“The more consumers adopt new technologies, the more comfortable they become with accessing content on every available screen and expecting the experience to be seamless across devices and platforms. The companies that are best suited to meet these formidable consumer expectations are those that can deliver hardware, software, content and social integration”. – Emarketer, November 2011
The level of agility expected from media corporations nowadays is unprecedented. The frantic pace of technological breakthroughs, the fragmentation of audiences and revenues and the increased demand for compelling content creates a constant state of flux in the chain of value for the broadcasting industry, and corporations have to adapt.
In Canada, in the US and in western Europe, many media corporations have chosen vertical integration to survive the ever-changing landscape, creating media empires that control numerous entities like cable services, broadcasters, radio stations, print media, Internet and sometimes mobile providers.
The launch of Netflix in Canada, the passionate reactions it triggered and the impending arrival of yet more OTT players in Canada seem to have paved the way to an awakening: in the global digital content market, more and more players share the same objective — to bridge the gap between them and the user.
In the meantime, many other events in 2011 exposed how blurry the lines are getting between content creators, content broadcasters, service providers and device manufacturers. Google bought Motorola, Amazon’s Kindle Fire is shaking the tablets market; rumors of Facebook and Amazon jumping in the mobile phone space, predictions that Apple would be the next screen disrupter in the TV sets universe — and, on the other hand, Samsung, Panasonic, SONY and fellow manufacturers investing massive amounts of money to enter the content space with Connected TV… It’s as though we’re all playing roulette, and everyone is putting their money on as many numbers and color cases as they can… ‘cause no one can predict where the ball will come to rest.
The 4 Scenarios for the Future of Television
All of the above lead to questions that will be crucial this upcoming year: is vertical integration the best answer to all this uncertainty? How many content gatekeepers can the “Digital Era” business models sustain? Where is the real competition ? (In Canada, the arrival of Netflix has created a remarkable solidarity between cable distribution competitors).
Even if these questions become more and more pressing, we don’t believe any of them will be answered in 2012. Moves and shifts in the value chain will continue but the times are calling for cross-sectorial collaboration, business models hybridation and coopetition between players. This approach is certainly more efficient considering that players have less and less time and resources to accommodate rapid market changes, disrupting learning curves and skill upgrades within organizations.
Basic principles of co-opetitive structures have been described in game theory. Coopetition occurs when companies work together for parts of their business where they do not believe they have competitive advantage and where they believe they can share common costs. (source: http://en.wikipedia.org/wiki/Coopetition)