Imagine the typical teenage girl watching TV today. She might have a tablet showing a new movie selected from her family’s cloud-based video library while keeping tabs on American Idol on her smart phone as she decides which pop star to vote for. Good-bye to the familiar old TV set? Au contraire. For years now, the demise of the traditional TV set has been predicted as tablets and smartphones have claimed more and more of our screen-viewing time. The fact is TV is here to stay. Its role in delivering compelling viewing experiences—collectively and individually—will continue but will also evolve to accommodate new digital formats and viewing habits. The question is whether traditional video service providers can change along with them.

Traditional providers such as cable companies, telcos and broadcasters are immediately faced with a disadvantage against newer entrants like Internet startups, retailers, device manufacturers, game manufacturers, and over the top providers (OTT). These start ups have less of a hard time creating new digital video services from nothing and building an ecosystem around it.   Traditional providers with their “set in stone” infrastructure are less agile; they don’t have the flexibility to completely reengineer processes, transform business models, or decouple from partners they have been relying on for years. The reality is that they no longer have that choice.  Take for instance the pressure broadcasters and cable companies are facing from OTT providers like Netflix and Amazon that are grabbing viewer attention and wallet share.

Up until now traditional providers have responded with “me too” digital services that are less differentiated and offer limited integration.  In order to compete, they need to act decisively with digital services that are accessible, adaptable, and that leverage their core strengths.  Accenture (News - Alert) recommends the following steps for solidifying a digital brand:

1) Balancing cost with revenue to achieve better value for digital content

Accenture’s recent Digital Consumer survey shows that while more than 30 percent of consumers say that they will increase spending on smart devices, only 12 percent of them plan to spend more on video content  This trend will persist and exert greater pressure on video service providers to operate profitably in the digital arena.

To achieve a balance, traditional players in the content value chain need a horizontal framework of common services and infrastructure over individual silos, implementing lean operations like cloud services, incorporating feedback to “right” digital services that have gone off the rails, and experimenting with new ways to monetize or add to the current viewing experience.

2) Maintaining B2C relationships across all digital channels

Digital channel are very useful in generating a significant amount of pertinent data on customer habits and usage patterns.  Providers with compelling content need to establish processes for collecting this data and recycling it back into product development in order to draw deeper, personal connections with consumers.  Tactics for capturing this data may include temporary access to premium content, contests and rewards. Once collected, this data can be turned into insight for guiding sophisticated segmentation, price optimization, targeted advertising and even increase the success of content commissioning.

3) Relying on IT to guide ones digital transformation

IT is still a big part of a traditional business and now there are clear benefits for having it shape digital services.  The digitization of distribution, production and display is driving a profound change on the operating model of media companies.  IT is best suited for helping video service providers adapt to this change. Forward-thinking organizations should build open architectures that can tie these digital services across a number of different mediums. This may require companies to invest and develop different technical skills within their IT departments - mainly the ability to integrate digital channels with enterprise architectures.

4) Operating with broadcast availability and broadband flexibility

Legacy video platforms were not built with today’s proliferation of screens in mind. The number of video-centric connected devices is looking to surpass the world’s population by 2017. To manage this larger scope, providers need to apply common delivery processes and supporting environments while reducing total cost of ownership. This has to occur against a backdrop of IP-based video services adding more, rather than less complexity around delivery. A holistic approach is needed to address this challenge, transforming operations from a model based on domains (content processing, play-out, distribution, devices) to one based on the end-to-end customer experience.

Digital transformation needs to happen now

Ten years from now, the TV business may be completely unrecognizable—certainly when compared to the way things are done today. That change is now in its infancy stage so there is still time for organizations to establish a presence before they are left behind. Waiting by the sidelines to see how things shake out is no longer an option.