To effectively provide the suggested value proposi- tion the rest of a distributor’s business model must be aligned to support it (Osterwalder 2010). Therefore we suggest a series of activities to be initiated that can ensure this alignment.
Must-do activities for Norwegian distributors
Develop a platform for TV-services that supports video-on-demand. This is absolutely vital, as video- on-demand is the foundation for the rest of the chang- es to the business model. Consumers have accustomed to this flexibility in the music industry, and now they want the same thing from the television industry. The industry-wide introduction of digital PVRs have pre- pared the users for this shift, and shown them that better alternatives to linear television exist. Future platforms that do not support content on-demand will not survive in competition with those who do.
Make sure the platform can be used with all dis- tribution channels. This includes fixed-line or wire- less broadcasting, distribution across the Internet and mobile transmission. Consumers are expecting ubiquitous access to the traditional services and the enhanced services of the future business model. The users are located at multiple locations with access to different networks, but still expect the platform to be available when they want to use it.
Adapt the platform to support a ubiquitous experi- ence across multiple screens and devices. Consump- tion of television will take place in more places than
just in the living room. Users have access to a different set of devices as they move around and they demand the platform to support them all. The user experience must be aligned as well, and if the user watches televi- sion on the train, he should be able to continue where he left off when he comes home to his main TV. New devices are launched continuously, and the platform has to be able to evolve to support today’s screens as well as the devices of tomorrow.
Create a vast library of content by aggregating dif- ferent sources and negotiating rights. Ultimately the users want to consume content, and this means that a good technical platform is not sufficient. A wide vari- ety of content available at any time is a prerequisite for future success. Distributors must come to agree- ment with content providers so they can act as holistic aggregators and at the same time support content pro- viders’ demands of being in charge of creating a seam- less transition between linear and on-demand televi- sion. Distributors must also be able to give access to a vast library of content from foreign licensors, which requires a continued focus on rights negotiations.
Create a seamless integration and user experience across the platform. Consumers are fundamentally non-technical users and are easily overwhelmed by all they must relate to with future television services. This makes it vital to create consistent interfaces and user experiences across different distribution networks and devices. It is for instance not enough to offer separate Internet and broadcast universes on the Television set; integration is key. Additionally users may not understand why OTT-services delivered directly to the TV do not offer the same quality-of-experience as traditional broadcasted content and this issue has to be addressed.
Maintain a focus on traditional linear broadcasting to support live events and the social TV-experience.
The television service every consumer is familiar with continues to live side by side with the advancements
in OTT-television and Internet distribution, and it is very important not to lose traditional linear broadcast- ing out of sight. Linear TV will not disappear, and it will play an important part of the future of television. It is an enabler for the social part of watching televi- sion, and it may be used as a promotion channel for on-demand content. The player that best manages to integrate traditional linear broadcasting with ubiqui- tous on-demand services will be very well positioned in the future Norwegian television market.
Should-do activities for Norwegian distributors
Create a national content delivery network in a joint effort between national content providers and national distributors with negotiated cost and revenue splits. Distributors are unanimously con- cerned with giving third party CDN-players access as deep into their networks as they get today, but at the same time CDNs are obviously necessary in order to effectively transfer high quality video content over the Internet. Content providers need a CDN-provider that can guarantee them equal performance in a major- ity of the networks in Norway, and are therefore not willing to use a CDN from a single distributor. When coupled with relatively low implementation costs, this points in the direction of a joint Norwegian content delivery network where distributors and content pro- viders both contribute. For content providers this may mainly cause a redistribution of costs, while it will reduce uncertainty for distributors.
Utilize user profiles and location information to drive revenues. Personal user profiles are prerequisites for a ubiquitous television experience, and will also open up for data gathering of the consumer’s habits and preferences. This can be used to drive on-demand sales by enhancing recommendation hit rates. It can also be used to display targeted advertisements to indi- vidual consumers, if agreements are negotiated with content providers so that they permit signal adaption. Combined with information about the user’s location
this may give advertisers incentives to pay more and thus increase the average revenue per user. This may finally make the future business model more viable.
Find a good way to recommend content. Vast con-
tent libraries have small positive effects if the users are unable to find new content. Several different approaches have been discussed in order to solve this issue, such as editors, search, automatic recommenda- tion and social recommendation. The need for seam- less integration between broadcasted and on-demand content further contributes to this challenge. Integra- tion with social networks and the user’s personal televi- sion profiles may be one step in the right direction, but the task will still be difficult. Future television business models will struggle without proper methods for driv- ing sales of niche content in the long tail.
Rig the business for a future where network and
infrastructure will become a commodity. In the
event that open networks become a reality – even in networks that currently are owned and operated by a single industry player – the deployed business model cannot revolve around infrastructure as a proprietary key resource. Differentiation is likely to be on the offered value proposition in the future, and compe- tition will be between services, not networks. Those who hold back for too long – and thus are not rigged to compete solely on services – will struggle when the networks eventually become neutral. In order to stay relevant in the TV-industry, incumbent distributors should have their main focus on content and user experience, not on protecting current assets.
Adapt industry standards to attract content provid- ers and lock global players out of the Norwegian market. The increased fragmentation with respect to technological standards used for distributing TV-content to different devices is something that is
infeasible for content providers to handle long-term. Unless standards are developed that allow for effortless integrations of broadcasters’ content in a distributor’s
100 service, content providers’ cost base can drive them out of business. If content providers struggle, less money will go to enhancing the value driver in this indus- try – content. If fragmentation carries forth, global players may also be given a window of opportunity in that they can come in and offer holistic solutions that attract customers and content providers.
Push for rights tied to content and geography rather than devices. A ubiquitous future with a tele- vision platform supporting multiple screens makes it vital to have content licenses that are unbundled from particular devices or terminals. It is difficult for play- ers in a sparsely populated country such as Norway to influence large global licensors, but if it the efforts are successful it will reduce platform costs and signifi- cantly reduce overhead in rights management.