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Cable Technology Feature Article

September 24, 2013

TV Ecosystem Stresses Point to a Future Fracture

By Gary Kim, Contributing Editor

Researchers at Maravedis (News - Alert)-Rethink have argued that at least six distinct shifts have occurred in content distribution over the last decade, and not all of those changes are directly related to the way video content gets delivered to consumers.

Some would say the significant changes are even more numerous than that.

Among those changes are the shift of “free over the air broadcasting” to the Web and the emergence of tablets as a new content viewing screen.

Observers used to talk about “three screens,” including the “big” movie theater screen, the TV and then the PC. These days, that is too limited. In addition to those three screens, we now have the mobile phone and the tablet.

The researchers did not mention, but some of us would add, the transition of Netflix from physical media delivery to streaming, as well as the efforts other streaming providers are making to create a big new distribution channel.

Time-shifting using digital video recording is another contributing trend that collectively might lead to a disruption of the video entertainment business.

Also, there is the struggle between video subscription distributors (cable, satellite, telco TV) and program networks about affiliate fees, with distributors increasingly concerned about end user cost implications, while programmers continue to insist on the price hikes to fund original programming.

Maravedis-Rethink researchers also identify some future trends, including channel unbundling to some degree as well as “TV Everywhere” services that allow video subscribers to view some of the content they pay for as part of their video subscription services to be viewed on other devices such as mobile phones, outside the home, and on tablets inside the home.

Some of the trends are not directly related to those changes in consumer behavior directly related to video entertainment consumption.

The huge amount of mobile device traffic now shifted to Wi-Fi is one such trend. The importance of that shift is that video consumption on a mobile device, which might not otherwise occur, now is feasible because consumers using mobile devices to consumer video do not have to worry about burning through their usage buckets by doing so.

Growing involvement of social media as a means for viewer engagement and interaction likewise are important new trends.

Nobody knows when the stretching and tensions might erupt in the form of a big change in consumer appetite for new delivery methods, a new willingness by programming networks to gamble on the value of those new channels, and corresponding strategy moves by the cable, satellite and telco TV firms to maintain their grip on consumer spending.

But it is clear the stresses are growing on a wide range of fronts.

Edited by Alisen Downey

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