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Opinions on the Market by Dave Morel

Opinions on the Market by Dave Morel

About five years ago, I started having a lot of conversations about mobile video. Many of us in the streaming media business seemed to think that "next year" was the year mobile was really going to be big. We were right when we said that in 2011, and since the start of 2012, mobile, most specifically tablets and handsets, has played a major role in shaping our industry. It's become a legitimate impact on revenues and brand awareness in a variety of ways. Perhaps most importantly, mobile experiences are now an expectation of the most coveted demographics in the advertising business, and that means content providers must have competitive offerings.

Still, there are challenges to overcome, many of which I get to have direct impact on for the most sophisticated broadcasters here in the U.S. and abroad in my day-to-day work. Monetization, integration with complex publication workflows, entitlement systems, linear broadcast and live scheduling, FCC regulations around Closed Captioning, Digital Rights Management, and the very (very) muddied waters of providing high quality user experiences in a world full of competing delivery platforms chiefly among them. Certainly we can not forget about what I'll politely call the nuanced implementations of the various protocols across the staggeringly disparate range of devices that exist in the market place today – a number which grows with every new press release. These challenges, thanks to a host of very smart folks (many of whom I have the pleasure to work with every day here at Unicorn Media), can finally be overcome in cost effective ways with much less effort than in years past.

As more and more content creators have solidified their mobile strategies through formation of digital teams that span across programming, distribution, ad operations, and myriad departments inside the complex world that is broadcasting, it is fair to say we have legitimately turned the corner with mobile, to the point where it's become a quantifiable profit center rather than a cost center. As an industry, we are no longer trying to keep up; rather we are innovating to the point at which we are legitimately changing the way people consume their entertainment, how they get news and weather or how they stay apprised of their favorite sports teams. Quite simply, the "where and when" they are tuning in is fundamentally different than it was just three years ago, and it's good for both the consumer and the producers of the content being distributed. Look no further than some of this year's streaming and digital media events, where heads of digital at ESPN and CBSi are talking about the promise of multi screen delivery. The promises of mobile specifically have begun to be satisfied as the strategies and technologies stay ahead of the ever-changing market. With many of the questions around mobile answered, like all forward thinking industries, we have shifted the conversation to start talking about the next big frontier.

There is a sea change afoot for sure; the prospect of breaking from the traditional cable and satellite-based models of servicing the market are becoming a dominant part of the conversation. The stage is already set. The successes of Netflix's transition to an IP based delivery model, Amazon's aggressive entry into the streaming entertainment industry cleverly tied to a subscription for physical goods via Prime, the sizable investment by Google's YouTube in their own studio and the much publicized monies they put into Machninima (even as they launch on Xbox Live!), are just some of the examples of the already changing landscape.

Lately I'm having lots of discussions about the future of television – I was asked the other day what I thought the industry would look like in five years, what with the constant chatter about the cord cutters and the cord nevers. Do I think cable and satellite will be a dying business in that time span? I don't think it will be. Certainly there is change and the successful operators will need to move a little faster than we have seen them do in the past, but the numbers and generational gaps in the taking up of new technology are simply too large to think that cable and satellite are on their last legs.

Today, the complexity of actually cutting that cord is just not going to work for my mother-in-law, but that doesn't mean we aren’t in the early stages of a very clear transformation of the media and entertainment industry. The above examples are just the beginning. The connected devices from Xbox, Apple TV, to Roku are poised to be in the dominant position for eyeballs. The very same MSOs that deliver the content through connections to your home have the infrastructure and capital to adapt. Today's "triple play" certainly seems threatened in the mid-term, but perhaps the consolidation of these services isn't the worst scenario for the MSOs and a single cord carrying data and entertainment is a viable option, one we are starting to see make some inroads with early adopters already.

The longer-term future aside, the impetus for the thoughts I've written here today stem from my belief that as we shift the conversation from mobile to connected devices, we won't be saying "next year" over and over. The challenges we have already solved with mobile are analogous to those of the OTT and STB market. The market has shown a willingness to create compelling content for an eager audience that grows larger every day, while the consumer devices get better with each passing trade show. So while cable and satellite won't be going away anytime soon, the opportunity to garner significant market share outside of the traditional broadcast spectrum is here, and it's here right now.

Perhaps most importantly is that we have seen the social contract of a consumer's willingness to watch advertising in exchange for compelling content, coupled with the fact that technologies that allow for the traditional broadcast business model of paying for that content creation by advertising support already exist at a level that is much more powerful than traditionally delivered entertainment. It's becoming quite clear that dynamic ad insertion is opening up the level of personalized and targeted marketing once only dreamed about by the "Mad Men" advertising executives we happily binge watch via Netflix.