The TV market is going through unprecedented changes. Our global study assesses this disruption and sheds light on new business models.
The TV market is going through unprecedented changes. Our global study assesses this disruption and sheds light on new business models.

A.T. Kearney’s most recent global study on the changes in the video and television industry included the distribution of 80 surveys and interviews with industry executives and experts on pay TV, telecoms, cable, broadcast, and online video providers. The study’s results provide key insights on the video ecosystem, including the anticipated rate of change and how to remain competitive as the industry continues to grow.

Today, with more than half of the world’s population online, and consumer demand for online capabilities experiencing a huge spike, companies are under pressure to keep up with the shift toward digital video distribution. Companies such as YouTube, Apple, Netflix, and Amazon are constantly updating and forcing traditional networks to merge with other companies and offer customers low-cost TV deals to keep prices at a par with online providers. Online video supply is growing faster than demand and creating confusion for the customer; with 53 percent wanting recommendations from their preferred platform, and 55 percent of customers willing to pay for them, a new role is emerging in the value chain: a content navigator that streamlines the customer’s search, based on a smart but simple interface, and providing access to all available video. 

The disruption in the traditional TV ecosystem is the result of several factors. Compared to the “old world” of television, this new ecosystem caters to a larger, global audience, allowing easy access for audiences with smart TV and smartphone availability. Content navigator platforms will evolve into a business platform, simplifying and enhancing the video experience for viewers and adding value for all stakeholders. The revenue streams from this model come from multiple sides: customers pay for subscription fee or one-time payments to watch content provided by the company; advertisers pay to place ads on the service; content producers pay to receive data that will improve their content. 

Whereas cable companies and telcos can focus on connectivity or become content navigators, pay TV operators have no choice but to evolve into content navigation, using one of five business models: pure, premium, producer, integrated, or tech navigator. Each business model comes with market-specific trade-offs between revenue, profitability, and risk. In general, the pure navigator model is the least capital intensive, which helps to reduce risk. The integrated navigator is the most capital-intensive model, but the rewards can be high in terms of both revenue and profitability thanks to the scale effect and entry barriers it can achieve.

Companies that provide compelling content and an exceptional customer experience, project a clear brand identity, and remain flexible in their commercial propositions will stand the best chance of outperforming competitors.


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