Video Entertainment industry must adapt once again to offset legacy Revenue Streams

Posted by Gianluigi Cuccureddu SMP in Writers on October 07, 2010  |  0 Comments More from this author  |    |  Follow Gianluigi Cuccureddu SMP on: Facebook | LinkedIn | Twitter |

That is the conclusion of InStat's recent research The Battle for OTT Video: Redistributing Video Industry Dollars.

As pointed out, the video entertainment industry has more than once had to adapt to big changes/life-altering technology innovations. Think of the initial adoption of the TV and home video recordings. Now it are the Online Video services and on-demand viewings that challenges the industry.

New business- and revenue models will have to be introduced and tested on trial and error to see if it's a viable -new- revenue stream or not.

Keith Nissen, Industry Analyst, said:

“The decline of retail video disc sales, coupled with on-demand viewing of TV content and the threat of video cord cutting, points to enormous changes ahead for the video entertainment industry.

As new business models emerge, there will be winners and losers, with billions of dollars at stake.  Our research identifies the potential revenue impact to players throughout the video value-chain, based on very realistic scenarios.”

Some of the research findings include:

• Pay-TV operators generated $93 billion in 2009 but as TV viewing becomes more splintered and TV monthly rates rise, TV operators run the risk of cord cutting.
• Premium channels (HBO, Showtime, etc.) are in competition with online video subscription services for both subscriber spending, as well as movie licensing rights.
• Broadcast TV advertising revenue is slowly declining as eyeballs shift from pay-TV to online content.  
• Retail video disc sales are expected to drop $4.6 billion from 2009 to 2014.  
• The emergence of electronic sell-through for online video purchases and rentals will transform the digital entertainment industry over the next five years.
• Online VOD (Video-on-Demand) subscription revenue is expected to approach $3.5 billion by 2014.  
  

The topic of new business-/revenue models is much written about on AppMarket.tv. As an important aspect to the evolution, growth and health of an industry life cycle, viable revenue is simply a pre-condition.

The latest trial and error of testing new models in the industry is Hollywood's answer: $30 Premium VOD to the changing dynamics.

Richard Kastelein rightly asked at the MIPCOM the question if "connected TV is the Napster effect, will someone be able to bring up The Pirate Bay on their Google TV?"

There are many forces at play and many certainties at stake.

How new entities will influence the industry is becoming visible, think of Apple's and Amazon's low cost VOD models, disrupting/threatening conventional TV network streams.

* Are these new streams complementary or susbstitutional in a significant way?

Everything is a hype at the beginning, after a time period it will normalize and balance out.

* Are these new streams going to well integrate with other new streams like Pay TV / A la Carte or not?
* Do people even know what they want with all the consecutive and fast-pacing technology innovations?

Many more questions will have to be asked and answered, with the advent of Apple TV, (soon) Google TV, a variety of set-top boxes, online streaming services and IPTV services, the new industry landscape has been partially shaped. Let's wait and experience how the new landscape will generate it's revenue in a sustainable way.