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The Future of PC/TV Convergence: Opportunities and Challenges in Online Video
Scripp Business Insights, October 2009, Pages: 167
Convergence is ongoing across the communications and entertainment markets. Video content is now accessible via numerous channels, beyond traditional services such as terrestrial, cable and satellite and towards online and mobile platforms. As a result, the online and broadcast markets are colliding, with video services making the move to the PC environment and web-based services becoming a core element of the TV viewing experience. There are an ever-expanding number of channels available for content to be distributed over and an ever-increasing range of technologies to aid the transmission.
Online video delivery is emerging as a true competitive threat to existing content service providers, offering the potential to extend reach to new consumer groups. Broadcasters and content owners are delivering services direct to consumers, regaining some of the control they had lost to other players across the value chain, while pay-TV providers and video rental firms are adding online video to their service mix to boost their appeal. On the flipside, consumer electronics manufacturers and pay-TV operators are adding web-based elements to their products and services. Increasing integration of web browsers into home devices, the emergence of TV widgets, and further deployment of enhanced interactive services aim to add greater value to offerings, and could act to divert consumer attention away from the PC for some basic tasks.
Scope of this report
Overview of the market trends, technological evolution and changing business models that have driven PC/TV convergence.
Market projections to 2012 for key communications and entertainment services including consumer broadband and mobile broadband.
Identification of the key challenges facing the key participants targeting PC/TV-related opportunities, including actionable insight into how to best approach this rapidly evolving opportunity.
Examination of the evolving competitive environment and the ways in which various protagonists are targeting PC/TV convergence opportunities.
In-depth analysis of the strategies being employed by a number of leading content providers and device manufacturers with regards to their involvement in the online video and/or connected device markets.
Insight into the future trends that will impact on the development with regards to PC/TV convergence, including identification of best-practice and emerging opportunities.
Reasons to purchase this report
-Gain a comprehensive understanding of how market trends are prompting convergence of PC- and TV-based services, and the impact such developments will have on traditional business models and strategies.
-Understand how the competitive environment is changing, and how content owners, broadcasters and device manufacturers will seek to gain a share of the spoils in the PC/TV convergence arena.
-Compare how different content providers and device vendors are positioning and developing their services and products in order to differentiate from the competition, gain market share and drive revenue growth beyond their core/traditional offerings.
-Appreciate the challenges faced by companies targeting PC/TV convergence opportunities, and understand why radically new market strategies will be required to make a significant impact.
-Identify future trends that will impact on the potential of PC/TV convergence, and gain insight into how to best approach this rapidly evolving opportunity.
Key market issues examined
In many countries, broadband is the fastest growing consumer technology of all time and is developing into a utility that already has almost ubiquitous coverage in advanced markets. The rise of broadband networks and consumer connections is a key driver for online video services, enabling consumers to connect to a broader range of rich media content and applications without the delays that were evident with narrowband dial-up services.
Increased internet usage is also having a profound effect on traditional TV viewing in almost all country markets. Up to a third of consumers in major developed markets are watching less TV as a result of their increased internet use; a significant proportion, and a trend which is challenging existing business models, especially those that rely on advertising as a primary revenue source. Many broadcasters are seeking new opportunities by pushing content via online channels to exploit the huge growth of online advertising.
Content owners are still not providing full support for new distribution channels. Movie studios have watched on as the music industry has been ravaged by piracy, and understandably want to restrict the impact it has on their businesses in whatever ways they can. As a result, content owners will continue to be both selective and cautious when seeking online distribution partners, and will demand that DRM is applied to high-value content such as new-release movies for the foreseeable future at least.
Portable PC-based video boosted by netbooks and mobile broadband. Until relatively recently, PCs were bulky devices tethered to fixed-line connections for internet connectivity. But the situation has changed considerably over the past year, with ultra-portable netbooks hitting retail shelves and mobile broadband starting to emerge as a mainstream proposition. Expect to see mobile broadband functionality to increasingly be integrated into netbooks over the next year, enabling streamed online services to be accessed on the move and opening up new audiences for content providers and device manufacturers alike.
Direct TV connection is essential if online video is to become mainstream. The vast majority of online video content is currently watched via a PC. But while PC-based services will remain attractive, offering the ability to watch content directly on a TV set is crucial if online video services are to appeal to the mainstream. Delivering this functionality is now a key focus of both device manufacturers and content providers.
Key findings from this report
- Online video delivery is emerging as a true competitive threat to existing content service providers, offering the potential to extend reach to new consumer groups.
- Exploiting opportunities across the connected home environment is seen by many PC and CE device manufacturers as a key way to boost average selling points. With online video now becoming available via a wider range of providers, the previous inertia in the CE market with regards to delivering connected devices is slowly being overcome.
- To maximize likely returns, content owners will need to fully support their online partners; a half-hearted approach, where only low-value or archive content is made available, could dilute service potential.
- Connected TVs are likely to become the norm within the next five years. By this time, it may not be economically viable for manufacturers to offers sets without connectivity.
Key questions answered by this report
- What are the major trends shaping and driving PC/TV convergence?
- Why are broadcasters and rival content providers investing so heavily in the deployment of online video services?
- Which factors are likely to inhibit the pace of PC/TV convergence market development and why?
- How are different market protagonists targeting the opportunities afforded by PC/TV convergence?
- To what extent will emerging online services threaten the current status quo across the video distribution market?
- What are the forecast market growth rates to 2012 across underlying technologies including residential broadband services and mobile broadband?
- How will the market for converged video services evolve, and which future trends will impact on developments over the course of the next 2-3 years?
The Future of PC/TV Convergence
PC-based video services hit the mainstream
Delivering internet-based services to the TV
Content provider and device manufacturer profiles
The future of PC/TV convergence
Chapter 1 Introduction
Who is this report for?
Digital pay-TV (DTV)
Digital terrestrial TV (DTT)
Internet Protocol TV (IPTV)
Video on demand (VOD)
Chapter 2 Market context
PC/TV convergence market trends
Broadband changes the rules of the game
Higher speeds bring new content-related opportunities
Consumers exploit broadband potential
Changing the face of media consumption
Broadband challenges remain
Entertainment market in flux
TV market in transition
Changing content consumption patterns
Traditional media hit
Traditional advertising market under pressure
Physical media is not (yet) dead
Significant obstacles exist for online video distribution
Move to high definition places greater demand on connectivity
Piracy concerns restrict progress
DRM restricts consumer uptake
Content rights issues restrict geographic expansion
Business model uncertainty reigns
Content owners are still not providing full support for new distribution channels
Chapter 3 PC-based video services hit the mainstream
Online video delivery reaches the mass market
Online video is no longer synonymous with low quality content
Online video is a disruptive force in the video delivery arena
IPTV may lose its competitive advantages
Broadcasters take a more direct approach
Broadcasters and content producers make strong investment to new channels
BBC iPlayer provides numerous learning points
One-stop online shops for broadcasters’ content emerge
Consumer uptake on the rise
The demographic divide
Maximizing online potential
TV on the move
Mobile TV starts to gain some momentum
Not yet a mainstream proposition
Alternative portable solutions are gaining more traction
Significant challenges remain for mobile TV deployment
Portable PC-based video boosted by netbooks and mobile broadband
Netbook market growth will boost demand for portable video
Mobile broadband offers new possibilities
Chapter 4 Delivering internet-based services to the TV
Digital entertainment devices get connected
The death of the ‘living room PC’ concept?
No one-size-fits-all home content hub exists
In-home content sharing takes center stage
Direct TV connection is essential if online video is to become mainstream
Media extender market makes slow progress
Consumer electronics devices get in on the act
Major TV manufacturers launch Ethernet-connected models
Widget-based services emerge
Yahoo and Intel drive a widget-based approach
Does consumer demand for connected TVs exist?
Does delivering internet services to the TV make sense?
Internet connectivity takes DVR-based services to the next level
Satellite pay-TV operators look to gain a foothold in the VOD market
Online video: complement or substitute?
Games console manufacturers push online video services
Sony and Microsoft battle for the living room
Sony playing catch-up
Consoles already well regarded as multimedia hubs
Consoles add to the video disruption
Connecting the PC and TV environments is a difficult task
Chapter 5 Content provider and device manufacturer profiles
Google / YouTube
Microsoft Xbox 360
Chapter 6 The future of PC/TV convergence
The future of PC/TV convergence
Online video will be a mainstream alternative to traditional distribution
Content owners must fully embrace new distribution channels
DRM will remain a stumbling block
Business model uncertainty will continue
Internet-connected, networked consumer electronics devices will become the norm
Leveraging content across multiple distribution platforms will be essential
Broadband providers must be fairly recompensed for their role in content delivery
Chapter 7 Index
List of Figures
Figure 2.1: Global consumer broadband subscribers, by platform, 2007-2012
Figure 2.2: Global consumer broadband subscribers (000s), by region, 2007-2012
Figure 2.3: Broadband uptake boosts multimedia usage (% users by activity), UK
Figure 2.4: Use of traditional communications services on the decline in the UK (minutes per person per day), 2002 and 2007
Figure 2.5: Increasing internet usage hits TV viewing
Figure 2.6: Uptake of new media platforms lower among older consumers
Figure 2.7: New video distribution platforms are gaining traction
Figure 2.8: Proportion of advertising spend attributable to TV and internet, by country (% proportion), 2007
Figure 2.9: The importance of internet advertising (% of advertising spend), by country, 2006-7
Figure 3.10: Short-form content still rules in the online world (% users accessing content by type and country)
Figure 3.11: User-generated content is highly valued by younger consumers
Figure 3.12: Proportion of broadcasters’ IT budget being invested in new distribution channels
Figure 3.13: Proportion of online population streaming online video, December 2008
Figure 3.14: Online video reaches 80% of US consumers
Figure 3.15: US online video viewing declines with age
Figure 3.16: Online video usage declines with age
Figure 3.17: Factors that would encourage greater use of online video services
Figure 3.18: Mobile multimedia usage remains relatively low
Figure 3.19: Portable video usage remains relatively low
Figure 3.20: The rise of mobile broadband
Figure 4.21: Watching TV and surfing the web concurrently is commonplace
Figure 4.22: Worldwide console shipments, 2005-2007
Figure 4.23: Consumers show some interest in console-based multimedia applications
Figure 5.24: The rise of legitimate online TV services in the UK
Figure 5.25: Content provider and device manufacturer summary
List of Tables
Table 2.1: Global consumer broadband subscribers (000s), by platform, 2007-2012
Table 2.2: Global consumer broadband subscribers (000s), by region, 2007-2012
Table 2.3: Proportion of UK internet subscribers participating in multimedia usage by type (% users)
Table 2.4: Time spent using communications services (minutes per person per day, UK), 2002 and 2007
Table 2.5: TV viewing habits in comparison to internet usage (respondents), France, Germany, Italy, UK, US and Japan
Table 2.6: Uptake of communications services, by age (proportion of UK households)
Table 2.7: Time spent watching movies/TV programmes (% of viewers watching at least one hour per week, UK)
Table 2.8: Proportion of advertising spend attributable to TV and internet, by country (% proportion), 2007
Table 2.9: The importance of internet advertising (% of advertising spend), by country, 2006-7
Table 3.10: UK online video usage (% users accessing content), 2008
Table 3.11: Types of online content most valued by different age groups (% users), UK, 2007
Table 3.12: % of online population streaming online video, December 2008
Table 3.13: US consumer TV and video viewing patterns (% users), 2008-09
Table 3.14: Average time spent watching online video (hours per week, US)
Table 3.15: Proportion of households using the internet for multimedia applications (by age, UK)
Table 3.16: Proportion of adult internet users using mobile phones to watch video content (% users)
Table 3.17: Portable device usage for multimedia (% users by frequency), UK, 2008
Table 3.18: Notebook mobile broadband users (000s, global), 2008-2014
Table 4.19: Users watching TV and surfing the internet concurrently (% user by frequency), 2008
Table 4.20: Global console hardware shipments (000s), 2005-2008
- BBC iPlayer
-Google / YouTube
- Microsoft Xbox 360
- NBC/Fox Hulu