4/22/2008
TV of the future – consumer trends, mobile consumption and emerging markets
TV consumption has changed beyond all recognition in just the last five years. Forty years ago, no one would have believed that today we would be watching content on our PCs, mobile phones and MP3 players. The progress in media development presents both opportunities and challenges - as Peter Smith, President of NBC Universal International explained at the AmCham business breakfast on April 18 at Hilton Stockholm Slussen.
Smith was introduced by Universal Pictures Nordic managing director Ivor Viljoen, who described him as "a legend wherever he’s been. And one of the most well-known and likeable people I’ve ever met."
TV consumption today
Smith’s presentation focused on the huge acceleration in both new technology and media consumption. The result of this growth is a highly fragmented market, featuring a marked audience shift from traditional media to the Internet, in particular.
In the UK, Internet traffic to online video sites (dominated by user-generated, free-to-view content) grew by 178% between February 2007 and February 2008. "Internet advertising spend in the UK is forecast to be greater than TV in 2009," he said.
The challenges of the future
Despite the burgeoning growth of new media in the television arena, a wholesale shift away from traditional TV for anything other than ‘short-form’ content is unlikely in the near future. Many barriers exist, including audience inertia, lack of business models and licensing issues.
"The situation is exciting, but challenging. [It’s] full of opportunities, but also risks," Smith said.
One of the main problems is that "content is king". In order for new media to grow, on-demand content providers need to offer viewers premium content. But the major distributors remain reluctant to make the "leap of faith" in releasing such content.
Exceptions are the highly successful distributor-controlled BBCiPlayer in the UK and Hulu in the US, which both offer geographically limited, premium content at no cost to viewers.
But until a sound business model is developed, things are unlikely to change very quickly. As Smith predicted, "the threat of piracy will hold the transition to new media at bay for a while yet."
Emerging markets offer huge potential
While the future transition to new media is less than certain, emerging markets in Eastern Europe and Asia offer exciting prospects. While growth in Western Europe has slowed to a steady 2-3%, countries like China, India and Russia are booming – with current growth of around 20% and another twenty years’ potential to look forward to. "I think this offers a really exciting opportunity for companies who are brave [enough] to go in there and take an early position," said Smith.
The meeting ended with a much appreciated viewing of the trailor for "Mamma Mia".
Written exclusively for AmCham by Julie Gunn, Battison & Partners
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