ESADE study describes the TV of the future

The TV of the future will involve more audio-visual group mergers, full adaptation to Internet and pay-to-view content, according to The Future of Audiovisual Media in Spain. This new ESADE report was presented today in Madrid by Jordi Bosch, Chairman of Endemol Spain; Óscar Cornejo, CEO of La Fábrica de la Tele; and José Antonio Guzmán Quintana, Television Project Manager at Orange, the sponsor of the event.

In his remarks, Xavier Busquets, Lecturer in the Department of Information Systems Management at ESADE and director of the report, declared: "The paradox is that, in the golden age of television, with higher-quality television series than ever before, few channels will have the financial resources they need to continue supporting football and the distribution rights of some majors, which is necessary to ensuring the long-term viability of media groups." He added: "Our problem is no longer one of planning, but rather of how to combine strategy development with creativity and innovation. The rules of the game are changing, and the question is how to guide and govern that change."

Mr. Cornejo expressed optimism at the present state of affairs: "There is more and more television, and more ways to watch and interact with it." He added: "We still tell the same stories as 2,000 years ago; the only thing that's changed is the way we tell them, and the fact that there is less money." He concluded with the following reflection: "The lack of income is a challenge. We can make a four-hour-long Sálvame with the same budget as an hour-and-a-half-long Aquí hay tomate."

The lack of financing is also a source of concern for Mr. Bosch, who explained: "This year, we won't get even €2 billion from advertising – down from a previous figure of €5 billion – so things become very difficult. Maybe advertisers should look for another, more comfortable medium and we should look for another system. I am confident that pay television is a driver of content creation."

Uncertainty

The audiovisual and television industry is undergoing a major innovation process and far-reaching changes that affect technology, content, viewers, consumption, distribution, management and the composition of the major media groups. And this process is being shaped by the severe economic crisis. The ESADE study warns that although television is an industry with a large degree of present and future uncertainty, it also faces great opportunities. The report notes that the economic crisis and measures such as the VAT hike on cinema tickets and other leisure activities can encourage consumption of audiovisual content – free or not – via digital media and television. "Opinions vary," explained Mr. Busquets. "In fact, the survival of cinema is more closely related than ever to the subsidies provided by television channels."

The failure of DTTV

According to the ESADE study, the audiovisual industry is now shifting towards a new, digital ecosystem based on three variables: content creation, relations with customers and the possible exploitation of their data, and the various means of digital distribution, ranging from DTTV to streaming.

In this context, television channels have evolved to become platforms seeking their place in a new content-distribution system in which the audience is more fragmented, interactive and vocal than ever before. According to the report, this is one of several reasons why DTTV has not obtained the expected results: "First, scale: there are not enough consumers for so many television channels. Second, confusion among viewers: many channels are rerun-based. Third, interactivity: this involves digitalisation, which is something that DTTY does not offer."

The television of the future

Given the present state of affairs, the ESADE study suggests four possible scenarios for the future of television:

Scenario 1. Media concentration. With two television channels (Antena 3 and Telecinco) controlling more than 80% of the advertising market, we can expect to see the other outlets shut down, fiction-content wholesalers and distributors of sports rights gain greater control over television programming, and growing pressure to retain viewers.

Scenario 2. Television as an Internet application. This scenario looks at the evolution of Scenario 1 with the strength of the Internet as a global distribution infrastructure, but with an assumption of market stagnation. Under such circumstances, the Internet would replace DTTV. Fiction programmes and football rights could be acquired by global platforms such as Apple, Google and Amazon.

Scenario 3. Pay television, with a different, more sustainable revenue structure, is expected to gain market share. Advertising would be replaced by other sources of financing.

Scenario 4. A war between open and closed platforms. With the growth of the market and the number of active customers, television as we know it disappears entirely. The Internet would be the primary distribution infrastructure, with open and closed platforms reaching viewers via a variety of fixed and mobile devices.

"By considering these four scenarios, we conducted an exercise in humility and perspective. Today's ecosystem is that of a global world, in which traditional advertising has been exhausted as the sole means of income, DTTV has been replaced by other aggregators and digital distributors, and two new actors, Apple and Google, will have much to say in the future," concluded Mr. Busquets. Success in the industry, he added, will require "the right positioning in terms of content, knowledge of customers and new distribution models".