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There can be no doubting the continuing impact of digital
distribution methods on traditional media industries. The current
decade seems destined to be the one where consumers make a real
shift to mobile and connected devices. All kinds of content can now
be enjoyed on smartphones, tablets and e-readers that are powerful,
portable and, most importantly, a pleasure to use. The industry
responded to this opportunity in 2010/11 by offering a huge range
of applications and other forms of digital packaged media.
In November 2010, 62m US subscribers owned smartphones - a full
10% higher than three months previously (comScore). In Singapore
70% of all mobile sales in the second half of 2010/11 were
smartphones (Enterprise Innovation). As wireless broadband networks
expand and improve, it seems highly likely that other countries
will see similar rapid uptake. In that context, providing engaging
material for those devices is a new opportunity.
Games are the most popular mobile activity in the USA with 23%
of users engaging in this activity (comScore). Games may be
pre-loaded on to phones, but now close to half of all apps
downloaded globally are mobile games (NPD Group).
Apps are also driving an increase in magazine viewing on tablets
since these devices lend themselves more to a "lean back"
experience than a phone or PC, replicating better the experience of
reading print magazines. ZinioTM, for example, now
offers titles as static-content app downloads, and more interactive
versions are being developed by some publishers, including
ourselves. In addition new e-readers like Kindle seem to have
finally captured the hearts of bookworms (Amazon).
Importantly, mobile apps offer consumers not just recreation,
but also a vast range of information to help them manage their
lives better, from travel planning to price checking. Whether
paid-for or ad-funded, they are an exciting development for our
The other key area where better mobile capability is driving
consumer behaviour is in video viewing. In Japan this activity is
second only to search - 23% of mobile users (comScore). On
smartphones, viewing is more about personal video or TV clips, but
the newer tablets provide a much better full-programme viewing
experience than earlier generations, which is doubtless helping
drive up online viewing figures. The number of US subscribers
watching video on their mobile devices rose more than 40% year on
year in both the third and fourth quarters of 2010, ending the year
at nearly 25m people (fig 1).
The phenomenal growth in social media remains the biggest trend
online and this brings both opportunities and concerns. For BBC
Worldwide it is the popularity of social, or massively multiplayer
online (MMO), games like Zynga's CityVille that is of particular
interest. One forecaster estimates there will be 69m social gamers
in the USA by 2012 (fig 2), with revenue hitting $1.32bn (up from
$856m in 2010). This is all the more remarkable considering that
this form of gaming took off in earnest less than two years ago.
Another study suggests online and mobile games will comprise 50% of
all games revenue by 2014 (Ibis Capital). As well as responding to
this trend, TV brand owners need to ensure fans are getting a great
experience online around their favourite shows on social media
sites and make full use of sites such as Twitter to alert people to
The concern about social media for website owners is that it is
now pulling advertising quite strongly away from other sites, even
search engines - the biggest sector online. Global ad spending on
social networks looks set to reach almost $6bn this year with
Facebook predicted to receive a 68% share. Twitter is rapidly
expanding its advertising capabilities, and analysts expect it to
attract $150m in advertising this year and $250m in 2012
Viewing programmes online is a major focus for the TV industry.
eMarketer estimates that by 2015 three-quarters of US internet
users, or 196m people, will watch video content online each month
(fig 3). Overall revenue from online viewing is forecast to grow to
well over $3bn across the USA and Western Europe by 2012 (fig
This trend means distributors have to find ways of effectively
managing the time frame in which content is made available across
all platforms, whether linear broadcast, on-demand digital service,
or physical DVD/Blu-ray. No longer can we rely on fans of our shows
to wait till a series is shown on a local TV channel or released on
disc. Instead the industry needs to provide managed options to suit
all preferences and purses. For really popular series, this
includes ensuring downloads are available near simultaneously with
the first linear TV transmission and also creating well packaged
DVD/Blu-ray discs with added-value features for those who like to
own a hard copy.
It's worth noting that, although the DVD market is often
perceived to be firmly in the "old media" camp, 2010 revenue
remained stable in the UK, and fell only 3.5% in the USA. About 60%
of the purchases in the UK market are made by collectors or those
seeking a gift (Kantar). Another driver has been the surge in
Blu-ray disc sales, which were up 55% in 2010 (BVA).
Online and mobile TV viewing may be increasing, but the
traditional pay-TV market is expanding too. BBC Worldwide is both a
supplier to this market and an increasingly important player with
31 international channels and 10 in the UK (in a joint venture with
Across the world, pay-TV subscription revenues were £120bn in
2010, a year-on-year increase of close to 12% (fig. 5). This was
driven partly by increased household take-up of services, up 7%,
and also by increased per-capita spending. Advertising revenue on
mutichannel TV also rebounded strongly, outpacing the global TV
advertising average by 3% (fig 6).
In terms of supplying both online and linear channel platforms,
the US studios dominate the global TV sales market, but BBC
Worldwide is the next largest distributor of finished television
The TV distribution market improved in 2010 as global TV
advertising recovered, with digital channels and online
experiencing the fastest growth. A boom in free digital terrestrial
TV (DTT) opened the market to new players, while established
broadcasters sought to strengthen their position by launching
sister channels, particularly high definition (HD) and
video-on-demand services. All of this increased demand for quality
programming, particularly factual and drama.
TV content from the UK continues to be popular overseas and
figures show exports of finished programmes were up 9% (PACT).
Drama is the genre which powers the programme sales market
worldwide (Eurodata/Médiamétrie) and the US studios are the main
provider. However, in recent years both the BBC and independent
producers have been developing faster-paced series with a more
filmic quality that play well domestically, and also capture the
interest of foreign audiences. Spooks (Kudos Film and Television)
and Sherlock (Hartswood Films) are cases in point. In factual, the
market is smaller but the UK fares well, especially in areas such
as natural history. The BBC's long-standing investment in its
Natural History Unit has resulted in a catalogue that is regarded
by buyers as the best in the world.
The UK also currently leads the world in TV format exports,
accounting for 39% globally in 2010 (PACT). The interesting trend
in recent years has been the rise in popularity of "factual
entertainment" formats. These are shows that focus on real people
demonstrating a skill, but with the production values and approach
of a light entertainment series. Production company Shine TV's
reworked approach to MasterChef is a good example.
One final development to note is the continuing consolidation of
the UK indie sector. The top five superindies now account for 50%
of this sector by revenue (Televisual). What's more, the US majors
are seeking to acquire UK production companies in order to add
to their own slates - in 2010 Time Warner acquired Shed Media and
earlier this year NewsCorp/Fox bought Shine Group. This means
distributors must be ever more creative in working with producers
at an early stage to support and lock down new projects or, as in
BBC Worldwide's case, in developing their own production
Every media player is focused on managing the transition from
physical products to digital ones, but the pace of change varies
from format to format and market to market and remains hard to
predict. What's more, the reduction of per-unit pricing is a
challenge (Ernst & Young).
However, TV viewing is continuing to rise across mobile, tablet,
and PC. Internet connected TV will be the next innovation to watch.
As a result, it is prudent to invest in new businesses for the
future while still ensuring established contributors to the bottom
line are appropriately supported through this transition
Outlook media and entertainment
- Smarter mobile devices have opened up new business areas such
as apps publishing.
- Online, DTT and pay-TV are providing a growing customer base
for TV channel and content suppliers.
- TV advertising rebounded in 2010 and the outlook is good in
- Online advertising continues to grow as spend transfers from
Challenges and risks
- Access to quality content rights is becoming increasingly
- Consumers hold the reins in terms of how and when they want to
- Driving the same value from digital formats as from physical is