Media Metrics: The End of TV as We Know It

Television has an inspiring past, ripe with innovation and popular culture influence. Since its coming of age in the mid-20th century, generations of TV viewers have happily embraced the broadcast experience. For the industry, making a connection with consumers was a pretty straightforward, one-to many experience. Until recently.

Today, audiences are becoming increasingly fragmented, splicing their time among myriad media choices, channels, and platforms. For the last few decades, consumers have migrated to more specialized niche content via cable and multichannel offerings. Now, with the growing availability of on-demand content, self-programming, and search features, consumers are moving beyond niche to individualized viewing. With increasing competition from convergence players in the TV, telecommunications, video, and Internet sectors, the industry is confronting unparalleled complexity, dynamic change, and pressure to innovate.

To ascertain what the future holds, IBM conducted extensive industry interviews with a variety of stakeholders and commissioned primary research from the Economist Intelligence Unit (EIU) in the U.S., Europe, and Asia.

Our analysis indicates that the evolution of the TV market hinges on two key drivers: the openness of access channels and levels of consumer involvement with media. For the next five to seven years, there will be change on both fronts, but it won't be uniform. Instead, the industry will be marked by consumer bimodality and the co-existence of two types of users with disparate channel requirements. While one consumer segment remains passive in the living room, the other will force radical change in business models in a search for anytime-anywhere content through multiple channels, platforms, and devices.

Tech-savvy and fashion-forward consumers are leading us into a world of platform-agnostic content, fluid media experiences, individualized pricing schemes and an end to the traditional concept of release windows. Given the influence of both segments in the 2012 forecast period, strategists today must work amid fragmentation, divergence, and opposition in the market to optimize across nascent and longstanding business models, within new and traditional release windows, and with both Internet-based and traditional supply chains.

This is the beginning of the end of television as we know it, and the future will only favor those who prepare today. IBM offers six recommendations to get started.

>> Segment. Invest in divergent strategies and supply chains for bimodal consumer types. Identify, develop, and continually refine data-driven user profiles to optimize product and service development, distribution, marketing messaging, and service migration. Tailor content, advertising, pricing, and reach dynamically.

>> Innovate. Innovate business and pricing models by creating, not resisting wider consumer choice with alternative bundles, pricing, and distribution. Take risks today to avoid losing an edge in the long term.

>> Experiment. Develop, experiment, refine, rollout. Repeat. Conduct ongoing market experiments to observe actual consumer preferences. Invest in new measurement systems and metrics for the on-demand world.

>> Mobilize. Create seamless content mobility for consumers who require on-the-go, portable experiences. Ensure easy synchronization across devices and platforms with minimal disruption.

>> Open. Drive open content delivery platforms to optimize content, stimulate revenue streams, and create flexibility cost efficiencies. Open platforms should be underscored by digital content protection strategies.

>> Reorganize. Assess business assets against future requirements and identify core competencies that are needed to ensure future competitive advantage.

For Me the Future is Now

I am in digital-electronics-gadget nirvana, and I'm not afraid to boast. My home sports a fully wireless broadband (WiMax) Internet environment, where content moves freely among the home server, several high-definition (HD) screens, the office PC, and mobile devices I continually upgrade.

I regularly acquire favorite TV shows (new and old) either from Internet search engines such as Google Video, a video/telecommunications provider's on-demand archive, or fully loaded Internet video destinations. I can't remember the last time I made "appointment TV" a priority, since I watch stored episodes of my favorite shows after the fact via my multiroom digital video recorder (DVR). A Bluetooth-like signal on my cell phone triggers the log-on for my media center system. When I'm ready to watch TV, I'm greeted with a mosaic screen of tiles featuring my favorite TV channels, suggested programs from the last 24 hours, season passes, and tailored on-demand choices.

My home network offers different on-demand pricing packages, depending on the number of times I plan to watch, copy, or download the programming, and whether the content is a preview. When I don't skip through the stored content, I am more amused than ever by advertising, particularly since it's tailored for me and comes with relevant links, add-ons, and a variety of purchase options within the commercial itself. While these options may feel overwhelming to some, I view them as a challenge with a big payoff. I will continue to be first on the block with the latest "gadget lover's dream realized."

My scenario is representative of a key group of consumers who lead the market. While the future will deliver these early adopters' dreams and more, it will be some time before leading-edge consumers inspire the mass audience. Media and technology companies are laying the foundation for change with infrastructure upgrades and service and experimentation, but ultimately consumers will drive adoption of these changes.

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