Media Sector Poised for Further Disruption

What Lies Ahead for This Rapidly Changing Market?

In 2017 we saw online providers make major moves into the TV and video content landscape. Amazon and Facebook both successfully secured TV rights to broadcast live sports, and the latter also launched its video platform, Watch. Efforts such as these have forced traditional broadcasters to rethink their strategies; a great example is Disney, which announced a $52.4 billion deal to buy Rupert Murdoch’s 21st Century Fox including its stake in Sky (see Dreaming of Streaming).

I firmly believe that even a heavyweight like Disney is not immune to changing consumer behaviour, as people have embraced new ways of watching TV shows and movies. For Disney, the acquisition will establish it as one of the world’s leading media companies and stands it in good stead to tackle the threat posed by Web providers such as Amazon and Facebook.

However, further disruption lies ahead and I expect this deal will prompt others to react. Here are a few of my predictions for the media industry for the years ahead.

In my view, Netflix remains a takeover target, but its growing content costs are an ongoing concern for the company. I predict it will introduce new pricing options and services in 2018 in a quest for new revenue.

Apple’s services business is on a march. To complement its move into music, I believe the company will roll out a subscription video-on-demand service. Apple recently filed a patent application for a content streaming system that could include both live and on-demand content. As part of its efforts to differentiate, I expect the company to feature original content prominently.

All eyes have been on Facebook lately, but the social network can’t solely rely on offering free content on an ad-funded basis, which leads me to believe that it will launch pay-per-view transactions for selected events by 2019.

We’ll also see lots of merger and acquisition activity in the US in 2018. Mirroring AT&T’s purchase of DirecTV, it would be a good move for Verizon to buy Dish Network as it owns a wealth of spectrum and content through a pay-TV satellite business.

One prediction that’s likely to take time to come to fruition is that grid-based electronic programme guides will cease to exist by 2022. Certainly, viewers are fed up of trawling through a list of TV channels. They prefer to search for specific shows and this is being made easier with the integration of voice interfaces in many set-top boxes.

All providers are jostling for position and jumping on the video bandwagon. It’s an area that promises to have a big year in 2018: companies will pour more money into winning premium content rights, especially in sports with the forthcoming Premier League rights auction set to kick off; additional programming in 4K, initial moves into 8K as well as growing support for high dynamic range (HDR); and greater use of 5G connectivity for contribution and distribution of video content. I expect we’ll hear more about 4K, 8K and HDR at CES in Las Vegas next week. I also believe more partnerships will emerge, akin to the agreement between BT and Sky announced at the end of 2017 (see Instant Insight: BT and Sky Reach Channel-Sharing Agreement).

With so many companies piling into video and TV services, it’s becoming harder to differentiate. Despite this, there’s still plenty of room for innovation: with content (such as premium, user-generated and original shows), user interfaces and new features. But the real hot area of competition is original content. As I’ve highlighted before, it’s a great time to be a content and media owner.