Television in the UK has changed beyond recognition from the early days of a single provider in the shape of the BBC. But where is it heading. Here is some visionary input (guesses) from me.
Sports rights are probably the key drivers for both Sky and BT. Currently rights are licenced by the IP owners to national broadcasters on a country by country basis. In the past IP owners had to follow the licencing model because the distribution pathway in any individual country was controlled by a small number of national broadcasters. The income generated for the rights owner is massive. The likes of Sky and BT have driven all major sports barring a few specially protected events from Public Service channels. Technology will make that IP even more valuable for the IP owners. New technology will allow the rights owner to directly control the distribution of their product to individual viewers and revenues will be collected directly by the rights owner. There is now no longer any need for host nation broadcasters.
FIFA, UEFA, the IOC, Formula One and others with global sports brands will tap into their customer base directly and control their own advertising and sponsorship without having to touch a third party distributor.
This is potentially bad news for companies like Sky and BT but opportunities could be available in secondary rights packages (highlights, delayed transmission etc) and the creation of less high profile sports brands.
High End Drama
In the absence of sports rights drama will become the main driver for subscription channels. This is already happening with the rise of Netflix and Amazon Prime. Both have moved into direct commissioning whilst still providing a secondary window for their initial business model as a distributor of Hollywood movies. The investment by these new entrants in drama output has seen a rise in production values coupled with an inflation in production costs. High end television drama production values are now on a par with features but still at a fraction of the cost both in terms of production and marketing. Public Service Broadcasters will struggle to compete with subscription services although it is possible that both the BBC and ITV could set up drama subscription services to capitalise on their existing brands. Such a move would need to happen quickly to avoid the new players grabbing market share and customers.
Lifestyle, food and travel
Traditionally cheap to make these style of programmes lend themselves to being directly distributed by large retailers on their own direct to consumer channels. Retailers could shift marketing spend away from traditional spot advertising campaigns and into ‘television’ production of their own lifestyle series fronted by their own talent. Retailers are already comfortable with having their own brand ambassadors and some have even ventured into advertising funded programming on regular TV outlets. Big retailers also have large databases of customers gleaned from loyalty cards. It is certainly not inconceivable to imagine a Jamie Oliver series transmitted by Sainsbury or Waitrose marketing their business and products via a Heston vehicle. It would probably cost a fraction of their current spot spend once the mind set for it changes both in the retailer head and that of the agencies which understandably are currently against any ad spend being diverted away from their hands. Is this behind the recent news highlighted in Broadcast of creative agency Beagle looking to expand into original content production?
Amazon is ideally placed to be at the forefront of this initiative with it already providing a huge retailing offering coupled with an existing television operation and a tech based infrastructure and knowledge base to deliver content to its massive database of customers all with credit cards already registered with the e-tailer. A range of subscription, micro payment or free services awaits to be exploited. Potentially good news for talent agents and producers.
Where does all this leave the existing broadcaster model? Not in a good place I would suggest. Opportunities still exist in low cost serials (Soaps) where brand loyalty still exists in fairly large numbers. News will also be an area that traditional outlets will succeed. The continued viewer engagement with “constructed factual” and youth programming may also an area PSBs can continue to be a leader, as well as the exploitation of secondary windows for advertiser funded projects, older feature films, sports highlights packages and local output. Of course many of the traditional broadcast companies have been expanding their production capacity and would be ready to exploit any growth in production requirements for new outlets. Their existing channels provide an ideal test bed for new ideas and the skill base acquired over many years makes these companies ideal targets for well funded tech giants to buy into a ready- made production and distribution outfit.
When all is said and done producers should do well as there will remain a need for a well constructed, professionally produced product. The existing broadcast model will largely be absorbed into a new construct although a rump will remain much like the print newspaper industry exists today in a much smaller capacity.