The way in which consumers access and consume TV and video is changing at such a rapid pace that telcos have a real opportunity to play a more significant role beyond mere delivery.
Several key trends mean “the scene is now set for any entertainment or communications provider to take the mantle and offer game-changing services”, according to Ericsson’s latest ConsumerLab report into the TV and video market.
These trends include the explosion of social TV, the increase in the multiscreen phenomenon and “anytime, anywhere” access becoming a mass-market service.
Specifically, the report found that consumers using social media while watching TV have grown by 18 percent since last year to 62 percent; a further 67 percent now use a wide range of screens to consume TV and video on a daily basis; while 60 percent watch on demand services on a weekly basis.
The report is based on interviews with 100,000 people in more than 40 countries.
Ericsson ConsumerLab senior advisor Niklas Rönnblom said the ultimate goal for those companies wishing to take advantage of this “new era” should be to provide an individualized TV experience.
No one has been able to offer such a service yet, partly due to the fact that it is a complex experience to provide, requiring relevant content rights ownership plus high quality delivery platforms and user interfaces.
The report noted that with consumers struggling to merge together the huge range of content sources available to them, there is an opportunity for a provider to deliver an aggregated service.
Crucially for telcos, that provider need not be a traditional TV broadcaster or the oft-quoted OTT provider.
Analysys Mason’s Cesar Bachelet told European Communications that providers of pay-TV services, including telcos, are in “a strong position” to be the ultimate winners.
“They have quite a few assets that they can capitalise on: control over the network to guarantee QoS; existing customer bases with service support and billing capabilities; plus relationships with content owners,” he said.
“They can also bundle services, thus reducing the cost of individual services.”
Ericsson highlighted four areas that any provider must now support to satisfy customers moving forward: on-demand, live TV, premiers and background viewing.
The need for on-demand provision is driven by the fact that it has become the number one service that respondents to the Ericsson survey said they would be willing to pay for, superseding HD quality.
But Bachelet warned that making this profitable was not easy: “It takes time and is generally a scale play,” he said.
In addition, providers must enable consumers to find their preferred content and consume it in a more flexible way.
“This means breaking away from the constraints of traditional pay-TV, such as inflexible channel packages, long-term contracts, restricting delivery of content to managed devices and adopting some of the features which make OTT services appealing –notably increased flexibility and lower cost,” said Bachelet.
“Better interfaces and a consistent experience across various devices are also important.”
Challenges remain, however.
Although viewing on mobile devices is on the rise, consumption is “sporadic with no distinct usage patterns having been formed”; they are still more suited for activities such as social networking and playing games, Ericsson noted.
What’s more, although scheduled broadcast TV consumption is on the decline it remains far and away the most dominant format with just under 90 percent of people accessing it at least on a weekly basis.
In particular, consumers like it for viewing live events and the collective viewing experience.
Nevertheless, Bachelet said telcos remain in a good position, particularly if they provide a compelling service to compliment traditional TV consumption.
Recent figures show telcos are moving in the right direction: in the first six months of 2012, for example, Deutsche Telekom’s IPTV service grew subscriber numbers by 40 percent while Telecom Italia saw equivalent growth of 31 percent.
Yes these numbers are from relatively small bases and we cannot be sure if they are profitable, but telcos do have much in their favour when compared to rivals in this changing landscape.
As we reported in June, for example, Google’s new TV service is a couple of years away from being a threat.
Many of the trends – from multiscreen to IP-based viewing – that consumers are setting play into the hands of telcos; a little innovation and flexibility could lead them to become much bigger players than they currently are.
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