The ‘Future of TV’ outlines Mindshare's view on the evolution of TV and video, and the likely implications for broadcasters and advertisers. This is part of Mindshare's ongoing Future Of... research programme which explores the development of the media and technological landscape, and assesses the likely impact on advertisers and media businesses.

1. FUTURE OF...
television

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3. Future of...
Mindshare’s Future of… programme rigorously What follows is an analysis of the Future of
interrogates the received wisdom and common Television, which we’ve prepared for advertisers and
assumptions that exist about the evolving media owners, which we gleaned from a mixture of
communications landscape. qual and quant research plus exclusive interviews
with industry experts.
Using a wide range of techniques – from co-creation
communities through to extensive quantitative An important read for key insights into this most
studies – Future of… rejects the conjecture that popular of media.
we believe underpins the advice offered by so
many agencies. Instead, it seeks out surprising,
challenging and verifiable answers to questions
communications professionals face every day.
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4. A medium in terminal decline?
TV has come under increasing pressure in recent obsolete. Empowered by this technology, we would
years and there have been plenty of observers all watch whatever we wanted, whenever we wanted
ready to write it off as a mass medium. Much of the it. We would fast-forward through all the ads. And the
challenge has come from technology, of course. once-sacred TV set itself would take second place in
Newer pursuits like gaming and the web have the home to the all-conquering PC.
competed with TV for our attention. It was predicted
that innovations like Sky + could make live viewing
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5. Evolution, not revolution
Only it hasn’t really happened what they considered to be the to gain ground, there are many
that way. Or not to the extent that key factors determining the TV aspects that will change only
the industry feared. The reality landscape between now and slowly and less radically than
has turned out to be much less 2020. And we also analysed lots anticipated. The overall picture is
dramatic and much more subtle. of industry data about current most definitely one of evolution,
So we thought it was time to take consumption habits, how they not revolution.
an unbiased look at the trends are changing and how they might
likely to affect the development of continue to change in the future.
the industry between now and the These subjective and objective
end of this decade. sources both pointed to the same
conclusion: while many of the
We interviewed a number of existing trends - fuelled in the
key industry figures and asked main by technology - will continue
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6. key findings
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7. 01 Linear viewing will remain 03 Spot advertising survives as
resilient as viewing choices new revenue streams emerge.
proliferate. We expect consumers The more commercially valuable
to retain their preference for live, audiences will watch more on-demand
scheduled TV viewing. programming than the average. This
will force broadcasters to adapt in two
ways, developing branded content
solutions primarily for younger
audiences, and addressable advertising
02 The brand becomes even more
for higher value audiences.
important in TV. Strong channel
brands will thrive as viewers look for
guidance through all the choice; and
the programme brand will become
critical as social media help drive
viewing to live, blockbuster content.
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8. detail
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9. 01 Linear viewing will remain resilient as viewing choices proliferate.
Crucially, we’re not watching any On-line video is another perceived Video on demand is also growing
less TV. We love TV. For all the newer threat to traditional TV and it is – especially among younger
alternatives vying for our time, growing, but at the current level audiences – but doesn’t yet
we still spend an average of four of around 19 minutes a day, it represent a marked shift in
hours a day in front of our TV sets is not yet making a significant consumption despite considerable
– essentially the same amount as dent in traditional TV viewing. And marketing effort. As with PVR
20 years ago. In fact, viewing time this viewing time is incremental time shifting, we expect viewers to
has actually increased slightly to standard viewing, not an continue their preference for their
in the past couple of years. And alternative. Plus, 80% of that time TV viewing to be live and of-the-
the majority of that time is still is spent watching YouTube or moment.
spent watching live, broadcast porn, neither of which can really
TV. The much-trumpeted shift to be considered direct competitors Factoring in all of these changes,
self-scheduling has yet to make to traditional TV programming. we estimate that linear TV will still
a significant dent. Time-shifting Likewise, there are many account for 70% of video viewing in
in homes that use PVRs hovers enthusiastic users of broadcaster 2020 (see Fig.1).That is a long way
around the 20% mark, a lot less sites like itv.com and iPlayer but short of the collapse that many
than had been predicted and the volume of viewing of these is had forecast. Traditional viewing is
there’s little evidence that people still relatively insignificant despite in fact proving remarkably resilient.
use their PVRs more the longer healthy penetration.
they’ve owned them.
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10. In households where people have got many tens
of thousands of video on demand we’re still seeing
about half of all viewing to fairly traditional, ad
funded much of it, shiny floor entertainment
television.
Mark Thompson
Director General, BBC
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11. Figure 1
Estimated video viewing by type
2010-2020 (f),Minutes
281
259
19 40
17
48
We believe 70% of
ONLINE VIDEO video viewing will
TIMESHIFTED TV
still be linear in
2020.
LIVE TV
223
193 70%
2010 2020 Source: BARB / Comscore / Mindshare estimates
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12. What I would say about 2020 is that linear television will
still be there. It will take time for the evolution of television
into the non-linear world to happen and it’s never going to
quite happen like that because we still want to share things
together.
Alan Yentob
Creative Director, BBC
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13. 02 The brand becomes even more important in TV
Another aspect of the current TV Strong brands will increasingly When these technologies take off,
landscape that seems in no danger help consumers manage and a strong master channel brand will
of being obsolete by 2020 is the navigate the bewildering array of become the access point for many
role of brands – both channel viewing choices they now face. viewers. The portfolio route taken
brands and content brands. We And the evolution of the electronic by many channels will become
believe that strong linear TV programming guide (EPG) is more blurred and arguably less
channel brands will prosper if, as likely to play an important role important at this point.
anticipated, total viewing time in supporting channel brands’
holds its current level (see Fig.2). influence. EPGs will evolve to
In fact brand strength will be more feature both “brand zones” and
important than ever to maintaining recommendation features as well as
share. the familiar listings.
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14. Figure 2
Distribution of Revenue
Traditional vs emerging media
The Big Head
Revenue
Emerging Media Age
Trad Media age
‘Strong TV brands
will prosper’
The Sagging Middle
The Long Tail
Top Bottom
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15. Big content gets even bigger
The value of a strong content brand And this big content has taken programme, chatting to friends or
can be seen in how well the top 5 full advantage of the rise of social even interacting directly with the
programmes have held up in the media where it is a natural and programme on a second device,
digital era. These programmes popular topic. This creates a kind of whether it’s an iPad or a smart
have lost fewer viewers over the “water-cooler online” effect. Social phone. Social media chatter helps
past 10 years than the rest of the interaction around blockbuster big content get bigger. And social
top 100 (see Fig 3). For all the content is expected to grow communities provide ready-made
fragmentation in our viewing we through the phenomenon of two- fan bases for leveraging content
still have that communal need for screen viewing - watching linear TV off the back of the most popular
the big blockbuster programme. while monitoring the buzz of a live programmes.
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16. Figure 3
TV Viewing Figures by rank
(% change 2000 – 2010 ytd)
0
-5
-10
-15
‘The blockbuster
% continues to thrive
-20 US* in the digital era’
-25 UK
-30
-35
Source: BARB / Nielsen *2001-2009
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17. Mass audience television still has its appeal
not just to advertisers but also to the public.
There is something about being involved in
something a lot of other people are watching
that you can talk about the next day. The
commonly enjoyed moment that everybody
can reflect on together.
Sir Peter Bazalgette
Former Chairman Endemol UK
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18. 03 Spot advertising survives as new revenue streams emerge
Dual-screen consumption will support live, linear Branded content will grow, particularly for brands with
TV – good news for the future of spot advertising. younger target audiences, but it is still challenging in
Overall, the continuing growth of pay TV (about 50% terms of transaction costs, the risks involved and its
of revenues by 2020) will further reduce the industry’s ability to demonstrate credible ROI. Ultimately there
dependence on advertising, but spot advertising will are only a finite number of brands and programming
still account for 80% of the reduced advertising total in genres suitable for ad funded programming, and this
2020, we estimate (see figure 4). will also act as a natural ceiling.
New advertising revenue streams, namely branded
content and addressable advertising, will continue to
develop, albeit relatively slowly, because of the higher
rates of time-shifting amongst the more commercially
valuable audiences. There are a number of factors that
will hold this back though.
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19. Addressable advertising – using data about individual a headache in the context of consumers’ – and
households’ spending habits and profile in order to legislators’ – growing concerns over privacy.
serve specific tailored ads to those consumers through
their set-top box – is likely to be more fertile ground. Nonetheless, it is an area of real potential and one set
to grow, particularly for advertisers who are currently
Sky’s AdSmart is probably the best known current heavy users of direct marketing.
system. It’s something of a holy grail for advertisers,
but it will be 2013 before advertisers are able to tailor We believe addressable ads will generate
messages accurately and to reach credible numbers of much more revenue than branded content by
viewers with sufficient accuracy. It’s also potentially 2020.
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20. Figure 4
TV industry revenue in £bn,
real terms 2010 - 2020 (f)
12 billion 17 billion
6% Other 10% Other 80% Spot
23% Public Funds (BBC)
17% Public Funds (BBC)
24% Advertising
30% Advertising
49% Subscription
41% Subscription
5% Content
15% Addressable
2010 2020 (f) Advertising 2020 (f)
Source: Ofcom / Mindshare Estimates
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21. implications
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22. For advertisers
Traditional viewing lives on and conventional 2] While addressable advertising is in its infancy,
TV spot advertising will continue to be a critical advertisers need to consider how exactly one-
medium for many years to come. to-one TV advertising could be used and to
experiment with broadcasters and TV platforms
The challenge for TV advertisers in the coming as opportunities develop. Advertisers will need to
years is twofold: understand their consumers in ever greater detail
to truly reap the benefits of targeting.
1] To work out how to use social media and two
screen viewing, to leverage their spot advertising
in must-view, blockbuster content. How can the
30s spot be best used to drive engagement or
interaction on the second screen?
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23. For broadcasters and platform operators
Brands will be more important than ever as Developing addressable advertising systems
viewing choices proliferate, so it will become and approaches that are coordinated across
even more critical to build channel brands that the industry will cut down on advertiser and
truly resonate and offer a sense of editorial agency transactions costs and encourage
endorsement over programme choices. Big brands experimentation.
and well-defined niche brands will thrive, but the
challenge will be to avoid the dangerous middle
ground.
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24. I think there will be more opportunities for advertisers
to target their potential customers more accurately and
I think there will be more opportunities therefore for
advertisements to smarten up, to be better focused and to
be better directed, not having to cover too many bases in
any one message. And so I’m confident that the 30 second
spot ad will survive as it has for 50 years, I am sure it will
survive another 10. But we will see far more variations
on the theme and far more intelligence in the way those
messages are communicated.
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25. David Elstein
Former Chief Executive Channel 5, Head of programming at BSkyB
& Director of Programmes at Thames Television
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26. more...
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27. What’s next for Future of...?
In 2012, Mindshare’s Future of... programme follow up its study of television with anaylsis of Mobile,
Social, Connected TV and Consumer Choice.
To receive these reports on their publication - or to request a place at one of our breakfast briefings on
each subject - please email rsvp.london@mindshareworld.com with your details. Alternatively, you can
contact Jeremy Pounder or Louise Richardson via firstname.surname@mindshareworld.com.
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