The Digital Video Business - Bringing TV to Life, Issue VI - Accenture
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Bringing TV to Life, Issue VI The Digital Video Business
Foreword
As Media & Entertainment industry lead, forces in the marketplace, forecasted how This year’s issue, authored by Sef Tuma, our
it is my pleasure to release the latest issue existing and future trends will shape the Accenture Managing Director and Digital
of our Bringing TV to Life series. market, and provided what we believe are Video Strategy Lead, offers unique insight
important suggestions for how our clients on the broad OTT-Video ecosystem as the
Bringing TV to Life was established in 2010 can react. We remain very bullish about collaboration models between traditional
as an annual commentary over the nascent OTT-TV as it continues to evolve its Content Providers and Aggregators become
Video over IP industry brought to you by consumer offerings, business models and strained. We are witnessing a battle for the
the Accenture Media & Entertainment supporting technology innovation to serve digital consumer of seismic proportions
practice and Accenture Digital Video. Over an increasingly sophisticated consumer. and this requires facing the digital future
the last six years, the OTT-TV market has Constant revolution and disruption are without fear of cannibalizing legacy
become more mature and has begun to nothing new for those working in digital business models. Becoming a Digital Video
confirm much of its incredible potential, entertainment. Even by those standards, business at scale today requires a new
evolving to become a mass-market the pace of change in recent years has approach to investment but is the ticket
phenomenon with great penetration across been exceptional—but it is fast becoming price for a successful future.
virtually all industrialized economies. the norm.
During this period, we have looked at the
Francesco Venturini
Global Media & Entertainment Lead
2 | Bringing TV To Life, Issue VI
The Digital Video Business
Over the past 15 years, video has been the only part of
the media industry to sidestep the full impact of digital
disruption. The video industry (spanning theatrical, home
entertainment, pay TV, advertising-funded and free-to-
air models) has remained relatively immune from the
trends that have swept music, publishing and other
branches of the media industry.
This is all beginning to change, with and associated operating models begin A reluctance to adapt will lead to
a wave of disruptive innovation now to capture a greater share of the market. declining growth opportunities and
engulfing the video industry. Trends most likely a fall in market share.
that until recently have held sway— Accenture defines and highlights two
rising production costs, traditional value capability models that offer traditional Companies need to make three
chains, non-disruptive investments, Providers and Aggregators an opportunity
fundamental decisions:
heavy policing of piracy threats and to reinvent themselves and maintain
unmet consumer demand—are becoming their relevance in the industry’s rapidly • What type of digital video business
unsustainable. As the industry transforms changing value chain: do you want to be?
itself, the stakes are high: the value
• How are you going to build the
of the global video market surpasses Digital Content Providers (DCPs) capabilities needed to be successful?
$500 billion. are a new breed of business looking
to serve content across a wide • In the event you need to collaborate,
As growth slows in many traditional how can you do so in a way that
areas of the video industry, established
array of different digital channels,
helps maximize leverage and
companies face the formidable challenge including OTT and IP distribution. profitability in your business
of capturing new growth while protecting Sometimes DCPs will offer content transactions?
their existing business. To succeed, these directly to consumers; in other
incumbents will need to make some cases, they will provide it through In this issue of Bringing TV to Life,
critical decisions about where they fit collaboration with Digital Content Accenture aims to help video businesses
into the industry’s emerging value chain, answer these questions. It focuses on the
Aggregators.
which is centered around IP distribution roles of DCAs and DCPs, and the relation-
of video. ship between them, outlining some of
Digital Content Aggregators the challenges that each face. Accenture
In this evolving value chain, the value (DCAs) are digital video also helps to identify the capabilities and
of leverage points such as infrastructure aggregation platforms designed strategic options that both Aggregators
(e.g., distribution networks, traditional to package multiple DCPs to and Providers need to consider to stay
STB devices), sales and traditional ahead of disruption in the digital video
consumers. In contrast to
customer relationship management market.
is falling, as digital capabilities and traditional Aggregators, DCAs
platforms are beginning to change how focus more on providing the In short, this perspective is intended as a
customers are served. At the same time, data and platforms, such as guidebook for transformation, empower-
scale of reach, quality of experience, media distribution and targeting ing traditional Providers and Aggregators
data-driven operations, ubiquity and services, that DCPs need to to help capture growth, protect market
seamlessness across devices are share and drive profitability in both
engage with audiences directly.
becoming increasingly critical sources established and emerging businesses.
of competitive advantage.
The time to act for traditional Providers
and Aggregators is now. As the pace of
An important consequence of this change
disruption in the industry accelerates, the
is that collaboration between traditional
relative size of the investment needed to
Content Providers and Aggregators
enable change will only grow significantly,
are becoming strained, as consumer
especially as gaps in capabilities widen.
behaviors evolve and as new business
Bringing TV To Life, Issue VI | 3
All change: an industry in flux
Constant revolution is nothing new for those working in
digital entertainment. But, even by the standards of the
media industry, the pace of change in recent years has
been exceptional.
FIGURE 1 | Comparison of digital growth and traditional growth in pay TV
Total Pay TV Revenue, 2015–2019c, $US billions, Source: PWC and SNL Kagan 2015
Broadcasting: 2.9% CAGR
2015 310
2016 314
2017 325
2018 338
2019 348
Telco: 9.2% CAGR Cable: 3.4% CAGR OTT: 15.6% CAGR
2015 36 2015 94 2015 23
2016 40 2016 97 2016 27
2017 44 2017 101 2017 31
2018 48 2018 104 2018 36
2019 51 2019 108 2019 42
Disruption has driven growth across the Key trends an affordable way to personalize services,
digital video industry, but the stand-out increasing engagement and the value
success has been the over-the-top (OTT) This growth has been propelled by both of advertising.
segment, which has been responsible advances in technology and changes in
for the vast majority of annual growth consumer behavior and expectations: Consumer trends
(Figure 1)—a trend that most analysts Consumers can buy ever cheaper yet
agree is likely to continue. Technology trends more sophisticated devices and now
Continued infrastructure upgrades, in expect constant connectivity and
Moreover, the growth in traditional particular fiber-based high-speed immediate video provisioning across all
markets is not a given for many broadband, have made OTT propositions a their gadgets. The portability of devices
incumbents, as both churn and average- reality. Faster broadband (in January 2015 is changing content consumption trends,
revenue-per-user (ARPU) pressures hit the Federal Communications Commission both for long-form and short-form video
their business, meaning they will need upgraded its definition from 4Mbps to audiences. Another trend sees video
to become nimbler, to both protect their 25Mbps1) has reduced barriers to entry services that have sprung from the
existing growth trajectory and augment for new players, who are able to optimize internet rather than broadcasting tending
it with OTT. delivery of video on unmanaged to offer more free content or lower-cost
networks. HD (and ultimately 4K) have subscriptions. To an extent, this has set
also raised customer expectations, the bar for consumer expectations and
enabling businesses to differentiate influenced their willingness to pay
between quality and “freemium” content. subscription fees. The proliferation of
At the same time, cloud technology and OTT services is popular with consumers,
big data have provided businesses with but the increased competition it brings
challenges the value of existing carriage
agreement deals.
1 The Verge. “The FCC has changed the definition of broadband.” Retrieved March 2016.
http://www.theverge.com/2015/1/29/7932653/fcc-changed-definition-broadband-25mbps
4 | Bringing TV To Life, Issue VIFIGURE 2 | The digital video industry value chain today
Source: Accenture
Creation Providers Aggregation Consumption
Content Rights Holders, Web-based Cable and Online Video Device Platform
Broadcasters
Producers Studios Providers (OTT) IPTV Platforms Manufacturers Providers
Rights Owners (NFL, NBA) Super Platforms (Google, Amazon)
Aggregators building D2C Content providers launching
Key Value Chain Movements propositions which may cannibalize direct-to-consumer video
their existing business but help OTT offerings (HBO Now)
defend against new market entrants
(Sky, NowTV)
Super platforms moving Super platforms expanding
towards content distribution in point of consumption devices
(Netflix) (Google Chromecast, Amazon Fire)
An evolving value chain However, a transformation of the value
chain is under way. Two important
Much OTT growth has been driven by new emerging business models lie at the heart
market entrants who have been investing of this change: Digital Content Providers
significantly in “webscale” platforms. (DCPs) and Digital Content Aggregators
These players have no legacy business, (DCAs). (See callout box on page 6.)
granting them considerable commercial To stay relevant in the new industry
and creative freedom, especially if they value chain, traditional Providers and
can procure premium content rights. To Aggregators will need to consider
position themselves for future growth implementing one of these models.
and take advantage of disruption,
established businesses need to make
choices about how to pivot. While roles
in the traditional value chain (see Figure
2) haven’t yet materially changed, their
relative attractiveness is in flux.
Bringing TV To Life, Issue VI | 5From traditional Content Providers
to Digital Content Providers (DCPs)
Traditional Providers typically own or acquire rights and monetize them
across different distribution channels. With either a business-to-business
(B2B) model—striking carriage deals and selling advertising—or a model
based on offering premium subscriptions to consumers, they manage
content programming, curation, scheduling and linear distribution, while
relying on Aggregators for the consumer relationship. The reliance on
advertising revenue drives a focus on market share, and winners distribute
to as many platforms (satellite, cable) as possible. That scale is important,
and without it many traditional Content Providers have struggled to
launch, for example, their own direct-to-consumer (D2C) models.
Traditional Providers are best placed to pivot into Digital Content
Providers (DCPs). This new breed of business aims to serve content it has
acquired or produced across a wide array of different digital channels,
including OTT and IP distribution. Sometimes DCPs will offer content
directly to consumers; in other cases, they will provide services through
collaborations with DCAs. Netflix is a high-profile example of a D2C DCP,
as an OTT provider that exploits content rights through subscription
services. Not all traditional Providers will be able to adopt a D2C model
of this kind, as it requires significant global scale to drive growth and
profitability. Instead, these Providers will need to work out how to
collaborate effectively with DCAs to deliver content.
From traditional Aggregators to
Digital Content Aggregators (DCAs)
Traditional Aggregators consolidate content from multiple Providers and
serve it to consumers, providing them with a broader content proposition
through subscription services. Cable companies, such as Comcast in the
US, own networks that market, sell and fulfill video services to consumers.
They own the customer relationship, packaging and bundling Providers,
and rely on audience scale in negotiations with Providers to create a
profitable subscription business.
But a new generation of Digital Content Aggregators (DCAs) is being
born. In Europe and elsewhere, telcos are increasingly becoming digital
video aggregation platforms. BT now competes with Sky and Virgin Media
in the UK, providing broadband, phone, TV and now mobile packages.
They deliver content through their broadband network without the
same number of carriage agreements, enabling FTA and OTT networks
through the YouView platform.
6 | Bringing TV To Life, Issue VIFIGURE 3 | Tomorrow’s transformed digital video industry value chain—a virtuous circle
Source: Accenture
Distribution rights Channels Channel bundle + experience
While a simplified view
Rightsof the relationship between traditional
fees Providers
Carriage fees and Aggregators may look Subscription
like this: fees
Creators Programmers Operators Audience
Distribution rights Channels Channel bundle + experience
Rights fees Carriage fees Subscription fees
Creators Programmers Operators Audience
…the relationship between DCPs and DCAs, with supporting capabilities, could evolve into something like this:
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capabilities:
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Cross-DCP care services
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digitally enabled organizations. They are focus more on providing the data and environment. Industry moves suggest
using their creative abilities as curators platforms, such as media distribution increasing flexibility in business models,
to forge engaging and interactive and targeting services, that DCPs need to as companies innovate to discover their
experiences around the content they engage with audiences directly. Figure 3 optimum position in the new value chain.
supply. Some DCPs with the requisite illustrates how the evolution of Providers
scale will be able to adopt direct-to- into DCPs and Aggregators into DCAs is
consumer (D2C) models, but others reshaping the industry value chain.
will need to collaborate with DCAs to
meet consumer demand for content.
Bringing TV To Life, Issue VI | 7FIGURE 4 | Comparison of expenses of a Traditional Content Aggregator (Comcast Cable)
Comcast Cable: Expenses as a percentage of video revenue. Source: Accenture analysis, company data
Traditional Content Aggregator (Comcast Cable): Expenses as a percentage of video revenue
Programming Technical & Advertising, Other
Product of
Traditional Content Aggregator (Comcast Cable): Expenses as a percentage Support
video revenue Marketing &
Promotions
Programming
44% Technical
26% & Advertising,
14% Other
15%
2013 Product Support Marketing &
Promotions
47% 27% 15% 11%
2014 44% 26% 14% 15%
2013 49% 27% 16% 8%
2015 47% 27% 15% 11%
2014
49% 27% 16% 8%
2015 Digital Content Provider (Netflix): Expenses as a percentage of revenue
FIGURE 4B | Comparison of expenses of a Digital Content Provider (Netflix)
Cost of Revenues Technology & Marketing General &
Netflix: Expenses as a percentage of revenue. Source: Accenture analysis, company data
Digital Content Provider (Netflix): Expenses as a percentage of revenue Development Administrative
Other
Cost
71%of Revenues Technology
9% & Marketing
11% General
4% 5% &
2013 Development Administrative
68% 9% 11% 5% 7%Other
2014 71% 9% 11% 4% 5%
2013 68% 10% 12% 6% 3%
2015 68% 9% 11% 5% 7%
2014
68% 10% 12% 6% 3%
2015
Traditional content aggregators face rising In a digitally disrupted ecosystem, SLING TELEVISION
programming costs, as they have little traditional Providers fret about the From Aggregator to DCA
flexibility with channels and bundling. In power of aggregators and their own
contrast, DCPs can manage programming increased distance from their audiences. Some aggregators are starting the
costs by leveraging data and analytics, Traditional Aggregators, meanwhile, transition to a DCA model. DISH, with
allowing them to have relatively face stiff competition and need to court its Sling TV offering, is an example of
significant content propositions without a range of Providers to appeal to fickle an aggregator moving in this direction.
requiring participation in an aggregated consumers. Both traditional Providers Sling TV is targeted at millennials and
service/product bundle. In addition, and Aggregators are responding by consumers who don’t have a pay TV
increases in technical and product support experimenting with new business models subscription. Launched in 2015, in its
costs are a common feature of traditional and, in some cases, moving towards first year it acquired around 500,000
content aggregators—for example, a DCP or DCA model: subscribers.4
Comcast still need to bear expensive
infrastructure and technical support cost DirecTV NOW TV
for the number of devices and associated
Aggregator consolidation From Aggregator to D2C DCP
services they offer the market. DCPs
Some Aggregators are looking for
such as Netflix can, on the other hand, Merger and acquisition activity has been
different ways to leverage their content
help reduce content delivery costs by driven by traditional Aggregators wanting
relationships to attack the OTT market
optimizing delivery across different to grow their subscriber base, helping
and capture a new audience. An example
channels and devices, leveraging purely them to diversify offerings and drive
is Sky’s D2C Now TV service, which
cloud technologies for infrastructure, and up ARPU. A recent example in the US
acquires rights and acts as a DCP, while
by digitalizing their support model, mainly is AT&T’s $49-billion acquisition of
its parent, Sky, continues to operate as
through the use of innovative software. DirecTV.2 In March 2016 AT&T
a traditional Aggregator.
This allows technology budgets to be announced it would be launching
primarily reserved for continued software three digital-only streaming services,
development and less for infrastructure which don’t require an annual contract, HBO NOW
(Figure 4). a satellite dish or set-top box.3 The rush to OTT
Traditional Providers are beginning to
2 New York Times. “F.C.C. Approves AT&T-DirecTV Deal.” Retrieved March 2016. expand their OTT offerings into direct-
http://www.nytimes.com/2015/07/25/business/media/fcc-approves-att-directv-deal.html?_r=0
to-consumer (D2C) services. HBO Now,
3 Wired. “AT&T Will Let You Get Cable TV Without Having Cable—Or a TV.” Retrieved March 2016.
http://www.wired.com/2016/03/att-will-let-get-cable-tv-without-cable-tv/ Showtime, CBS All Access and Hotstar
4 Advertising Age. “Dish Remakes Sling TV App to Vie With Hulu, Netflix in On-Demand”. Retrieved March 2016. are examples of stand-alone streaming
http://adage.com/article/special-report-consumer-electronics-show/dish-tweaks-sling-tv-app-vie-hulu-netflix- services that were launched in 2015.
demand/302013/
8 | Bringing TV To Life, Issue VIMeanwhile, digital natives are also AMAZON PRIME means many are exploring D2C OTT
assessing how best to position them- From DCP to DCA propositions, though more as lateral
selves—whether as a DCP or a DCA— than primary strategic moves.
in the industry’s shifting value chain: Amazon launched a new initiative
called “Streaming Partners Program” For DCAs, the growth of IP and OTT
that allows Prime members to add
YOUTUBE RED services has increased consumer choice,
subscription programming to their meaning they now need to relate to two
From DCA to DCP Prime video service. For instance, users customers: their users and the DCPs they
Google’s move into subscription video on can add video content from Starz and support. Some have now created D2C
demand (SVOD) is an ad-free subscription Showtime to their membership for Provider propositions, even though these
service in the US, launched in October an additional monthly fee.7 may cannibalize their pay TV business.
2015.5 It’s YouTube’s first significant
move to becoming a rights holder. Staying ahead Whatever the strategy adopted by each
of disruption business, it’s clear the pivot requires
NETFLIX investment. This could be in content
From DCP to global DCP Traditional Providers still need to grow creation or acquisition, building new
audience scale by working with as many capabilities and services or optimizing
Netflix recently announced expansion traditional Aggregators as possible; distribution costs with an eye on quality
into 130 countries, bringing their total exclusive vertical integration with a single of experience. The collaboration between
reach to 190 countries.6 The firm already Aggregator without global scale has rarely DCAs and DCPs is key. Although some
has more than 69 million subscribers in proved to be a winning strategy. And the companies will diversify, testing both
more than 50 countries. pressure to own the consumer relationship DCA and DCP roles, ultimately each must
(and, consequently, subscription revenues) decide which type(s) of business they
as digital becomes ever more important, intend to operate and start building for
success now.
5 YouTube. “Meet YouTube Red, the ultimate YouTube experience.” Retrieved March 2016.
http://youtube-global.blogspot.co.uk/2015/10/red.html
6 TechCrunch. “Netflix Launches In 130 New Countries, Including India But Not China.” Retrieved March 2016.
http://techcrunch.com/2016/01/06/netflix-finally-goes-global/
7 Re/code. “Amazon Starts Building Its Own Bundle by Selling Showtime, Starz and More With Amazon Prime.”
Retrieved March 2016. http://recode.net/2015/12/08/amazon-starts-building-its-own-bundle-by-selling-show-
time-starz-and-more-with-amazon-prime/
Bringing TV To Life, Issue VI | 9An accelerating wave of disruption is transforming both
the traditional and digital video industry. Conventional
business models are under pressure, squeezed by shifting
customer expectations and competition from digital rivals.
Traditional Content Providers and Aggregators will need to
adopt new business models to capture growth, protect
market share and boost profits
New business models
for the digital video
DCPs
industry
Digital Content Providers
serve content across many different digital channels, either directly to
consumers or through collaborations with Digital Content Aggregators.
1. WORK TOGETHER WITH PLATFORMS 2. MOVE FAST High-performing DCPs
AND DEVICES must be able to rapidly test new
A DCP’s ability to scale audiences and grow consumer experiences and business
profitability may depend on its success in models so that they can respond
building mutually beneficial relationships with agility.
with DCAs.
3. STAY CLOSE TO THE CUSTOMER 4. GET NOTICED DCPs need to use
One-to-one relationships between new techniques—in content and brand
Five key strategies business and consumer are most likely marketing, and curation—to build brands
to return future revenues, so DCPs may with a personality and positioning that
to become a Digital decide to diversify into multiple models customers understand.
Content Provider (DCP) (D2C, TVE, marketing only), to serve the
consumer and promote loyalty. This
requires new capabilities (including an
understanding of identity) that neither
have traditionally needed to optimize
their business. 5. SUPPORT MULTIPLE BUSINESS
MODELS Given the accelerated
segmentation of digital consumer
behaviors and the importance of scale
to their business model, DCPs need to
be able to launch different propositions
using a shared platform. This allows
them to efficiently exploit their content
investments while maintaining their
editorial voice, helping them to acquire
viewers and sustain consumer loyalty in a
manner that is both agile and consistent.
10 | Bringing TV To Life, Issue VIDCAs
Digital Content Aggregators
are digital video aggregation services that focus on supplying the New business models
data and platforms that DCPs need to engage audiences, while for the digital video
providing a consolidated offering to consumers. industry
1. ALLOW CONTENT TO REMAIN KING 2. SCALE UP TO SUCCEED A large viewer
Content is still the most decisive factor in a base and footprint attract content providers
customer’s choice of provider. A unique and and enhance a DCA’s ability to segment its
relevant content line-up will remain an customers accurately and deliver more
important source of competitive advantage. relevant user experiences.
Creating the perception of endless content
to multiple different segments of diverse
interests will be the key to optimizing new
consumer bundles.
4. ACCELERATE NEW DIGITAL
CAPABILITIES TO SUPPORT THE
ECOSYSTEM A DCA needs to be an enabler
3. DIFFERENTIATE THROUGH QUALITY for DCPs looking to engage customers
directly—creating a platform for innovation
OF SERVICE AND EXPERIENCE
not only in technology but also in content
Quality of service and experience are vital
curation and editorial. Tighter cooperation Seven key strategies
differentiators: the better a DCA performs,
can maximize value for both partners,
the more interest it can attract from content to become a Digital
avoiding duplicated costs and efforts.
owners and DCPs.
Content Aggregator
(DCA)
5. AGGREGATE INSIGHTS DCAs are in 6. LEVERAGE THE LIVING ROOM
a unique position to understand customer ADVANTAGE Through their ownership of
behavior. They can use these insights to consumer premises equipment (CPE), most
improve their services and to provide a DCAs hold a clear advantage in the battle
value-add to DCPs looking to learn more for the living room. But leading DCAs need
about their customers. to find distinctive new offerings to set
themselves apart from the crowd.
7. BUILD TRUST By fostering consumer trust
and serving consumers wherever they are,
DCAs can become the preferred route for
customers to access digital services, putting
themselves at the heart of an ecosystem of
providers.
Bringing TV To Life, Issue VI | 11Digital Content Providers
(DCPs)
Pressure is growing on broadcasters and other
traditional Providers in the digital video industry.
Traditional business models are being squeezed by the
dual threat of declining audiences (as more viewers
become cord cutters) and the migration of advertising
spend to online. At a time when shareholders are
expecting growth, this is creating challenges, forcing
Providers to adopt innovative strategies and explore
new areas to forge growth.
Accenture’s analysis suggests that Typically, access to market is through Becoming a direct-
traditional Providers can potentially syndication deals with platforms (both
benefit from considering two (not broadcast and digital). The extent to to-consumer business
mutually exclusive) strategic options, which platforms intermediate between This strategy is most suited to DCPs who
which can help their transformation the DCP and customer varies, with already have access to a digital consumer
into Digital Content Providers (DCPs): two models prevailing: base and offer a broad range of curated
content. To benefit from a direct-to-
Integration with Digital business-to-business consumer (D2C) strategy at scale, a
(B2B) model is a straightforward DCP will need to acquire, maintain and
Digital Content content-supply and revenue approach. monetize the customer relationship.
Aggregators (DCAs) The DCP gains little insight about the Digital product development capabilities,
end-consumer but does not need to with competitive speed to market, will
Most traditional Providers are focusing
invest in the infrastructure required be required to keep pace with content
on this strategy, and it’s a particularly
for industrialized digital business-to- platforms. Enhanced curation tools will
appropriate path for brands with specific
consumer (B2C) capabilities. This is help to generate customer loyalty. If
compelling content, niche output or
effectively moving more towards a successful, a DCP will potentially benefit
an ambition to address a variety of
studio model where content portfolio from a diversified business with a direct
geographic markets without significant
management becomes more important relationship with its customer base, a
marketing spend. The potential benefits
than digital consumer engagement. possible income stream from subscrip-
spring from the rapid growth and scale
tions, and an enhanced ability to segment
derived from access to large digital
Digital business-to-business- audiences to maximize advertising
audiences, which unlocks increased
to-consumer (B2B2C) model revenue. But that is a pretty big “if.”
revenues through advertising services
and shared subscription fees. offers a more sophisticated approach
where the Digital Content Aggregator Building on these two strategic options,
(DCA) acts as a platform but does not we have identified several themes for
wholly divorce the DCP from its end- traditional Providers to focus on as
consumer, allowing the DCP to partially they look to transform their business
own that relationship. This is a less (Figure 5). For each of these themes,
conventional relationship because it gives we highlight strategic tools that Providers
the DCP some control of the consumer’s can employ to overcome the challenges
experience of the content coupled with they face in these areas, helping them
an understanding of consumer identity move towards a DCP model.
(e.g., shared authentication)—both of
which have not been typically granted
on traditional platforms.
12 | Bringing TV To Life, Issue VIFIGURE 5 | Strategic options for Providers looking to transform into DCPs
Source: Accenture
Traditional Content New DCP
Provider Capabilities Challenges Capabilities Required
• Multi-platform planning • Reaching audiences cross- • Integrated multi-channel
• Multi-platform format creation device and platform engagement and scheduling
PROGRAMMING • Retaining the brand’s • Multi-distribution product
& PLANNING • Linear scheduling and programming
hallmarks development
• VOD catalog planning and
management • Managing customer • Segmentation-informed curation
relationship across platform and commissioning
• Digital content optimization
• Content financial and budget • Managing rights and entitle- • Multi-business-model platforms
• Market screening and sourcing ments across platforms and • Multi-channel content
RIGHTS devices repurposing and supply chain
MANAGEMENT • Distribution and licensing
• Supporting mixed business
• Content performance and analytics models to increase average
revenue per user
• Content acquisition and quality • Supplying and managing • Multi-business-model platforms
control multiple content and metadata • Multi-channel content
CONTENT variants
• Content management repurposing and supply chain
PROCESSING • Support curation and
• Archive management
recommendation tools
• Content processing
• Broadcast playout and control • Delivering quality multi- • Multi-business-model platforms
Service delivery platform experiences Multi-channel content
CONTENT & • •
• Protecting rights across a repurposing and supply chain
SERVICE DELIVERY • Real-time content management
multi-platform environment
• Content protection
• Resource planning • Commissioning effective • Segmentation-informed curation
• News production content with good return and commissioning
CONTENT on investment
Program and promotion production • Interactive and innovative content
PRODUCTION •
• Engaging audiences with experience
• Sport and live event production compelling propositions
• Branding and digital marketing • Personalizing offerings • Integrated multi-channel engage-
• Digital sales • Maintaining one-on-one ment and scheduling
CUSTOMER
Digital customer service customer relationships • Multi-business-model platforms
PROPOSITIONS •
• Customer experience design • Rapidly iterating products • Multi-distribution product
• Retaining customers with development
• Customer and audience analytics
engaging products • Segmentation-informed curation
• Social interaction and commissioning
• Interactive and innovative content
experience
• Marketing and commercial offers • Delivering scale propositions • Direct marketing (content) to drive
Multimedia ad sales and billing cost-effectively across digital scale
ADVERTISING •
and linear
• Traditional ad operations • Digital ad optimization
• Managing commercial customer
• Digital ad operations relationships and optimizing
inventory
Bringing TV To Life, Issue VI | 131 Work together with platforms
and devices
A DCP’s ability to scale audiences and grow profitability
depends in part on their success in building beneficial
relationships with DCAs.
A major difficulty for DCPs when they bring consistency of look and feel to the propositions. A flexible platform to
engage with DCAs is a lack of control programming they are promoting, while support them concurrently may be
over how users experience their content. also significantly reducing costs, through required.
DCPs need to find ways to control how the effective use of application program-
their brands appear to the end-customer, ming interfaces (APIs) and software Data sharing. DCPs currently receive
surface and promote suitable content, development kits (SDKs). Automation tools limited data or even a limited understand-
analyze their success, and collaborate can help DCPs monitor “real world” usage, ing of identity from DCAs—often it’s only
with the platform and other tenants. DCPs measure performance and evaluate performance data that is shared. Our
should boost their firepower by adding consumer experience. analysis suggests that considerable value
capabilities such as “integrated multi- could be created if DCAs shared data or
channel engagement & scheduling” while Marketing and advertising. DCPs most likely data services more widely with
maximizing their return on investment will need to shift their marketing focus DCPs—changing the nature of their
through “digital content optimization.” from just one output channel and liaise relationship. DCPs could leverage insights
with aggregators over the way their from this data to identify, for instance,
We highlight three particularly important
content is marketed—in terms of both which audience niches are underserved
areas for DCPs to focus on:
direct content marketing and broader or over-performing, while exploring new
awareness marketing. This may compel channels, content types and audience-
User experience and DCPs to adjust their operating models to sHowever, tools to facilitate business
engagement. DCAs own the user resolve clashes in their marketing focus, services powered by shared data are
experience and sometimes determine the
schedules and windows between their few and far between, and we believe
technical quality of service. DCPs can
D2C, DCA partners, and broadcast that strengthening this relationship is
a sizeable business opportunity to
be explored.
2 Move fast
Shareholders want to see rapid growth. To maximize
its revenues, a DCP will need to acquire customers
rapidly—and keep them.
Delivering a consistently high-quality Relying on continual iterations of legacy to build modular, scalable cloud
product at speed and at scale is hard. technology delivery platforms is a risky architectures based on a micro-services
High-performing DCPs must be able to strategy. These legacy systems often philosophy. This allows appropriate
test new consumer experiences, business spread their tentacles deeply through technologies to be used for each feature,
models and marketing messaging so they an organization, causing integration while providing the ability to rapidly scale
can respond and adapt in an agile and problems and inefficient product and deploy new capabilities—and support
timely manner. Because this flexibility development wherever they surface. a wide array of different business models
and agility will be vital for DCPs as The challenge is to deliver an both locally and globally without
new market opportunities open, they appropriately sized new platform with significant capital expenditures. These
will need to be able to create “multi- capabilities to support the business technologies touch—and can even
business-model platforms’ supported by as it develops, but not to waste money transform—the entire approach to serving
‘multi-distribution product development.” through pre-emptive over-specification. the audience. Ultimately, they can unify
an organization into a single, efficient
Cloud-based systems can support operation for managing content,
rapid growth in this way. Increasingly, customers and advertisers, as well
Accenture is seeing clients choosing as the interactions between all three.
14 | Bringing TV To Life, Issue VI3 Get noticed
Building a business requires visibility and differentiation.
Neither are simple to achieve in the digital economy.
Successful DCPs need to build brands Marketing efforts by DCPs will need to Brand marketing and curation.
that stand out, with a personality and be focused on two parallel streams: Consumers appreciate a trusted guide,
positioning that customers understand. and the way that content is curated can
Content marketing. Consumers tip the balance between success and
The journey to building a loyal audience today face a bewilderingly vast choice failure. For D2C DCPs seeking to attract
begins with getting noticed, which of content. To stand out, DCPs must an audience who will return frequently,
requires stronger capabilities in digital restructure their capabilities to promote curation can be a vital means of
marketing and branding. The production of consistent engagement across digital differentiation. Fundamentally, this
original content can kick-start this process, channels. Planning and promotion- represents a transition away from
by attracting the creative talent that is management tools must be deployed traditional scheduling capabilities to a
needed to establish an attention-grabbing to support the brand and schedule the model where the selection and promotion
marketing platform. That said, building release of content, creating a coordinated of material is focused on driving consistent
capabilities such as “direct marketing to content-marketing strategy across outlets engagement. To make this transition
drive scale” and “segmentation-informed and social media, deployed at the pace successfully, DCPs will need to develop
curation & commissioning” will also be consumers expect. Metadata is becoming a number of important capabilities.
critical to maximizing reach, optimizing increasingly important to personalized These include:
revenue and, ultimately, remaining viable content marketing. A successful business
in the B2C game. will drive revenues by marketing the same • Creating tools to lower the supply-
piece of content with different “feel” to a chain costs of curation: for example,
variety of audience segments. This is not by facilitating content browsing and
entirely foreign as traditional Providers supporting horizontal catalogues to aid
have created different promotions for serendipitous research, thus reducing
their programming to different segments costs.
on linear TV. Finally, businesses need • Improving content packaging and
a feedback loop. For many traditional catalog planning: providing the right
Providers this will be a fundamentally metadata and catalogue-management
new capability: a business horizontal tools allows a curator’s personality to
that can capture individual usage data burst through to the consumer.
and generate insights to drive new
revenues, by reviewing the effectiveness • Testing and refining strategies: KPIs
of marketing activities. must be consistently measured, so
that the effectiveness of curation in
driving engagement can be accurately
evaluated.
Bringing TV To Life, Issue VI | 154 Stay close to the customer
It’s increasingly clear that services based on one-to-
one relationships between business and consumer are
best placed to return future revenues.
For a DCP this can mean diversifying into relationship management challenges of resulting in a horizontal business
a D2C model to boost scale and reach, acquiring and then retaining potentially capability that can support marketing,
enhancing its ability to monetize assets. millions of customers in one go. This sales, loyalty and churn management,
In those D2C models, DCPs will need presents two specific challenges: to directly boost revenues.
evolved capabilities including “digital
content optimization” and “interactive Subscription customers demand Managing this transition will be a
and innovative content experience,” a high quality of service, measured fundamental change for organizations
as they strive to increase loyalty while in both technical and human terms. unused to direct marketing to individuals.
balancing their portfolio of content There is a new billing relationship to be They will need to identify an individual
investments. established, customer-lifecycle and churn customer’s specific needs and match a
management becomes important, and the proposition to them, without appearing
For many traditional Providers, this
requisite direct marketing skills are rarely “creepy.” Faced with a mountain of data,
move—from a broadcasting to a retail
present in a DCP’s marketing department. DCPs must be able to link up the cross-
model—is the most radical change in
device activity of individuals, analyze it
their history. Digital technologies have
at the level of an individual consumer,
made this an affordable ambition, and Handling vast volumes of
derive insights and feed initiatives
most DCPs have little legacy in this customer data will become a crucial that can influence their KPIs around
area to act as a brake. However, few are requirement for businesses dealing
engagement or monetization (e.g.
already equipped to handle the customer directly with millions of users. Investment
direct marketing campaigns).
in a data platform will be needed,
5 Support multiple business models
Shareholders want to see rapid growth. To maximize its
revenues, a DCP will need to acquire customers rapidly—
and keep them.
Given the accelerated segmentation In some markets, the DCP’s ability to
of digital consumer behaviors and the leverage similar services effectively to
importance of scale to their business support product development and related
model, DCPs need to be able to launch business services will be used purely as a
different propositions using a shared marketing channel; in others it will be as
platform. This allows them to efficiently a full-blown D2C offering. In either case,
exploit their content investments while being able to quickly launch, test, adjust
maintaining their editorial voice, helping and scale new business models will
them to acquire viewers and sustain become a critical capability in the digital
consumer loyalty in a manner that is B2C game.
both agile and consistent.
16 | Bringing TV To Life, Issue VIBecoming a Digital Content Provider
(DCP)
Revolutionary change to your business and operating
model can appear a daunting prospect. Here we outline
some pragmatic, short-term steps that traditional
Providers can take to being the transformation of their
businesses.
As the popularity of digital and IP-distributed video
increases, traditional Providers will need to assess how
to evolve their business models to capture revenue
growth. This may not entail an immediate interruption
to the business but certain activities will need to be
reconsidered in preparation for what will most likely be
a significant disruption. Traditional Providers need to
take some important first steps to becoming DCPs:
Move from one-way to two-way Have a clear “digital-first” Evolve relationships with
conversations with consumers. strategy. traditional and Digital Content
Many Providers, especially traditional Many Providers continue to rely on the
Aggregators (DCAs).
broadcasters, are accustomed to one-way traditional part of their business to feed The business and operating relationship
communication with their customers. They premium content to their digital channels. between traditional Providers and
take audience measurement into account, “Digital first” would change this: the Aggregators has evolved very little,
but primarily through conventional means, DCP’s digital capabilities such as content despite rapidly changing consumer
such as “overnights” or focus groups. capture, supply chain, metadata manage- behavior. Carriage agreements require very
Traditional Providers need to become DCPs ment and editorial would be primed to little digital integration between Providers
and collect data from digital channels transform at the ‘speed of internet’ and and Aggregators, other than cooperating
that allows the organization to respond feed all traditional and digital channels. on TV Everywhere models, which are
to consumer specific needs. If collected This is especially important as DCPs will widely seen as a defensive rather than
and analyzed at scale, this data could give potentially need to use these channels revenue-growing strategy. In today’s
insights into new audience segments, for multiple business models in an agile digitally disrupted video industry, DCPs
transforming traditional scheduling as manner. DCPs should be looking to could benefit hugely from the capabilities
much as digital marketing. “Horizontal” support these capabilities with cloud- of DCAs, including consumer relationships,
business capabilities need to be put in based technologies, as cloud providers usage and quality of experience data, and
place to bridge the gap between the are investing heavily in video storage, service channels. DCPs should determine
traditional and digital parts of the transport, encoding and distribution. how DCAs could complement their digital
organization. This results in the fact that, to remain agenda and include these requests
relevant in B2C, DCPs will need to when renewing carriage agreements or
transform into media technology content deals.
companies who value highly efficient
software development as much as
compelling content production.
Traditional Providers who do not move
now will find themselves responding
much more slowly to consumer demand
than the rest of the market.
Bringing TV To Life, Issue VI | 17Digital Content Aggregators
(DCAs)
In a continually evolving digital video landscape,
traditional Aggregators need to act fast to fend off
the ever-growing threat of content owners and Digital
Content Providers (DCPs) going direct to the consumer.
Aggregators also need to quickly establish their position
as a Digital Content Aggregator (DCA) in the industry’s
shifting value chain, identifying how best to leverage
their assets to maximize market share.
A DCA must operate on two fronts, A healthy relationship With these two crucial relationships in
with its potential success dependent on mind, Accenture has identified a number
the health of two critical relationships: with consumers. of strategies that a traditional Aggregator
DCAs must build on their enviable with ambitions to become a DCA can
A strong alliance position as owners of the customer adopt. Figure 6 sets out some of the
options that Aggregators have to evolve
relationship, to become the single
with DCPs. interface for consumers, offering an their business and ensure their continued
Beyond negotiating carriage agreements array of additional content and success in a fast-changing market.
to bring compelling content packages services that keep pace with viewers’
to consumers, the DCA must create ever-changing tastes.
additional value for the DCP, to better
cement its position in the value chain.
The DCP should come to see the DCA
as an enabling collaborator rather than
a potential competitor.
18 | Bringing TV To Life, Issue VIFIGURE 6 | Strategic options for Aggregators looking to transform into DCAs
Source: Accenture
Traditional Content New DCA
Aggregator Capabilities Challenges Capabilities Required
• Customer service • Increased customer • Distribution products and services
• Customer experience design segmentation • Data-driven package and
SALES &
Customer / audience analytics • Simple consumer product ad targeting
MARKETING •
offerings with complex
Social interaction • Digital package optimization
• constructs
• Cross-DCP care services
• Increased competition from
digital service providers • Multi-channel quality of service /
experience
• Content financial and budget • Balance between customer • Content and subscriber
Distribution and licensing demand and ecosystem optimization services
OFFERING •
commercials
MANAGEMENT • Content performance and analytics • Data-driven package and ad
• Skinny bundles economics targeting
while maintaining breadth • Content optimization enablement
of content offerings
• Cross-DCP targeting
• Optimizing packages with
content inflation
• Service delivery • Importance of coherent • Distribution products and services
Content protection multi-platform distribution Data-driven direct marketing
SERVICE DELIVERY/ • •
• Effective partner ecosystem enablement
NETWORK • Distributor enablement
management • Multi-channel quality of service
• QoS / QoE across a number of and experience
different devices and services • Content and subscriber
optimization services
• Marketing and commercial offers • Cost pressures on advertising • Data-driven package and ad
• Multimedia ad sales and billing without measurement targeting
AD SALES/
Traditional ad operations • Provider vs Aggregator revenue • Data-driven direct marketing
AD ENABLEMENT •
share imbalance enablement
• Digital ad operations
• Targeted and dynamic ad services
• Cross-DCP targeting
• Application and infrastructure ops • Multi-service and multi- • Multi-channel quality of service/
Network engineering and platform management experience
SERVICE •
operations • Ubiquitous network • Content and subscriber optimization
MANAGEMENT management services
OPERATIONS • Service monitoring
• Field force • Disconnect across service • Cross-DCP care services
offerings • DevOps-driven platform
• QoS / QoE across a number of development models
different devices and services
Bringing TV To Life, Issue VI | 191 Allow content to remain king
Content is still the most decisive factor in a customer’s
choice of provider. Consequently, the quality and
relevance of a DCA’s content will continue to be key to
its success. A content line-up that sets its offering apart
from that of rivals will remain an important source of
competitive advantage.
Strong content propositions will depend By building a “content and subscriber bundles will depend on the DCA’s ability
on the DCA establishing broader content optimization” capability, DCAs can also to create profitable, contractually
collaborations with multi-channel experiment with how content is packaged permitted bundles and market them at
networks (MCNs) and services such as and presented to consumers. Extending an attractive price to viewers, while not
Netflix. As consumption trends continue and repackaging traditional content cannibalizing its higher-ARPU customers.
to diversify, becoming the gateway that bundles with niche content from a broad The speed and flexibility of digital does,
brings a wide range of content together variety of sources, to create new—and however, give the DCA the opportunity
in a consistent, easy-to-use experience previously unrealizable—skinny bundles, to rapidly launch, test and evolve new
will attract and engage customers. has now become an almost inevitable packages, boosting its chances of hitting
option. The success of these skinny upon a successful product.
2 Scale up to succeed
Scale is critical for aggregators and underpins both
advertising- and subscription-based business models.
A large viewer base attracts content providers and enhances
a DCA’s ability to segment its customers accurately and
deliver more relevant content and user experiences.
The ability to measure and manage Building a new audience. An Service bundling. DCAs have
this scale of engagement will unlock effective way for a DCA to gain scale significant opportunities to expand
capabilities such as “data-driven package is to expand beyond the footprint of its through service bundling. Amazon is
and ad targeting” and “data-driven direct physical infrastructure. Sky’s Now TV, achieving substantial growth through
marketing enablement.” which we highlighted earlier as an bundling additional services at a
example of a D2C DCP launched by an competitive price point. By offering a
Both traditional Aggregators and DCAs Aggregator, demonstrates how this subscription that bundles SVOD, shipping
face a clear and present threat from approach can attract new and different and music services, Amazon is setting the
super platforms, whose unrivalled scale audiences, including millennials and benchmark for what a future DCA could
and agility enables them to accelerate cord-cutters, while managing the impact look like. For service bundling to be a
product innovation and reduce time to of churn on their traditional business. success, DCAs will need to evolve to
market. In response, a DCA will need support increased innovation, reduced
to resolutely defend its position as time to market and the ability to explore
the preferred route to the consumer. new initiatives in parallel.
Investing in infrastructure will play an
important role, but a DCA should consider
two further growth opportunities as part
of its strategy:
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