This article originally appeared

in the 2013, No. 1, issue of

The journal of high-performance business

Industry Report | Media & Entertainment

The eyes have it

Guess who controls the

future of TV
By Robin Murdoch, Youssef D. Tuma and Marco Vernocchi

T elevision is about to undergo the same kind of disruption

that occurred with the introduction of the smartphone.
What will change when the largest screen in the home
has a big say in how we consume content, information
and services over the Internet?
a ccenture.com/outlook

Picture a typical nine-year-old

watching TV today. She probably has
a tablet in her lap, ready to check out
videos related to the Animal Planet
special shes watching. Or perhaps
shes borrowed her big sisters phone
so she can vote on this weeks episode
of Dancing with the Stars.

for instance, the pressure the cable

companies are facing from so-called
over-the-top (OTT) providers, such
as Netflix and Hulu, which send their
content through the Internet. In short,
were now seeing the collapse of the
walls that previously excluded new
entrants to the TV business.

By the time shes old enough to head

off to university, however, her TV
viewing experience will be markedly
richer. By then, she may be inviting
her friends over to watch the sitcom
filmed by her classmates and loaded
into her homes cloud-based content
librar y. After her friends leave, she
might pick up the easy-to-use TV
remote to take a high-resolution tour
around the Beijing neighborhood where
her big sister lives. Or maybe shell
search for a favorite scene in one of the
Twilight movies.

So how can the TV still be relevant in

a tablet and smartphone age?

Good-bye to the familiar old TV set?

Au contraire. For years now, the demise
of the popular appliance has been
predicted as the Web has claimed
more and more of our screen-viewing
time. The fact is, the TV is here to
stay. Its role in delivering compelling
viewing experiencescollective and
individualwill continue. However,
the big screen in the living room is
indeed undergoing a metamorphosis,
because what goes on behind the
screen is changing dramatically.
For most of us, the TV will develop
as an even more valuable vehicle for
entertainment and, increasingly, for
education and information. But for
business leaders up and down the
media value chainfrom filmmakers
and broadcast channels to Internet
service providers to last mile communications operatorsthe reinvented
TV is a huge disruption.

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There will be winnersbusinesses

that quickly grasp the nuances of the
resulting changes in the creation,
financing, production and delivery of
content. But others may find themselves
facing fierce new competition. Take,

To be sure, TV viewing time has become

fragmentedthe result of busy lives that
see consumers recording, for example,
the Boardwalk Empire episode that
the school board meeting forced them
to miss. And of course, screen time
today is shared with laptops, phones
and tablets.
Accentures latest research on consumer
viewing habits finds that fully 62
percent of TV viewers are concurrently
using a computer or a laptop and
41 percent are using a mobile phone
messaging friends about a sitcom joke
or fact-checking politicians claims,
perhaps. Coupled with the widespread
availability of high-speed wireless
Internet, todays viewing experience is
more interactive, more consumable and
far more sharable in real time.

Dominant medium
But the truth is that the living room
screen remains a dominant communications medium, and will continue to
be so. There is still no substitute for
the collective viewing experience of
watching the big game or the season
finale of a popular drama. Plus, the new
Accenture study reveals that young
people are much more engaged with
TV than might be supposed.
Even 25-to-34-year-olds view, on
average, almost 140 hours a month of
traditional TV programmingmore
than 20 times as many hours as they
spend watching video on the Internet
or on their phones (see chart, page 9).
And nearly half of all users still sit
down in front of the TVnot their
smartphones or tabletsto watch

Reinventing TV: Nine key questions for established media players

There are dramatic changes in the television industry
going on behind the screen (see story). Traditional media
players must respond by reinventing themselves, a process
that begins with self-examination. Crucial questions for
the C-suite management team include:
1. Should traditional media and entertainment companies
reinvent themselves as consumer businesses? If so, how?
2. Can new digital economic models be made to work for all
parts of the media value chain?
3. How might new OTT offerings threaten the subscription
pay-TV giants?

4. What new types of partnerships and collaborations

should media businesses consider in order to better match
consumers new digital experience requirements?
5. Will new industry business models sustain investments
in high-quality contentor will profits be channeled
elsewhere?
6. How can the ad industrys traditional players collaborate
to move toward a new world of multiplatform advertising?
7. How can data and analytics be used to galvanize new
business models?
8. Should traditional vertically integrated media companies
resist or embrace open platforms?
9. How do content companies maximize revenue across linear
and on-demand as the balance shifts toward the latter?

some type of OTT video content.

Another relevant measure: YouTube
users average five or so hours of
video viewing per montha figure
that is dwarfed by the time they
spend in front of the TV.
Bottom line: Television still has great
power to pull audiences. And big
changes are coming that will continue
to engage viewers.
Not too many years from now, we will
be able to use the TV unit to access
an entire ecosystem of content
richly immersive, far more of it fully
interactive and all of it on-demand
via the Internet. It will be easily
sourced from content catalogs and
accessed with a handheld devicea
next-generation smartphone, perhaps,
or a dedicated device that is as simple
and intuitive to use as todays remote.

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Just as significantly, individual

consumers, armed with highperformance hardware and software,
will become content creators, able to
provide more of what the news channels
deliver. (Think of higher-quality
versions of the publics mobile-phone
news bulletins of Hurricane Sandys
devastation.) At the same time, the

major movie studios are meeting the

growing demand for premium video
content. Look at the money pouring
into blockbusters$150 million to
produce Skyfall, the latest James Bond
film, for example, and the estimated
$250 million spent on the newest
Batman movie, The Dark Knight Rises.
These movies are being engineered
during original production to maximize
the downstream opportunity in extras,
web videos, apps and so on. And,
increasingly, content is as likely to be
distributed by an Amazon or a Google
as it is to show up courtesy of Bravo.

King of content
Network executives and cable operators
dont need to look far to see what is
rocking their world. The easy answer,
of course, is technologyfrom the
TV hardware to the social media with
which to share content to the cloud
services that make it effective to
store vast amounts of data. The fact
is, however, that the consumer is the
undisputed king of content.
Over the past decade, control of the
viewing experience has shifted rapidly
to the one who holds the remote.
TiVo and many other digital recording
systems have made it easy for people

UK viewers now get all channels digital TV

In the summer of 2012, the British public got another
way to watch telly. The new Internet TV service, called
YouView, has been hailed by some industry insiders as the
natural successor to Britains current model of free-to-air
TV. Some researchers expect that 3 million UK homes will
have YouView by 2015.
YouView combines the United Kingdoms free-to-air digital
channels with on-demand content, all delivered without
subscription. An easy-to-use set-top box brings together
IP and broadcast TV technologies, making them accessible
to viewers through a single consistent and intuitive user
interface. The service is backed by a consortium of seven
partners, including the countrys main terrestrial broadcasters
(BBC, ITV, Channel 4 and Channel 5), two ISPs (BT and
TalkTalk) and a network services provider, Arqiva.
The services big innovation happens behind the screen. Its
application platform gives consumers access to a vast array
of content options. For example, if the box is connected to
a broadband line from a partner ISP, then an application
providing that ISPs IPTV service will appear automatically.
As the number of content sources in its ecosystem grows,
YouViews attractiveness to both consumers and to potential
new content, devices and service providers will continue to
increase. At launch, more than 140 content providers had
signed up to add their content to the YouView platform;
today, more than 300 providers are interested.
YouView is not simply another version of a web-enabled
TV service. It features a single, consistent, intuitive user

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interface (integrating on-demand, catch-up and broadcast

TV). It includes a unique content discovery platform:
a central catalog that allows global search, browsing by
genre/popularity across content providers, and a backwardlooking electronic program guide (EPG). Unlike a lot of smart
TVs, it doesnt zone off on-demand content in a separate section
that you access from another menuthe whole lot is integrated,
notes one reviewer. Its open application platform can be used
by any participating content provider, offering consumers
a tremendous range of content. It also upgrades easily,
accepting new features over time such as behavioral
targeting and predictive recommendations generated by
analysis of social media datasuch as iTunes Genius music
recommendations.
YouView provides a strong springboard for innovation. Its
unified and open ecosystem is expected to disrupt the
existing TV business model, affecting content providers,
broadcasters, ISPs, advertisers, set-top-box manufacturers
and many other technology enablers. And it offers abundant
opportunities to create new products and features, becoming
increasingly attractive to consumers and providers of content,
devices and TV services.
To date, consumer feedback on the user interface has
been very positive. UK telecom company TalkTalkjust one
of multiple sales channels for YouViewsigned up 29,000
YouView customers in the first month after launch. A
thousand new customers are signing up each day for the
service, according to a TalkTalk spokesperson.

to choose when they watch their

favorite programs. But consumers
also want to be able topersonalize the
services they consume, with search,
recommendations and social features
becoming increasingly integrated
across media. Accenture found that
64 percent of them prefer using
genresthat is, content types such as
spaghetti Westerns, cartoons and
othersas search criteria for finding
new video content. And 43 percent
prefer finding new video content by
using personalized recommendation
engines that track what theyve watched
and suggest similar content.

In a similar vein, 28 percent of users

have already created video playlists
on their current video services, such as
Netflix and YouTube. These companies
make it ever easier to do this, particularly by using historical behavior
to recommend relevant viewing
experiences. The story is much the same
with music services such as Pandora
and Spotify as well as Amazon.com
with a whole range of merchandise.
At the same time, consumers are
becoming distributors. Social media
users have an average of 3.2 friends
who post videos at least once a day;

Screen of choice
TV is still the primary device for watching full-length shows and live content in both the United States and the United Kingdom.
Portion of US and UK viewers who watch video content over the Internet, on each device

70%
Full-length movies and TV

32%
4%
7%
65

Live content

30
6
5
12
74

Short videos/clips

24
12
9

TV

49

User-generated content

15

PC/laptop
Mobile/smartphone
Tablet

9
Source: Accenture analysis

almost four out of 10 consumers post

video online via social media. More
than half of the respondents polled
by Accenture would be interested in
recommending video to others as part
of belonging to a video service.

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This is not just about controlling

content; its about content creation as
well. The term prosumer is entering
the language to describe talented
amateurs who use sophisticated but
affordable consumer technology to
produce quality news reports or
instructional videos, for instance.
Today, aspiring adventurers can buy a
GoPro camera for less than $300, attach
it to their mountain bike or scuba
mask, and capture astonishingly
high-quality video that is easily edited
on any laptop and just as easily shared
via social media. Indeed, the growth
in so-called user-generated content has
exploded. YouTube now has more than
800 million unique users every month,

and while the vast majority of them are

watching, growing numbers of them
are posting content that they or others
they know have generated.
The capabilities are developing so
quickly, and spreading so widely,
that its safe to say that prosumer
content will soon provide serious
competition for some genres of
professionally produced content
news footage, for instance, and some
reality TV shows. Consumers are even
changing the funding of content
creation (see sidebar, page 6).
If those technology-enabled factors
are pushing the media industry from
one side, its key sources of revenue
notably advertisersare pulling it on
the other side. Increasingly, businesses
expect to be able to measure what they
get for their investments. Traditional
media has always had a hard time
delivering precise measurement, and

Not waiting for deep pockets

By 2010, a movie director named Steve Taylor secured
funding to create a film adaptation of Donald Millers book,
Blue Like Jazz. The following year, the film lost the support of
a major investor, forcing Taylor to stop production.
Thats when two fans of the book stepped in. To raise the
$125,000 required to resume production, they created
a Kickstarter webpage called SAVE Blue Like Jazz! (the movie).
The campaign reached its funding target of $125,000 in
10 daysand blew past it, becoming the most successful

Kickstarter fundraiser of 2010. In total, $345,992 was raised

by 4,495 backersan average of just $76.97 each.
In April 2012, Blue Like Jazz opened nationwide across 136
screens. In just eight weeksbefore distribution internationally
and through rental and cable channelsit had netted half of the
movies total budget. It is just one of several examples of crowdfunding. The trend is borne out by Accentures recent consumer
research: 36 percent of digital consumers would be willing to
donate small sums to fund their favorite movie or TV program.

while the explosion of Internet media

is exacerbating the situation by further
fragmenting viewing attention, it
is also creating opportunities for
better measurement.

Following the money

So who wins in a new media world?
The consumer does, of course. But
the other winners are likely to come
from outside the boundaries that have
defined the industry over the past
half-century. It is not a stretch to say
that companies such as Amazon and
Google will make big gains, as will
others that grasp the significance of
the disaggregation of traditional media
value chains and the development
of new forms of media value creation
and consumption.
Weve already seen the arrival and
growth of businesses that offer new
ways for consumers to access digital
content. New entrants like YouTube
and Netflix are also now creating
their own content to differentiate
their brand and sidestep the battle for
content rights.

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Amazon, Google and Apple already

offer consumers access to significant
amounts of content, even though it
is not at the core of any of their
businesses. For instance, Googles
core business is search, yet it streams
more than 4 billion hours of video
per month via YouTube.

Apple generates the vast majority

of its income from sales of its devices,
yet it made $2 billion in revenue
in the third quarter of 2012 alone
from its iTunes Store, App Store,
the iBookstore, sales of iPod services,
and Apple-branded and third-party
iPod accessories.
The newcomers are following the
money. They understand that success
in the media sector has revolved
around premium content, and that
it will continue to do so in the future.
Which explains YouTubes announcement,
in October 2011, of a $100 million
investment in premium channels and
the announcement by Netflix in May
2012 of its plan for a $185 million,
five-year investment in original
content. Just two examples of Netflixs
investments: The new season of Arrested
Development, releasing shortly, and
House of Cards, the US version of the
UK political series of the same name
directed by David Fincher and starring
Kevin Spacey.
The tectonic shifts underneath the media
industry will permanently reshape
the landscape, altering everything
from the flow of advertising dollars to
the makeup of the industry itself.
To that last point: Some of the writing
may already be on the wall. In recent
months, some pure OTT content
providers have gone from strength

For further reading

Accenture Video-Over-Internet
Consumer Survey 2012: Winning the
Battle for Consumer Trust, Accenture
2012: http://www.accenture.com/usen/Pages/insight-video-over-internetconsumer-survey-2012.aspx
Taking The Pulse study, Accenture 2012:
www.accenuture.com/pulseofmedia
Changing Faces: The TV Company
of the Future, Accenture 2012:
http://www.accenture.com/us-en/
Pages/insight-changing-faces-tvcompany-future-summary.aspx
For more related content,
please visit www.accenture.com.

to strength. Netflix now has more

subscribers than many pay-TV operators
in the United States. That is an astonishing statistic, given that Netflix was
founded only in 1997.
At the same time, the most forwardthinking of the traditional operators
are making significant moves to
properly position themselves in the
new media world.
To take just two examples: British
Sky Broadcasting is making its
existing content offerings available
on as many devices as possible, and
YouViewa new open-platform
system that makes IP and broadcast
TV technologies easily accessible
to viewers through one intuitive
user interfaceis backed by such
industry giants as BT and the BBC
(see sidebar, page 4).

Removing the guesswork

Traditional subscription models are
not the only ones at risk from the
new media model. Advertising
will also have to accommodate the
steady shift to digital content and
the inexorable move to OTT content,
together with the fact that more
and more content is being viewed
holistically, with digital entertainment
experiences encompassing TV, film,
web video, gaming and apps.
Thus far, the managed migration of
rights to new platforms has preserved
traditional TV advertising and pay-TV
subscriptions as the greatest drivers of
revenue. But the industry may be about
to change too fast for that to remain
true. Possible signs of things to come:
Subscriptions could well shift away
from bloated bundles to la carte options that allow consumers to pick and
pay for exactly the content they want
and no more, from a range of different
providersnew Internet-based players
among them.
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Already, chief marketing officers

everywhere are scrambling to
reallocate and optimize marketing

budgets across platforms. They are

getting some help from increasingly
sophisticated customer data collection
and analytics tools, which are beginning
to enable new forms of cross-screen
targeting and measurement. To
a large extent, digital removes the
guesswork from traditional advertising
modelsdigital data is more accurate
and more granular than its analog
predecessor.
But there is still much to do before the
typical marketing department is able to
effectively use sophisticated analytics
to deliver premium, personalized,
interactive advertising, and create a
richer, more detailed understanding of
specific consumer groupsor fan bases
that will respond to new offers.
So what does the new face of TV mean
for todays established media businesses?
The ascent of the consumer requires
business models that are built around
consumer needs rather than those
of a particular channel, platform
or advertiser. A single shared view
of the customeroften across
different channelsis a prerequisite
for a successful, consumer-focused
multiplatform strategy.
The businesses that adapt successfully
will need to try different approaches
concurrently. Theyll need to create and
run with hybrid business models and
constantly reevaluate their place in
the media value ecosystemperhaps
taking on new rolesso they can spot
and capture new revenue opportunities.
In short, players all across the media
value chain now have to plan for a new
and fundamentally different media
delivery architecture.

Ten years from now, the TV will still

be one of the largest pieces of furniture
in the living room, and it will still have
a central place in family life. But the
TV business overall may be unrecognizablecertainly when compared
to the operating models and industry
makeup that prevail today.

The decisions that new entrants

are making today up and down the
media value chain are already forcing
some serious rethinking within the
established media industry. The
traditional broadcast networksthose
most at risk of disruptionmust act
more promptly and assertively than
they are accustomed to if they are to
survive in the new world.
But the decisions being made by the
Amazons and Googles have ramifications far beyond the media business
itself. They will color the choices that
advertisersbusiness-to-business as
well as business-to-consumerwill
have to make. They will have an
impact on the world of education.
They may well change the directions
of development of a host of new
content-delivery products. And they
could even reshape the role of media
as it reflects and affects public policy.
To paraphrase the old political maxim:
Where TV goes, so goes the nation.
Outlook is published by Accenture.
The views and opinions in this article
should not be viewed as professional
advice with respect to your business.

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For more information about Accenture,

please visit www.accenture.com

Copyright 2013 Accenture

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are trademarks of Accenture.

About the authors

Robin Murdoch leads the strategy group
within Accenture Communications, Media
& Technology. He is based in Seattle.
robin.murdoch@accenture.com
Youssef D. Tuma leads Accenture
Digital Services for the United Kingdom.
He is based in London.
youssef.d.tuma@accenture.com
Marco Vernocchi leads the Media &
Entertainment group within Accenture
Communications, Media & Technology.
He is based in Milan.
marco.vernocchi@accenture.com