Report: Legacy TV to Decline, While Broadband Video Reshapes Video Viewing

written by: Richard Kastelein

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shutterstock 68819029FCC Chairman Tom Wheeler opened NAB this week by warning attendees that the legacy TV industry has reached an "inflection point" where online providers "can move from being the disrupted to the disruptor." According to a new report from TDG – 2020 Vision – Video Viewing Forecasts by Age and Service, 2013-2020 – this is indeed what will happen in the next six years, with legacy TV declining from 90% of all video viewed in 2013 to approximately two-thirds in 2020, with online video sources making up the difference.

“By 2020, legacy TV viewing will decline by more than 25% from current viewing levels,” according to Joel Espelien, TDG Senior Advisor and author of the new report. “This decline is being driven less by a flood of new online content and the availability of more screens, and more by evolution of the ‘Big 4’ and the impact they will have on consumer video viewing.”

The Big 4 in this case includes Amazon, Apple, Google, and Microsoft. As Espelien first noted in December 2013, “Each of these companies are building global ecosystems to support quantum video viewing – the multi-screen, multi-context, highly personalized video viewing experiences that TDG long ago predicted. Subsequently, they constitute the most significant challenge to legacy TV viewing and will account for a growing portion of daily video viewing in the next several years.”

Uniquely, in addition to building complete delivery ecosystems, each company has a larger business (a “cash cow”) to help subsidize the distribution of their platforms, both physical (hardware) and virtual (operating systems and apps), making them capable of impacting the video market in ways that a traditional TV operator cannot.

Evidence supporting this hypothesis is found throughout today’s headlines. Comcast recently told regulators that its competition is no longer other TV companies, but online giants like the Big 4.

Not only do these companies already deliver video to millions of consumers, but they are now producing original content delivered increasingly via proprietary hardware. Amazon’s new Fire TV, for example, is a high-end Internet set-top box in the same mold as Apple TV and will closely bond to Amazon’s video service and retail sales on the TV.

As well, Google introduced the Chromecast Internet stick and is re-launching its Android TV platform. As Espelien notes, “Both Google and Amazon, in particular, could afford to give away their hardware if necessary in order to disrupt the industry. This fact is not lost on forward-thinking legacy operators.”

2020 Vision – Video Viewing Forecasts by Age and Service, 2013-2020 examines trends impacting consumer video viewing from 2013 to 2020. It assesses both legacy TV and broadband video viewing by age and source, including broadcast, Tier 1 Pay-TV, Tier 2 Pay-TV, TV Everywhere, the Big 4, Paid OTT, and Web Video.

The report also discusses the strategic implications of these trends and offers recommendation for video professionals who must plan for and manage their businesses amidst this shifting landscape.

About the Author

Richard Kastelein
Founder of The Hackfest, publisher of TV App Market and global expert on Media & TV innovation, Kastelein is an award winning publisher and futurist. He has guest lectured at MIT Media Lab, University of Cologne, sat on media convergence panel at 2nd EU Digital Assembly in Brussels, and worked with broadcasters such as the BBC, NPO, RTL (DE and NL), Eurosport, NBCU, C4, ITV, Seven Network and others on media convergence strategy - Social TV, OTT, DLNA and 2nd Screen etc.

He is a Fellow of the UK Royal Society of Arts (RSA) and UK Royal Television Society (RTS) member.

Kastelein has spoken (& speaking) on the future of media & TV in Amsterdam, Belfast, Berlin, Brussels, Brighton, Copenhagen, Cannes, Cologne, Curacao, Frankfurt, Hollywood, Hilversum, Geneva, Groningen (TEDx), Kuala Lumpur, London, Las Vegas, Leipzig, Madrid, Melbourne, NYC, Rio, Sheffield, San Francisco, San Jose, Sydney, Tallinn, Vienna, Zurich...

He's been on advisory boards of TEDx Istanbul, SMWF UK, Apps World, and judged & AIB awards, Social TV Awards Hollywood, TV Connect & IPTV Awards.

A versatilist & autodidact, his leadership ability, divergent and synthetic thinking skills evolved from sailing the world 24000 miles+ offshore in his 20′s on sailboats under 12m.

He spent 10 years in the Caribbean media & boating industry as a professional sailor before returning to Europe, to Holland.

A Creative Technologist and Canadian (Dutch/Irish/English/Metis) his career began in the Canadian Native Press and is now a columnist for The Association for International Broadcasting and writes for Wired, The Guardian & Virgin. His writings have been translated into Polish, German and French. 

One of Kastelein's TV formats was optioned by Sony Pictures Television in 2012. 

Currently involved in a number of startups including publishing TV App Market online, The Hackfest and Tripsearch TV. As CSO for Worldticketshop he helped build a $100m company.

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