With the recent launch of Amazon’s Fire TV it is becoming apparent that a battle of business models among the market contenders is evolving. We are witnessing the development of a competition of business models with hundreds of billions of dollars at stake. Even when working with elements of the value chain, it is sometimes valuable to take a step back and look at the grand scheme – the macro level market structure and changes. Today, the main revenues in the TV market come from cable subscriptions, advertising and, mainly in Europe, license public funding. How will the future of this market look like? Will it be revolutionized or are we witnessing a quite evolution. The traditional players are lining-up. First you have the distributors; the companies actually delivering the TV signal and own the access. This originally included satellite and cable, but has now been accompanied by cobber/DSL, DVBT, FTTH and most recently mobile. These companies mainly get the revenues from charging for pay TV and in most cases internet access. This group of market participants experience an increasing degree of internal rivalry because the different access infrastructure types have different advantages to various segments. Most significantly, cable/satellite is coming from an all dominant position and is likely to lose market share in most of the World. Secondly, you have the content curators, broadcaster, and networks. As opposed to the group of distributors, the curators have always been competing for our time and eyeballs. Their revenue mainly comes from advertising which accounts for between 40% and 60% of the total market depending on the continent, but also from fees paid by the distributors. Finally, we have the content owners who seem to be able to increase their revenues year over year with the sports category taking the lead. In the US alone it is expected that content cost will increase around 10% per year over the next years.
Besides the traditional players, we have over the past couple of years witnessed the entry of the OTT providers including market participants with very different backgrounds including representatives of all the three traditional players such as Sky with SkyNow, Viasat with Viaplay and the NBA with NBATV. But on top of this new players are entering the scene with giants like Google including YouTube, Apple, Amazon, Yahoo and of course Netflix having gained more than 40M paying subscribers in a few years. Additionally, we have a second category of new players entering the market: the device and TV set manufactures.
Now, the revenue market is mainly consistent of distributer’s subscriptions and curators advertising revenues plus license fee mainly in Europe. So the battle is not only a battle for the consumer but to a high degree a battle of how to serve the customers in the future. The very large players are, at macro level, going to the market with very different business models: Google is coming from a business of search/advertising, Amazon from e-commerce, Apple from a vertically integrated business model of devices to a market place and Comcast with a highly integrated model all the way from access infrastructure, to curation and content ownership.
How do you see this market evolving and what characterizes the likely winners and losers – let me hear you opinion?
Besides the traditional players, we have over the past couple of years witnessed the entry of the OTT providers including market participants with very different backgrounds including representatives of all the three traditional players such as Sky with SkyNow, Viasat with Viaplay and the NBA with NBATV. But on top of this new players are entering the scene with giants like Google including YouTube, Apple, Amazon, Yahoo and of course Netflix having gained more than 40M paying subscribers in a few years. Additionally, we have a second category of new players entering the market: the device and TV set manufactures.
Now, the revenue market is mainly consistent of distributer’s subscriptions and curators advertising revenues plus license fee mainly in Europe. So the battle is not only a battle for the consumer but to a high degree a battle of how to serve the customers in the future. The very large players are, at macro level, going to the market with very different business models: Google is coming from a business of search/advertising, Amazon from e-commerce, Apple from a vertically integrated business model of devices to a market place and Comcast with a highly integrated model all the way from access infrastructure, to curation and content ownership.
How do you see this market evolving and what characterizes the likely winners and losers – let me hear you opinion?
