Changes in Media Consumption
The penetration of digital TV and broadcast Internet in homes around the world has drastically increased over the recent past, and will continue to rise. However, traditional radio and TV will still hold value in 2020: BCG estimates that traditional media will hold 60% of viewership across all target sections, and more than 80% of viewership among people aged 50 and more. But overall viewership of linear TV will continue to face a steady decline.
The digital migration will be driven by two factors-
The porting effect – Studies demonstrate that as viewers age, they continue to stay loyal to the media they grew up with. For example, older viewers prefer to stick to TV sets and print newspapers, despite the variety of options available now.
The market effect – This factor is driven by technological advancement. The most powerful impact has been caused by improved broadband infrastructure, which brings high-speed Internet to more and more homes at affordable rates. Such advancements pave way for new forms of media and form an ecosystem with them.
The shift of consumers towards non-linear media poses a huge challenge for the traditional PSBs. The investment required to pose significant competition to digital players for popular programming is rising. But due to very limited public support, PSBs do not have many options to shoot up their revenues.
The primary issue is that of scale. The digital entrants have a strong global reach, sophisticated technologies, considerable expertise, and a treasure of consumer data gathered over years to better target consumers. Even the largest PSBs cannot match up to this level of competition.
Public funding for PSBs around the world has either stagnated or decreased. PSBs would also not be able to sharply increase licensing fees for their content, due to their historical mandates. Moreover, viewers can now receive any kind of content they want at any time through private channels and the Internet.
Overall advertising revenues are slightly increasing in line with the GDP. However, a sharp increase in advertising is very difficult to achieve for most PSBs. Even if advertising rules are loosened, PSBs would have to fight for a substantial share in a brutal and sluggish market.
The existing regulatory structure restrict the kinds of programming that PSBs can provide, and also their advertising avenues. PSBs may also face legal constraints on their ability to offer online content. The regulatory constraints on advertising vary substantially from country to country. For example-
· The BBC cannot air radio or TV advertisements in the UK. It can run only limited online advertisements on mobile apps and on international websites.
· ARD of Germany is allowed to air commercial advertisements on TV, but with a maximum ad time of 20 minutes before 8pm Monday through Saturday. The PSB may not run online advertisements.
A Strategy for Cross-Media Success
To stay relevant in today’s disruptive world, PSBs need to build a comprehensive platform and content strategy. New structures are needed to ensure that this strategy is effectively fulfilled on a financially sustainable basis. To catch up with the incumbents of digital media, PSBs must accelerate their pace of digital growth. They must also stay up to date with digital technology and service trends. To achieve this, BCG proposes that PSBs adopt a new system for measuring consumption of media content and define their content portfolios.
It is important for broadcasters to have an understanding of how their different target viewers segmented by suitable demographics consume media throughout the day across genres and channels. BCG defines a new metric called media touchpoint as contact with any media platform during a 30-minute duration.
Measuring media touchpoints gives a clear idea of how media are consumed across different platforms. It can also track parallel usage – for example, if a viewer watches a 2 hour movie on TV and spends 2 minutes browsing the internet on an iPad, his/her actions would amount to a total of 4 TV touchpoints and 1 mobile tablet touchpoint. These data points can add substantial weightage and detail to information captured from the existing metrics.
By developing an exhaustive touchpoint-tracking system, PSBs can generate insights into what makes content relevant to target consumers. This metric can also be extended to add new features that could help gain more information on the media consumption patterns and preferences.
Fine-Tuning the Content Portfolio
Once a thorough understanding of the consumption behaviors of different target groups is obtained, PSBs need to aggressively restructure and refine their content portfolios to cater to those target groups.
· Relevance and Reach: It is important to differentiate the programming that is relevant to the masses from the programming that is relevant to specific target groups. A PSB must decide whether to lead or follow in each content genre.
· Genre Economics: PSBs can make better decisions by implementing genre economics, which is the cost-benefit analysis for each genre and subgenre. By combining genre economics with the media touchpoint approach, PSBs can estimate the amount of investment needed in different genres.
Building Cross-Media Capabilities and Structures
PSBs need to break down the borders separating the different media platforms – radio, print, TV and online. Each of these platforms must be integrated across the organization. This implied that PSBs need to build cross-media capabilities in everything from market research and advertising to technology, innovation and human resources.
Making Funding Sustainable
All the challenges mentioned essentially require a strong and sustainable financing model. Increasing public funding may not be a feasible option in all countries, but PSBs can achieve significant cost savings by transforming their organizations and adopting an analytical approach to investments. PSBs also need to look beyond revenues that are generated from pure programming and explore new opportunities such as online gaming, second-screen offerings and video-on-demand services.