2017 will most likely be the worst year to date in US pay-tv history, with subscriber losses getting bigger every quarter. But is pay television really dying? Parts of it definitely are: cable and satellite now belong in the zombie category along with newspapers and CDs. The decline may be slower but the trend is clear.
However, pay television isn’t really dying, it’s simply evolving to accommodate a new type of TV viewer – one who demands user-friendly business models, updated UIs and affordable devices.
We are moving into a world of Cloud TV transformation, so how will it play out in 2018? Here are some trends to look out for.
Time for a TV UI Refresh
That huge screen in the middle of your living room isn’t going anywhere. Yes, mobile took the world by storm, but when it comes to watching long-form premium content, TV is still the king of the hill.
Nielsen reported in October that 89.5% of time spent watching SVOD was done on TV devices. A few days later, a YouTube TV exec told Wired that more than half of YouTube TV’s watch time (the skinny bundle offering from YouTube) comes from Chromecast.
To me, this is confirmation that mobile is a great discovery device and perfect for casual viewing, but that TV sets are still the primary destination for watching long-form premium content.
In 2018 we will see more attempts to break away from the traditional TV UI and merge web content with premium content. Remember the X1 UI Comcast created for the 2016 Olympics (here’s a cool demo)? YouTube TV has recently started taking a similar approach with its app. For example, if you search for Tom Cruise in the app, you will see his latest movies from your on-demand library, upcoming linear airings and also Cruise’s appearance on the ‘Late Late Show with James Corden’ from YouTube.
Roku is doing the same thing on its OS 8 Smart TV interface by blending broadcast and streaming content (you need an antenna). Roku’s focus is on price – when searching for a movie or an episode, Roku will find the lowest cost option from free TV or from the many Roku apps.
Over the last 12 months I have realized that many people hate typing. I first noticed this when I shared a ride with a girl who messaged her friend repeatedly using voice recordings. After that rather annoying experience, I saw it everywhere. The fact is that many of us prefer talking to typing.
TV has been voice-enabled for a number of years now – for example, AppleTV, Amazon Fire, Comcast X1 and Sky Q. And many in the industry feel that in 2018 we will reach a tipping point.
Voice was definitely the hottest trend at IBC 2017, with operators saying this is the #1 feature requested by customers. For example, Comcast reported in 2017 that it deployed 17 million voice remotes and added functionality to replace manual rewind by simply saying –”go back 30 seconds” or “jump forward five minutes”. This is just the beginning.
Voice and AI is already a major battleground for tech companies as Apple, Google and Microsoft try to challenge Amazon’s dominance – and voice will become increasingly important for TV operators too.
Sports Going Direct
Netflix are going to invest $8B in content next year. Amazon will probably be close behind, following Jeff Bezos’ declaration that they will find “big shows” for Prime Video (which yielded some monstrous investments). It’s clear there’s almost too much original content being produced by OTT services – but then again, UK and US networks have been producing endless amounts of content for the last 20 years and done OK.
But there’s still a huge gap in the booming Cloud TV market for sports.
This will change in 2018 when ESPN launches its direct-to-consumer service. This is a strategic shift for Disney who decided to acquire BAMTECH to launch the ESPN service and then license the technology to other cable networks who may want to launch their own OTT services.
So much has been written about how premium sports content will never go OTT, but there are actually plenty of sports out there that would benefit from a worldwide OTT service. In 2018, for example, a Formula 1 service will be launched by Liberty Media in select markets, which may also include the US. We could see more niche sports going in the same direction in 2018.
TV’s Future Ad Infrastructure
Advertisers love TV but distrust connected TVs. And it really shows…. If you recently used any TV Everywhere app to watch your favorite TV show in the US, you likely saw the same ad again and again (and again). Few things can be more annoying. This is a symptom of how primitive the OTT TV advertising ecosystem is.
Although completion rates are well above 90% and most inventory is considered premium, connected TVs and various connected devices like Apple TV and Roku are cookie-less, which means it is more complicated to target users and there are also issues around viewability.
However, connected TVs are the next frontier for digital advertising, which has already transformed our world by making Google and Facebook extremely profitable (oh yes, it also made Donald Trump US president).
Google is rolling out various products to bring traditional TV advertising to Cloud TV services, while platforms like AppNexus and Tremor are trying to convince advertisers to shift budgets there too. While we are approaching the inflection point, I would argue that it’s probably still 12-18 months away. But this means that the investments in the tech should be made in 2018.
In summary, 2018 is set to be an exciting year for cloud TV. With most of the industry already committed to transform the TV experience, the race is on to use all of the benefits of the cloud to innovate – and make TV more enjoyable than ever before.
How accurate was Iddo with his predictions for 2017? Check them out here!