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TV: The Internet Is Coming
 

TV: The Internet Is Coming

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The internet is coming to your TV set, along with all the targeting and interactivity of digital media. This will make true Video on Demand (VOD) a reality and potentially replace traditional TV ...

The internet is coming to your TV set, along with all the targeting and interactivity of digital media. This will make true Video on Demand (VOD) a reality and potentially replace traditional TV advertising models.

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    TV: The Internet Is Coming TV: The Internet Is Coming Document Transcript

    • 23/10/2009 TV: The Internet Is Coming TV: The Internet Is Coming The Rise Of Video On Demand (VOD) Richard Dance & David Norris
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming Executive Summary 1. The internet is coming to your TV set, along with all the targeting and interactivity of digital media. This will make true Video on Demand (VOD) a reality and potentially replace traditional TV advertising models. 2. SNAPSHOT: Yahoo! Connected TV is the dawn of TV becoming “Internetised”. 3. Technology will not converge in an efficient manner. People will continue to engage based on the content not the technology platform. 4. Good content will always find a way to consumers’ screens, by legitimate or other ways. Technology should be thought of as a means of distribution rather than as an idea in itself. 5. With all this growing choice, communication can no longer just interrupt consumers; the idea to be communicated must be engaging and accessible via a number of formats, judged on standard branding and effectiveness metrics. 6. Some opportunities and considerations for advertisers.
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming 1. The internet is coming to your TV set, along with all the targeting and interactivity of digital media. This will make true Video on Demand (VOD) a reality and potentially replace traditional TV advertising models. Video on demand has been in development for years. From the moment audiences moved from massed screen based entertainment (cinema) to private screens in their home (Television) the trend has been towards greater choice, personalisation, and the transfer of control to the individual. Developments such as multiple channels through the aerial, infra- red remote controls, digital broadcasts, PVR’s, and now the internet have all conspired to move the burden of responsibility from the corporation to the viewer and there are seven broad themes that highlight the increasingly individual task to find TV entertainment and information: In today’s world, we see the next wave of developments taking shape – producers of content (e.g. Endemol) vying with broadcasters (e.g. Sky), and infrastructure providers (e.g. BT Vision) competing with hardware manufacturers (Apple, Sony, Nintendo) and software companies (e.g. Microsoft). Even across this limited list of companies, the overlap they have across these categories is obvious; consumer choice is expanding ever faster. Moreover, viewers are changing their behaviour quicker than major corporations can possibly adapt to. Content production is passing into the hands of consumers, with cheaper and higher performance technology democratising what used to be a corporate preserve. As a sociological trend, this is interesting enough. But screen based entertainment produces audiences, and audiences attract advertisers, and the disruptive change of the past few years places mass reach advertising in jeopardy. Not that people are watching less television; far from it. In part due to today’s economic situation, people around the world are spending more time watching their TV; but the way they are watching is becoming far more complex, and the efficiency of mass reach advertising is suffering.
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming Multitasking is becoming commonplace1, ad avoidance continues to grow, and perceptions of brands continue to be threatened by consumer empowerment and tribalism. Faced with this challenge, we need to continue to optimise linear, interruptive, standard advertising models for as long as a return on investment can be proven, while simultaneously developing insight and expertise in the new forms of marketing communication. 1 During the second quarter of 2009, more than half of Americans (57% Nielsen A2/M2 Three Screen Report) who have Internet access at home use television and the Internet simultaneously at least once a month. Though this two-screen, simultaneous usage amounts to just 3% of their TV viewing, it already represents more than a quarter of their at-home internet usage (28%).
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming 2. Snapshot: Yahoo! Connected TV is the dawn of the TV becoming Internetised TV widgets on Yahoo! Connected TV enable the consumer to interact with web services (such as Twitter, Facebook, instant messenger) while watching television, without the need for a separate box. In the Yahoo! scenario world, the coveted space below the TV is no longer occupied by decoders and PVRs. Everything can be accessed directly through your TV. TV widgets combine the visually rich and engaging passive characteristics of television with the personalised interactive elements of the internet. Thus Yahoo! hopes to be able to deliver internet values to the TV experience. Yahoo! has partnered with Samsung, Sony, LG and Vizio to provide this service, and widgets are already available from Yahoo!, eBay, CBS, Flickr, USA Today, and Twitter. Navigation via the television is personalized to the login details of the user – allowing children and parents to have different sets of application, suited to their needs. These apps can form part of the viewing experience, for example, you could watch your favourite programmes and discuss them as you watch with friends via Twitter. The user set up is simple, and it is live in the US already, with a Samsung launch set for end Q4 2009 across Europe.
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming 3. Technology will not converge in an efficient manner. People will continue to engage based on the content, not the technology platform. As disruptive technologies go, the internet is about as big as they get: and television entertainment is about to be ‘internetised’, as Yahoo! Connected TV demonstrates. Having identified a number of different combatants on the VOD battlefield, it is clear that for Yahoo! Connected TV offers a new technological development, but as the below highlights there are always different technological elements that determine, but the key to achieving success comes in the content that is delivered. Technology, in the form of hardware and software, rarely converge, especially in the early stages of development. The back of your PC, with numerous sockets and ports, is testament to this. It’s probably already the case with the back of your TV too. Market forces and the desire of companies lock in consumers with a competitive edge require divergence, not convergence. From this model, we can estimate no one technological platform will provide a comprehensive VOD solution. Fragmentation of audiences will continue, with new divisions emerging across hardware, software and broadcaster solutions. This could necessitate multiple ad formats and programming solutions, without the advertiser ever achieving incremental reach.
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming 4. Good content will always find a way to consumers’ screens, by legitimate or other ways. Technology should be thought of as a means of distribution rather than as an idea in itself. Recent history indicates the internetisation of home entertainment will transcend restrictions imposed by technology. Evidence for this comes from the persistent success of piracy in all forms, YouTube, torrents, open source video players such as VLC, and the apparent ease with which digital rights management (DRM) controls can be circumvented and hacked. Technology doesn’t converge; content does – despite strong corporate interest in maintaining control over what content viewers can access. On the basis of these two observations, and the previous section, we believe content is likely to be the biggest deciding factor of this emerging battle, and it is in this area we recommend our clients make the greatest exploratory investment. However, we also expect to see a couple of interim phases, during which ‘portals’ of content emerge, perhaps as part of the existing brand heritage of broadcaster channels. In this scenario, a range of standard ads will be place alongside or intercut with content, targeting people by behavioural characteristics. At the same time, examples like Yahoo! IPTV show another foray into the desire to aggregate audiences. To see content as a deciding factor in the emerging battle of the media plan we need to address the different ways that content is now shown within the changing nature of media consumption. Though TV offers quick mass reach and is still the optimum screen for big live sporting, music and news events, the internet and mobile mean that online content is rapidly increasing and becoming more important (with 26.9 million people viewing online video content in April 2009). People are able to watch what they want when they want. Mobile puts a screen into the hand of the consumer, and mobile will be the next area that VOD technology will explode. With 3G penetration set to increase from 30% to 68% in 2010 – we could be set for the decade of mobile advancements, including VOD. There are a number of VOD content opportunities, which can be set out across a spectrum, from interruption to engagement:
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming Content needs to be suitable for all types of screen as the technological advances cannot be utilized without placing content in the necessary environment. Greater consideration needs to be taken when developing creative ideas and executions to work as well on a mobile or on a big screen, and create bespoke content for each planned distribution platform.
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming 5. With all this choice, communication can no longer just interrupt consumers; the idea to be communicated must be engaging and applicable to a number of formats, judged on standard branding and effectiveness metrics. Brand communication needs to move from telling people what to think or buy, to demonstrating the brand think like its target audience, or even have common beliefs with you. Today, brands have to persuade consumers to buy or use their products and services. Delivering content through VOD offers an ideal environment to achieve this, as it achieves a greater level of attention than passively broadcast content. The metrics that best indicate success have yet to be defined in this emerging sector; however, looking at the range of data that we currently employ to prove the effectiveness of internet-based digital campaigns, we can start to identify the data we will require from content providers. To determine which platform or technology is best suited to your project, standard media planning techniques such as audience reach, user response data, and the innovation effect of employing advanced technology need to be applied. In aligning with content rather than the technology itself, a number of different means of transmission will be possible – in each case, the costs of so doing needs to be understood.
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming 6. Some opportunities and considerations for advertisers The opportunities in this area have barely been defined, let alone proven. However, getting in on this opportunity early gives brands a chance to learn without risking exposure when audience sizes are higher. We see four areas that are worth exploring: TV widgets and utilities Apps are becoming commonplace in the mobile world, and brands are increasingly finding ways to make this extended and intimate relationship with consumers with for both parties. These range from functional apps, such as recipe and store locators, to leisure apps such as the iPint or the BMW driving game. Apps on the TV offer a whole new dimension – the ability to bring quality content to users (e.g. show people how the recipe is made, rather than present a list of instructions), and a greater range of interactivity afforded by the bigger screen. Apps for the Yahoo! IPTV is made easier by Yahoo! providing a development kit for coders, and this is a model most IPTV services are likely to follow following it successful adoption by Apple for the iPhone and Google for their Android phones. It is also exciting as there is the potential to use the on screen AV content to link directly in to the downloaded TV widget. For example, an application that has a feed of relevant and interesting live statistics being flagged up, and linked to the TV creative that runs at half-time of a football match. Search Search has come to dominate the revenues of the internet, and the death of the TV listings page is going to bring search to the fore in entertainment too. Why looks at a static list of programmes that are being shown tonight, when you can select from a list of programmes based on your previous viewing habits, or which your friends have recommended? Search will be one of the few points of aggregation (ignoring ‘hero’ content such as major sporting, music or news events). VOD content/bespoke programming Advertiser funded programming struggles to gain traction in today’s broadcaster controlled TV environment. In the IPTV world, this barrier is removed. Coupled with the possibility of making TV in a non-linear form (allowing users to explore a video world and its side stories, and other unforeseen potentials), Advertiser-funded VOD is a hugely important opportunity and area to gain expertise in. Addressable TV spots Presently, the bedrock of internet targeting, the cookie, is not available on TVs (Nor incidentally is it available on games consoles). When the TV has a cookie, advertisers can apply internet targeting principles – frequency capping, sequential messaging, and behavioural targeting. Some broadcasters, such as Sky, have a wealth of data on their subscribers – not just household size and address, but through a panel system they can monitor the effectiveness of spot advertising on peoples buying habits. It is only a matter of time before ad breaks are customised to the viewer; the ads one household sees will be different to those their neighbor sees through the same broadcaster feed. This development requires very little technological development, simply a change in the way TV is delivered to your screen. Interactive spots
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming The Red Button is a familiar fixture on UK multichannel homes. Pressing it leads a simple ‘dedicated advertiser location’ (DAL), which is rented from the broadcaster by the advertiser. The DAL can contain anything, from bonus content, to games, to response channels. While there are limitations in what can be currently achieved in this environment, the ‘microsite’ approach to interactive TV is likely be taken up by many more advertisers as more bandwidth and greater interactivity of advertising formats comes online.
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming Appendix: VOD Landscape (UK focus) - Broadcasters - Software - Hardware
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming Appendix: VOD Landscape (UK focus) However, it is important to understand the marketplace that it will be entering in, and hoping to revolutionise – that of the IPTV world and digital connectivity. Broad areas competing in this space and key players trying to bring gain advantage include the following: Broadcasters Consumers can now achieve the in home TV experience that they choose, if they pay for it. Services such as Sky+, BBC iPlayer and Virgin Media in the UK have enabled consumers to watch TV around their lives, never missing that crucial programme or event. However, they need to pay for it if they want the full fat package to pause live TV, record series in advance or experience in High Definition. The competition has seen the broadcasters fight it out to be the tool of choice to watch on demand TV. Most of these digital broadcast providers have also moved in to the broadband Internet supply business, but as yet none of them have figured out a successful way to integrate their properties. Even as digital IPTV services and players develop such as Sky’s skyplayer they are not looking at the online platform to enhance the broadcast experience but simply looking to get closer to delivering the same broadcast service through your laptop as through your TV – they seem unable to connect the two. Green button technology is a digital platform from Sky gives advertisers the opportunity to offer television viewers additional content lasting up to two hours. Users can press the green button on their Sky remote to set a reminder for the longer-form programming on the Sky Guide or record it on their Sky+ box. The aim was to change the perception of interactive.
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming Software Web 2.0 and the explosion of broadband across developed markets means that premium, long format content can be streamed easily over the internet. The revolution started by YouTube has led to the emergence of players such as Tivo which gives you control over your TV viewing by keeping track of the latest TV schedule and automatically recording every episode of your favorite shows, even if the day or time they air changes. Video, music and photos can all be accessed by attaching a TiVo wireless adapter and connecting your TiVo DVR to your wireless home network. Hulu in the US is another tool which allows users to enjoy videos on Hulu.com and on 35 other sites. Hulu videos are available on AOL, IMDb, MSN, MySpace, and Yahoo! in the U.S. as well as a growing network of personal blogs, fan sites, and other Web sites where users choose to embed the Hulu video player. It offers the freedom to share full-length, full fat content thanks to the Ad-funded model. In many ways this is the software providers’ challenge to the broadcaster. If people only select the content that they want to watch, when they want to watch it then why not access it through the Internet, avoid subscription charges? As bandwidth continues to evolve at such a rapid pace (who remembers 56k dial-up?!) in Western markets then the quality will continue to improve and the ability to have a screen in your home powered by your laptop and not a set-top box will become the more practical option for the masses. A concept to match and improve the endeavors of Hulu is Project Canvas aiming to break internet-connected television in the United Kingdom market in Christmas 2010. It is intended to combine broadcast content with broadband content, delivering both through the television (as distinct from the computer) – but again it is yet to be seen how it will approach any form of convergence between the two and what the enhanced offering can be for the end consumer. The clear trend in the Software spectrum seems to be trying to bring the focus away from our smaller screens back to our larger domestic screens.
    • 23/10/2009 [Client Logo] TV: The Internet Is Coming Hardware The contemporary home will see a large TV sitting proudly as the centre of attention, connected to its HD broadcast box, HD DVD player and top-end games console(s). However, the quest over the past few years has been to pull this all back to one device. Firstly, the HD DVD capability was won by PlayStation and the integration of the Blu-Ray player as standard into its 1st gen PlayStation 3. These next generation consoles including Microsoft’s Xbox 360 and Nintendo’s Wii now offer amazing connectivity, and the Wii has attracted a much broader ‘gamer’. Now on the more advanced platforms of PlayStation Home and Xbox Live you can engage with the Internet, shop online, organise digital photos and communicate with other users and access premium, streamed content. The question is how far away are we from a broadcaster partnering with a gaming manufacturer to produce a one box which has all of the options? Maybe Microsoft’s deal with Sky Sports in the United Kingdom and the Microsoft Xbox Natal ‘home entertainment’ system is a step closer to this. Or potentially technology will evolve to a point where we do not need any form of hardware beyond a screen that does everything…