original content to support its video platform.Faced with these threats fro

9、m powerful new sources,pay TV providers are taking new positions in the market.Comcast has bought NBC Universal and Dreamworks Animation,AT&T is seeking to acquire Time Warner,Liberty Media has bought Formula One,and many pay TV providers have launched“skinny TV offers”at marked-down prices closer t

10、o those offered by the new online video providers.At the same time,most broadcasters are going direct to consumers with their own over-the-top(OTT)on-demand services.As new business models emerge and companies redefine their way of doing business,the market structure is being transformed(see figure

11、1 on page 2).For a long time,the traditional TV value chain had stable revenue pools with each company playing a clearly defined role:pay 2NextGen Video:Winning in the New Video EnvironmentTV providers received subscription fees from end users;broadcasters received advertising revenues and,in some c

12、ases,carriage fees.The number of revenue pools at each stage of the value chain was limited and for the most part restricted to the domestic market.By contrast,in the new video environment,there is much greater breadth in the revenue pools.Moreover,the traditional value chain is being replaced by a

13、much more fluid ecosystem,where many companies take on multiple roles and both compete and cooperate with each other.A major factor of this new video ecosystem is the accelerating shift in customer viewing habits from linear broadcast to on-demand,which is increasingly over an unmanaged IP connectio

14、n(over-the-top).Although this trend is evident,much uncertainty remains.“Linear will face a decline,”the president of a North American media company said in our study.“The direction is clear;the speed is not.”That said,executives agreed linear TV will not disappear and has a future role to play.The

15、speed at which the traditional TV value chain is being disrupted in a market depends on a myriad of factors,although we see the availability and cost of broadband and connected devices as the main factors.Our Global TV Disruption Index assumes connectivity is the trigger and that the TV market lands

16、cape and business environment further accentuate disruption (see sidebar:A.T.Kearneys Global TV Disruption Index on pages 4 and 5).In markets such as Northern Europe,North America,and developed Asia,disruption is already well under way.TraditionalTV landscapeNew“video”landscape Recorded production L

17、ive events Made-for-digital Live streaming Multiple feeds(for example,multi-camera)Small/2nd screen AR Sales to broadcasters Linear rights Standard windowing Local deals Sales to new digital service providers Linear and non-linear rights New/compressed windowing Some global online deals Broadcast TV

18、 channels Live streaming VOD apps Content libraries General linear advertising IP-targeted linear ads Digital video advertising Multiscreen/interactive apps Content discovery,management algorithms Pay TV subscription SVOD AVOD TVOD UHF/VHF DTT Managed fixed line Mobile Satellite Open IP Managed IP C

19、DNs Analogue TVs Analogue and DTT STB Smart TVs STB media gateways Digital media receivers Connected consoles Smartphones/tablets PC/laptopsNotes:UHF is ultra high frequency.VHF is very high frequency.DTT is digital terrestrial television.AR is augmented reality.VOD is video on demand.IP is Internet

20、 protocol.SVOD is subscription video on demand.AVOD is advertising video on demand.TVOD is transactional video on demand.CDN is content delivery network.STB is set-top box.Source:A.T.Kearney analysisFigure 1 The TV ecosystem is evolving into a new“video”landscapeContent creationContent aggregationCo

21、ntent provisioningDistributionProductionProductdevelop-mentServiceoferingEnhance-mentDeliveryHardware3NextGen Video:Winning in the New Video EnvironmentAmong the large emerging markets,China and Mexico are also seeing major shifts in viewing patterns,and we expect India and Russia to catch up soon.O

22、n the whole,our study reveals a strong sense that the video ecosystem is on the cusp of unprec-edented upheaval.Most respondents anticipate major disruption of revenue distribution within a decade,with 53 percent saying it will happen in the next five years.Almost all the rest expect moderate change

23、 in the next five years but transformational change within the next decade.Where to CompeteArguably the most defining characteristic of this new video environment is a massive increase in content supply,enabled by the democratization of both production and distribution(see figure 2).More than 400 ho

24、urs of video content are uploaded to YouTube every minute,while more than 400 scripted TV dramas are aired in the United States every year.1 There are more than 1,300 OTT video services globally,and the leading OTT providers,such as Netflix and Amazon,are spending billions of dollars to produce orig

25、inal content.The video battleground will continue to grow.“I expect each major studio and TV broadcaster to have its own OTT service,”one executive said.These developments lead to an oversupply of video services for consumers to choose from.And yet our study indicates executives expect households to

26、 pay for only two or three video subscriptions.With most content owners and new service operators lacking the capabilities,Notes:OTT is over-the-top.VOD is video on demand.Source:A.T.Kearney analysisFigure 2 The disruption in the video ecosystem is driven by unrestricted“democratization”Democratizat

27、ion ofTalentProductionPlatformsAdd-onsAccessDevicesAudiencesTalent decided by big media scouts and auditionsCapex and tech-heavy filming by few studios with deep pocketsBroadcasting limited to a 24-hour grid,and limited pay TV bundlesRights owner dictates most adjacent content or revenue streamsDist

28、ribution controlled by infrastructure owners(for example,cablecos,satcos)Single screen in the family living room,often at a significant costLocal audiences being servedOld world of TVNew world of videoEveryone,including every company,can broadcast themselvesAnyone with a smartphone has a license to

29、produceCheap and easy to create an OTT VOD platform or digital multichannel networkAnyone can create and monetize websites/apps related to a showAn Internet connection unlocks near-unlimited video contentEveryone can own a smartphone for less than$50Global audiences in control24h$1 Improving Our Bra

30、nd Safety Controls,Google,17 March 2017 4NextGen Video:Winning in the New Video EnvironmentA.T.Kearneys Global TV Disruption IndexAlthough the trends in TV markets around the world are similar,the environment and pace of disruption varies.Our Global TV Disruption Index assesses how much disruption e

31、ach country can expect over the next five years.In our Index,disruption is defined as a shift in video consumption from linear broadcast to OTT platforms.Demand-side disruption also results in broader supply-side and economic disruption.In a digital OTT environment,the supplier land-scape is much mo

32、re fragmented than in linear broadcast with a different degree of value chain integration.The revenue models and margins are also much different.The Index is comprised of 17 metrics that are driving disruption in three weighted categories.2,3 The top 20 countries that are expected to be the most dis

33、rupted come from nearly all continents(see figure A).The highest-ranked country is Sweden,which is already progressive in online video.High-quality,affordable Internet infrastructure is complemented by a favorable digital media landscape and a culture of innovation,with many online media technology

34、start-ups,including Spotify,Voddler,Magine,and Mavshack.The relatively high degree of government control over the Swedish broadcast TV market may also indirectly be a contributor to innovation.The other Nordic countries are also in the top 20 for many of the same reasons,in addition to high proficie

35、ncy in English,which makes consumers more likely to access non-native OTT video content.In Asia,the more developed markets of Singapore,South Korea,and Hong Kong are all in the top 10.Making the top 20,Malaysia has one Source:A.T.Kearney Global TV Disruption IndexFigure A:Top 20 countries in A.T.Kea

36、rney TV Disruption IndexConnectivityDemand/supplyEnvironmentalTotalscore ScoreRankScoreRankScoreRankSwedenAustraliaSingaporeUnited StatesDenmarkHong KongCanadaColombiaSouth KoreaFinlandUnited KingdomNorwaySaudi ArabiaQatarNew ZealandSwitzerlandMalaysiaTaiwanUnited Arab EmiratesAustria1112

37、8192030.228.529.928.529.227.427.326.129.528.424.626.524.125.523.125.120.123.123.525.452922201412.713.411.811.612.213.011.518.211.310.710.69.516.613.410.49.417.811.713.710.2232026282522294303962717357.17.46.68.06.36.88.32.76.17.68.77.31.93.48.37.13.46.43.44

38、.9372714292050.049.248.348.147.747.347.247.046.846.743.943.342.642.441.841.741.341.240.640.52 Connectivity(55 percent):fixed broadband Internet penetration,mobile broadband Internet penetration,fixed connectivity bandwidth,mobile connectivity bandwidth,penetration of connected

39、devices,mobile data affordability(relative to GDP per capita at PPP).Supply and demand(35 percent):pay TV household penetration,pay TV affordability(relative to GDP per capita at PPP),consumer age-related demographics,on-demand viewing(TV,smartphone,tablet),digital share of advertising market.Enviro

40、nment(10 percent):innovation environment,regulatory environment,English language proficiency,credit card penetration.3 Metrics are derived from A.T.Kearneys NextGen Video study and established sources such as the GSM Association,Ovum,Gartner,Economist Intelligence Unit,ZenithOptimedia,IHS Markit,CAS

41、BAA,the Latin American Multichannel Advertising Council,Millward Brown,Bloomberg Global Innovation Index,World Bank,EF Education First,and Akamai.5NextGen Video:Winning in the New Video Environmentof Asias highest pay TV penetration rates,leading to a mind-set of paying for video content that will s

42、upport subscription video on demand(SVOD)models,while the regional success of Malaysian SVOD provider iflix and ongoing online video innovation by pay TV leader Astro have also boosted the online video market.Other notable countries in the top 20 are Colombia,which has good connectivity and Latin Am

43、ericas highest pay TV penetration,and the Gulf countries of Saudi Arabia,Qatar,and the United Arab Emirates.Saudi Arabia ranks highest in the Gulf,boasting the worlds highest YouTube consumption per capita,relatively cheap mobile data,and one of the youngest populations in the world.Further insights

44、 are evident when adding a second component:the actual disruption progress,defined as the viewing ratio of on-demand video relative to linear broadcast(see figure B).When comparing countries viewing ratio(actual disruption)with the Index score(projected disruption),we see three stages of disruption:

45、Acceleration.Consumption shifts are clear,supported by enablers with a virtuous cycle of growth in the online video ecosystem likely to drive exponential disruption.Adaptation.Enablers are mostly in place or rapidly evolving with consumption patterns expected to soon follow.Enablement.Enablers are l

46、argely lacking,but markets could skip the curve under the right conditions.In the enablement stage,change is expected to be gradual.However,there is potential for a dramatic shift.For example,in India,which didnt make the top 20,telecommu-nications company Reliances sig-nificant cut in mobile data c

47、harges combined with the explosive growth of OTT video services could trans-form the market.Of course,it is also worth bearing in mind that for large,heterogenous markets such as India both the current and short-term disruption potential will vary signif-icantly between urban and rural areas.All mar

48、kets are already experiencing disruption to varying degrees,and all are expected to follow the same curve.There is therefore much to learn from markets that are both at the same stage and those that are further along the curve.Finally,although some markets appear to be safe from short-term disruptio

49、n,the landscape can change quickly,particularly through supply-side innovation and changes in connec-tivity,such as national fiber rollouts,the launch of 5G,or mobile data price wars.A futureproof strategy,supported by scenario planning and war-gaming,can help protect market position and capture new

50、 opportunities.Figure B:There are three stages to consider when comparing countries viewing ratio andDisruption Index scoreHighLowDisruption progress:ratio on demand versus linear viewingSpainGermanyFranceHong KongUnited StatesTaiwanUnited KingdomBrazilSingaporeMalaysiaJapanItalyQatarRussiaPolandNet

51、herlandsNewZealandColombiaDenmarkCanadaAustraliaArgentinaMexicoSouth KoreaNorwayChinaSaudi ArabiaTurkeyIndonesiaEgyptBelgiumIndiaPhilippinesSwitzerlandUnited ArabEmiratesHungaryNigeriaFinlandGreeceAustriaRomaniaKenyaThailandPortugalCzechRepublicPakistanSwedenSouthAfricaChileIrelandNotes:The target a

52、ge group is 16 to 45 years old.On-demand viewing includes time spent watching on televisions,smartphones,and tablets.Sources:Millward Browns AdReaction Video study,Ericssons TV and Media 2016,A.T.Kearney Global TV Disruption Index0.52.53.51.53.02.04.01.00.0Expected disruption(TV Disruption Index sco

53、re)AccelerationAdaptationEnablementStrong enablers exist with high consumer uptake for video on demandEnablers are in place,and demand is expected soonSome enablers are not developed enough to initiate disruption6NextGen Video:Winning in the New Video Environmentresources,and experience to provide d

54、irect-to-consumer offerings,market fragmentation will create opportunities for companies to collect and deliver this overflow of content in a compelling and structured way.In this environment,viewers dont want to waste time surfing through content platforms to see what is available.The average Ameri

55、can spends nine minutes flipping traditional channels per viewing session but 18 minutes per Netflix viewing session deciding what to watch.In essence,they want help navigating the vast amount of on-demand content.To simplify their searches,55 percent are willing to pay,and 53 percent want recommend

56、ations about what to watch.4 To be successful,video platforms will need to offer compelling content,easy-to-use services,and accurate recommendations about what to watch.A content navigator simplifies and enhances video experience for viewers and adds value for all stakeholders in the ecosystem.Our

57、study indicates a strong latent demand for what we call content navigators.By providing an intuitive interface that helps users quickly find the shows they like,a content navigator can create value for all stakeholders.One core function,for example,is analyzing viewing patterns to determine what con

58、sumers might like to watch next.Because the quantity and quality of data help determine the relevance of recommendations,scale will be vital.By highlighting relevant content,the content navigator acts as a conduit between viewers and content providers,such as traditional production houses,made-for-o

59、nline producers,broadcasters,OTT aggregators,infrastructure owners,and advertisers.In our study,81 percent of respondents say a smart but simple user interface is a very important factor in consumers decisions about which video service provider will be their gateway to the vast selection of video co

60、ntent.A content navigator business model has revenue streams coming from a range of stakeholders(see figure 3 on page 7).First and foremost,consumers generally pay subscription fees or one-time payments to watch content provided by a content navigator.At the same time,adver-tisers pay to place ads o

61、n the service and to receive data.Meanwhile,content producers and aggregators may also pay or barter to receive data,which can be used to improve their content.In some markets,content navigators pay carriage fees to content producers and aggregators as well as wholesale fees to infrastructure owners

62、 if the content navigator does not own its distri-bution infrastructure.The content navigator is a platform business.As with platforms such as YouTube and Facebook,scale is a key driver of profitability and the leaders will be those that move first to create scale fast.Once the content navigator has

63、 captured a significant market share,more content owners and advertisers will want or even need to be on the platform,thus strengthening the content navigators negotiating position.Many companies in the TV ecosystem can pursue a content navigator role,including telecoms,cable companies,satellite TV

64、providers,broadcasters,4 Reelgood,Learndipity Data Insights,TiVo consumer survey7NextGen Video:Winning in the New Video EnvironmentInternet companies,and connected device manufacturers.A number of potential business models are available to pay TV operators.Pure pay TV providers that do not have thei

65、r own delivery infrastructure have no choice but to evolve into content navigators.Telecoms and cable companies,however,do have a choice:focus on providing connectivity over their broadband infrastructure or expand their TV businesses to become content navigators.The right decision will depend large

66、ly on the companys market position and the likely degree of competition from other parts of the video value chain in each market.Those that choose to become content navigators will need to decide how aggressively to pursue advertising revenue and consumer payments,whether to invest in producing or l

67、icense exclusive content,and whether to bundle content with access(where local regulations permit).A pay TV operator aiming to become a content navigator has five business models to choose from(see figure 4 on page 8):Pure navigator.The company provides a platform for third-party content without buy

68、ing premium rights.The pure navigator typically charges a subscription to the platform and earns commission on selling third-party content on demand.This model relies on providing a superior customer experience underpinned by appropriate redistribution partnerships.Premium navigator.This is essentia

69、lly a pure navigator that also licenses rights to exclusive content.The premium navigator can also earn revenue by selling subscriptions to its own content as well as adjacent advertising.This model relies on strong content sourcing and monetization capabilities.Source:A.T.Kearney analysis Figure 3

70、Content navigation is a multi-sided business modelContentproducersAggregatorsAdvertisersUsersInfrastructureprovidersContent navigatorCommissionCarriage feesCommissionConsumerand viewingdataTargeted adsDiverse andpersonalizedcontentViewing dataThe“right”content and userexperienceSubscriptionfees/cons

71、umerdataDelivery/accessWholesale/transmissionfeeValue propositionMoney flows8NextGen Video:Winning in the New Video EnvironmentProducer navigator.This model is essentially a premium navigator that also builds an in-house original content rights library,either to use as a differentiator or to license

72、 to third parties.In addition to the revenue streams available to a premium navigator,a producer navigator can earn licensing revenue from its own content.This model relies on having in-house production and distribution expertise.Integrated navigator.In this model,the company builds on a producer na

73、vigator model to also have its own proprietary platform to broker targeted advertising.The goal is to maximize advertising revenue from its own products and earn commission on third-party advertising sales as well as tapping the content revenue streams that are open to producer navigators.Be a low-c

74、ost open or neutral platform for content ownersto reach the market,enhanced by technology Be the homeof premiumsports andentertainmentcontent,funded by higher user revenue and premium advertising Be a majororiginal content house and consumer platform,using contentownership and revenue to boost marke

75、t position Be a fullyintegrated media company using content control and advertising technology to maximize access to all revenue pools Be a digital-or mobile-first content provider,a leader in digital technology and data focused on a younger demographic Subscription for platform commission from thir

76、d-party VOD sales or transactional VOD rental Same as pure navigator plus subscription for content and ad revenue on own products Same as premium navigator plus licensing revenue from own content Same as producer navigator plus higher ad revenue on own products and commission on third-party ad sales

77、 Same as premium navigator plus higher ad revenue on own products and commission on third-party digital ad salesNote:VOD is video on demand.Source:A.T.Kearney analysisFigure 4Pay TV providers have five content navigator models to choose fromPurenavigatorPremium navigatorProducer navigatorIntegrated

78、navigatorTechnavigatorStrategyModelApproach Focus on core activities such as aggregating content and providing a superior customer experience Extensive reliance on partnerships Reliant on strong content sourcing and monetization capability User experience and marketing to reinforce perceptionof valu

79、e In-house content production and distribution expertise Operating model separation of content and distribution Several business units for production,content sales,distribution,and advertising services Broad capabilities,including data analytics for production,distribution,and advertising Major inve

80、stments in digital content and digital advertising platforms Rigorous use of data Digital operating model9NextGen Video:Winning in the New Video EnvironmentAn integrated navigator needs several business units for production,content sales,distribution,and advertising services,underpinned by broad cap

81、abilities such as data analytics for production,distribution,and advertising.Tech navigator.This model focuses on building an on-demand ecosystem with online and mobile platforms along with video content and digital ad networks.The tech navigator can tap the same advertising and content-related reve

82、nue streams as the integrated navigator,but its exclusive focus on an online on-demand operating model means it invests solely in online content and advertising platforms.Each business model comes with market-specific trade-offs between revenue,profitability,and risk.In general,the pure navigator mo

83、del is the least capital intensive,which helps to reduce risk.The integrated navigator is the most capital-intensive model,but the rewards can be high in terms of both revenue and profitability thanks to the scale effect and entry barriers that it can achieve.Succeeding in the New Video EnvironmentT

84、o thrive in this new environment,having the right content is no longer enough.The user experience and branding are also central elements of the value proposition(see figure 5).“In the online world,experience is even more important than content,”said the CEO of a multi-regional OTT service provider.A

85、nd in a world swamped by content,effective searching tools are in high demand.In effect,providers need to move from a“content is king”mind-set to a“customer is king”mind-set.Effective commercialization,a fit-for-purpose operating model,and building new internal capabilities will also be essential.So

86、urce:A.T.Kearney analysisFigure 5Business model requirements for videoCapabilitiesContentExperienceBrandCommercializationExperience Surfacing Social Slickness Screen Subscription ServiceBrand Matching brand promise Love for the brandCommercialization Polarized portfolio Portfolio unbundling Distribu

87、tion for reach Advertising flexibilityOperating model Cost management Organization structure Processes and governanceCapabilities Technical and content Deal making and partnership Customer analytics Business-to-consumer capabilities,such as billingContent Control and focus on spend Content formats G

88、enre mixOperating model10NextGen Video:Winning in the New Video EnvironmentBalancing content spend and formatsBuilding scale will require offering a broad range of content that caters to a wide variety of tastes,including made-for-digital content(see figure 6).Short-form content designed for mobile

89、devices also needs to be part of the portfolio.Premium sports content continues to be important to attract subscribers,but the content navigator needs to be selective as some recent surveys show people under the age of 24 are not as interested in sports as older generations are.The head of strategy

90、for group entertainment at a major European telecom group made the following observation:“Steeply growing:soccer.Falling:all other sports,except perhaps e-sports.”5Content navigators will also need to consider how to meet the burgeoning demand for local content.In our study,45 percent of respondents

91、 say they expect to spend more on local content.“Demand for local content is there,but not much is being produceda missed opportunity,”said the chief technology officer of a media group in the Middle East and Africa.With the right platform,the content navigator can also go one step further to provid

92、e access to non-video content and services such as gaming,music,shopping,and smart home services.Honing the customer experience Content navigators should aim to deliver an outstanding viewing experience that is immersive,fluid,personalized,and social.Creating such a customer experience requires a fl

93、awless execution across an array of elements(see figure 7 on page 11).Pointing consumers toward the right content at the right time is vital because it will save them time and drive up usage and the perception of value,which will in turn boost advertising revenue and increase consumption and associa

94、ted data.Along with being proficient in data Figure 6 Meeting consumers needs will require a variety of formatsSource:A.T.Kearney analysisLinear free-to-air channels In-house channelsLive eventShort-form and clipsBig studio and broadcastersMultichannel networksPay TV and online service providerNon-v

95、ideo providersMusicBroadband and voiceCommerce and home shoppingVideo servicesVideo formatsProvidersNon-video servicesPay TV networksTransactional video on demand Long-formUser-generated contentIndependent studiosGamingSmart homeSubscription video on demand and ad-based video on demand5 E-sports are

96、 competitive multiplayer video games,typically played by professional gamers.11NextGen Video:Winning in the New Video Environmentand metadata analytics,a content navigator will need to use algorithms to predict,rank,and group content in line with an individuals profile and what people of a similar p

97、rofile watch.That process can then be used to inform recommendations both for on-demand content and scheduled content.The content navigator will also need to provide an excellent search service and contextual information that will enhance the experience of aficionados.At the same time,it should be e

98、asy for consumers to turn off data tracking to protect their privacy when they want.Building brand engagementAmid intense competition,building a strong brand is vital.In our study,94 percent of respondents cite a clear identity as an important factor to winning consumers.Of course,a strong content p

99、roposition and an excellent user experience are the core ingredients of a strong video brand.“Good content and good experience will build your brand,”a European telecom executive said.“Excellent experience can create a love brand,”noted the director of B2C/head of entertainment at a European telco.I

100、f the brand engagement is outstanding,customers will forgive the occasional buffering message and the lack of a certain movie or series.Ultimately,customers become brand advocates who recruit more customers.Choosing the right brand position is also important.Companies are experimenting with three op

101、tions:TV service as an extension of a primary brand,TV as a sub-brand with some unifying factors,and TV services as a separate brand.The right choice will depend on company-specific factors,such as the target audiences perception of the parent brand.“The brand must be JourneySurfacingSocialSlickness

102、ScreenSubscriptionServiceRelationshipTechnicalSource:A.T.Kearney analysisFigure 7Delivering a superb customer experience requires attention and execution across several dimensions Curation and search Recommendation engine Personalization Contextual information Opinion making Creating(blogs and other

103、 user-generated content)Profile building CommunitiesUserexperience Multiscreen Viewing options Virtual and augmented reality Cross-device including mobile-first Intuitive and attractive userinterface Attractive hardware Consistent content delivery platform and technology Personal customer carefor bi

104、lling,operations,administration,andtechnical Digital care(peer-to-peer and self-help)Fluid relationship Ease of sign-up and cancellation Open-door mentality Invitations and reminders to come back12NextGen Video:Winning in the New Video Environmentlikable and create empathy,”noted a C-level executive

105、 at a large European cable company.Many telecoms use sub-brands for their video propositions as they seek differentiation and distance from their core connectivity business.Fine-tuning the commercial proposition It is no longer enough to offer big bundles of channels for a monthly fee.Consumers now

106、expect to be able to buy content on their own terms with flexibility to choose the content they want and then pay as they go rather than buying a rigid package or paying by the day,by the series,or for a season.For example,AT&Ts DirectTV Now and Astro Malaysias NJOI both offer no-contract,modular se

107、rvices with bite-sized sports content.Some consumers are also willing to pay a premium to have no commercials.Next to content,the user experience and branding are central elements of the value proposition in the new video environment.At the same time,the proliferation of video platforms combined wit

108、h the fragmentation of platform usage calls for content navigators to adopt a broad distribution strategy to achieve reach and scale.The navigation service should be available across satellite,terrestrial,broad-band,and mobile networks and accessible via televisions,consoles,tablets,smartphones,and

109、computers.“The key success factor is a big platform with massive scale combined with exclusive content,”a European telecom director said.The technical cost implications of multi-platform distribution do,however,also need to be managed closely.Another important element of the commercial proposition i

110、s a flexible advertising platform that can personalize commercials,reducing the likelihood that consumers will block or otherwise avoid ads.“In the next five years,we will see a transformation of the advertising business from network buying to targeted and programmatic buying,”said the executive res

111、ponsible for a large telecoms ad department.For example,Skys AdSmart platform can reach specific segments with more than 90 attributes and enables an ad campaign to target commercials to a certain demographic.The goal is to achieve cost-effective results for advertisers.One year after launch,AdSmart

112、 had increased Skys annual revenue by 54 million,partly by attracting new customers:more than 70 percent of AdSmart customers are new to Sky and TV advertising.Revamping the operating modelTraditional operating models are no longer fit for purpose in the new video environment.The organization design

113、 needs to be reviewed to encourage flexibility and innovation,supported by new business processes and governance structures.“We want to create an organization structure enabling content generation by young talent,”said a board member of a Japanese broadcaster.This includes finding the right level of

114、 centralization to balance control with flexibility,finding the most suitable position for“digital”in the company,and creating agile teams that provide talented juniors with the environment and opportunities they would expect at technology firms.Adopting a digital-first approach to internal processe

115、s is also needed to match the speed and agility of new competitors and to support culture change.13NextGen Video:Winning in the New Video EnvironmentIn parallel,cost management needs to become a priority,refocusing cost and investment to parts of the business driving real differentiation and advanta

116、ge.There needs to be“more propensity to reinvest benefits to seek the long-term sustainability of the business,”said the director-general of a North American pay TV operator.“Save to spend”becomes an important principle to maintain profit margins and needs to be enabled by enhanced procurement and s

117、trategic sourcing.Investing in new capabilitiesTo become content navigators,most pay TV providers will need to develop new capabilities.In our study,although content acquisition and management remain the priority in-house capabilities,this is closely followed by customer analytics,a typically less-d

118、eveloped capability among many traditional TV companies(see figure 8).Rounding out the top five are the tradi-tional business-to-consumer capabilities of sales,marketing,and customer service along with technical skills and partnership management.Most aspiring content providers will need to build an

119、ecosystem of partners to bring together the full range of technical and commercial capabil-ities required to succeed.Figure 8Pay TV providers will need new capabilities to become content navigatorsA.T.Kearney survey score:importance of internal factors(%of respondents)Content acquisition/managementC

120、ustomer analyticsTechnicalTraditional B2C(sales,marketing,customer service)“Bread and butter”for pay TV,telecoms,and cablecos,others are building these capabilities for their on demand oferPartnershipmanagementImportance of content acquisition capabilities reflects the importance of content“Getting

121、and using advanced analytics to understand choice”EVP,Indian broadcaster“Critically importantis the technical capability to make service work always,on any device,everywhere”CSO,European cableco“Telcos should be natural partners to OTTs”VP,Asian pay TV operatorAnalytics is second most important and

122、capabilities for this need to be further builtKey in mature markets(for example,DRM,metadata,devices)and emerging markets(for example,managing video quality)requires strong capabilitiesIncreasing amount and diferent relationships(both as client as well as supplier roles)drives importance of partners

123、hip managementNotes:DRM is digital rights management.OTT is over-the-top.Source:A.T.Kearney NextGen Video study32%33%33%48%61%43%52%34%32%26%Veryimportant Important14NextGen Video:Winning in the New Video EnvironmentSurvival of the Fittest Starts NowIn todays video ecosystem,broadcasters,telecoms,ca

124、ble companies,and pay TV providers are at risk of being pushed out by the fast-growing popularity of global OTT video platforms such as Netflix,Google,YouTube,Amazon,Apple,and Facebook,who tend to build on their existing brands and strengths honed in the online world,such as customer targeting,adver

125、tising,and data analytics.While many executives believe they have identified what they need to do to thrive,most companies are struggling with execution.In fact,67 percent say they face an array of challenges in moving from planning to design and implementation,among others:(Over-)Dependence on thei

126、r legacy business model,which has often been very successful for many years with stakeholders reluctant to tamper with it A lack of internal agility and deficiencies in developing or acquiring new capabilities Indecision over how and when to monetize OTT and on-demand video A legacy mind-set about m

127、anaging customer relationshipsAs they grapple with these challenges,executives see the risk of being overtaken by diversified Internet companies that are gaining ground in video(see figure 9).The biggest perceived threats are Netflix,Google,and Amazon.“OTT will be the number 1 media player in 10 yea

128、rs,”said a European telecom groups chief strategy officer.Figure 9Internet companies are expected to be big winnersWho is best positioned to win in the video environment in the next five years?ProductionhousesMajor diversified Internetcompanies providing OTT videoPure-play OTTvideo providersTelecoms

129、 and cable companiesPay TV operatorsBroadcasters0.20.50.41.01.11.4Major winnersMajor losersNeutralWinnersLosersNote:OTT is over-the-top.Source:A.T.Kearney analysis15NextGen Video:Winning in the New Video EnvironmentAlthough this is a realistic assessment of how the market dynamics are likely to play

130、 out,it is not necessarily a zero-sum game.All kinds of companies can win in the new video environment if they get their strategies and internal operating models right.For telecoms,cable companies,and pay TV providers,this often means becoming content navigators as soon as possible with a focus on f

131、our areas:Compelling content.Cater to a wide variety of tastes,and ensure programming is fresh and innovative with both local and made-for-digital content.Exceptional customer experience.Be consistent and flawless,enabled by technology and enhanced by a positive and open customer relationship.Clear

132、brand identity.Build a strong“love”brand in customers minds,moving from hard fact-based push messaging to softer experience-based pull messaging.Given the intense compe-tition for consumer attention,this will be crucial.Flexible commercial proposition.Offer flexible options for products,payments,and

133、 platforms,including a trade-off between subscription price and advertising load.In addition to consumers desire for flexibility,advertisers want more options and the ability to target ads to justify their spending.Delivering this sophisticated proposition and competing with tech companies will requ

134、ire new operating models and rapidly developing new capabilities.Because retraining staff will take too long,most content navigators will need to recruit new talent,partner,or buy specialist companies that have the required expertise.There is little time to lose.In fact,in most markets around the wo

135、rld,disruption is already happening.Given that scale in the content navigator role is vital,and the number of winning content navigators will be limited,fast movers will gain a clear advantage.AuthorsSarovar Agarwal,partner,Melbourne Martijn Nuijten,consultant,Amsterdam Christophe Firth,principal,Mi

136、ddle East The authors would like to thank the following people for their valuable contributions to this paper:Europe,the Middle East,and Africa:Herve Collignon,Florian Dickgreber,Laurent Viviez,Julien Vincent,and Ajay JayaramanAsia Pacific:Ajay Gupta,Alessandro Gazzini,Anshuman Sengar,Shekhar Chauha

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