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IBC Report: Pay TV Will Thrive in the Online Video Era
While the major studios are diving into online distribution, they remain cautious -- and they're sticking with current pay TV models.

The future of broadcasting may lie online, but that doesn't phase premium content producers -- such as Discovery and Disney -- who are confident that they can continue the current pay TV model. Also, the fragmented distribution landscape is seen as a grand opportunity rather than a threat by one of Europe's leading  pay TV broadcasters.

Those were the takeaway messages at the opening plenary to the International Broadcasting Convention (IBC): "The Rise and Rise of Broadcasting? The Next Chapter."

"Even if the models of distribution have changed there remains an underlining desire for quality content," declared Discovery Communications CEO Mark Hollinger. "The contribution to our business of new versus traditional platforms is very small, so from a near term perspective we will continue to supply pay TV as our number one priority.

"We've been cautious about putting long form content out on broadband -- either for free or for download. We do make short form content available for free, but with respect to long form we've come late to striking deals with online providers.

"The big questions from our standpoint are ‘What is the business model behind any new form of distribution?' and ‘What is the knock-on effect on our existing business?'" Hollinger said. "I am a firm believer in the old adage that you get what you pay for, so while we remain open to any [distribution] opportunity, we will judge each one against those two criteria."

Walt Disney's senior vice president of media distribution, Catherine Powell, agreed that media companies "must be focused on serving consumers on a well-timed, well-priced basis with the highest quality content. In today's world of increasing choice and fragmentation, exceptional creative content from trusted brands is more important than ever."

A third member of the heavyweight panel, Brian Sullivan, CEO of Sky Deutschland, said the broadcaster was investing heavily in placing lots of the technology onto the TV screen, especially around things like sports apps.

"To us, this isn't about old fashioned interactivity because we know that viewers want to be relatively passive while watching TV, but this technology allows their experience to be customised by them. If they want to play around more with the system, they can," Sullivan said.

Sky Deutschland is already the biggest OTT supplier in Germany, with close to 1 million regular customers to Sky Go.

"All we have to do is to get the packaging right and then it becomes another growth opportunity for us," Sullivan said. "As far as I'm concerned, if the customer wants to get my content, I'm happy to deliver it to them however they want it. The more connected devices out there, the greater the opportunity for us to deliver our products to those devices."

But challenges remain, and for John Tate, BBC group director, strategic operations, black holes in connectivity are a big one.

"Connected devices need to be connected -- still fewer than half of IP-enabled TVs are," Tate said. "Built-in Wi-Fi will help, but isn't yet standard. The best devices will come with broadcast access and local storage. And no-one has cracked how connectivity makes story-telling better. That's why the BBC has started a connected studio to work with the industry to develop the best creative and technical ideas."