Guest Post by Microsoft Partner, UI Centric
The media industry has undergone radical changes over the last few years and continues to transform at a remarkable pace. From working with our clients we have seen this transformation first-hand. Physical media consumption has been in rapid decline for almost a decade while content publishers and studios have slowly (and sometimes painfully) been adapting their distribution models to meet customer’s changing viewing habits.
Without their own distribution infrastructures, producers have widely begun to distribute their content via online VOD services such as Netflix, Amazon and iTunes. Although in some ways this could be perceived as ‘joining the digital age’, in reality this model is actually in many ways just a digital facsimile of the legacy business model - with few exceptions, content is still being served in a linear ‘push’ model to consumers.
The current challenges for content publishers with the digital business model are as follows:
- Squeezed margins. Pricing is fixed by the distributor and is much lower than traditional distribution
- High distribution costs. Distributers are charging often non-negotiable 20-30% margins
- No direct relationship with consumers. The digital distributer ‘owns’ the relationship customer and in-effect uses your customers to further add value to their own business
- Loss of control over SKU-packaging. In the past, publishers could add value to content by packaging ‘special editions’ or box sets. The standard model only accommodates two levels of pricing: new releases and back-catalog
Outside of the media and broadcast industry the advent of smartphones, tablets, game consoles and next-generation smart devices is creating new industries and business models that are user-centric and highly interactive. Users are becoming much more sophisticated and more demanding in the way they access their content – from banking, to shopping to social media. The user experience is now a critical driver to user adoption and commercial success of a digital product.
We believe that interactive experiences will be the key driver in a new era for the Media and Broadcast industries. Content will cease to be delivered in simple linear ‘push’ form and will instead will begin to be delivered in the same way that consumers expect other digital content to be: as applications, or ‘apps’. Aligning to consumer expectations ensures your business is positioned centrally in the market but it doesn’t have to stop there. Each app
will be a unique digital experience not just based around the linear content but a ‘mini-world’ reflecting a producer’s wider creative vision adding value with an experience that consumers can enjoy more than once.
As well as the creative opportunities, distributing content experiences rather than linear media also opens new business models and commercial opportunities. Publishers will be able to control their own pricing and can directly add value to their content increasing margins. Distribution costs can also be lowered by potentially avoiding the 20-30% overhead currently charged by the major distributors.
The ability to directly establish & maintain a direct relationship with the consumer is perhaps the most exciting opportunity for content creators. ‘Owning the eyeballs’ will enable publishers to potentially cross-sell their catalog, build customer databases, explore merchandising opportunities, and to sell advertising in new ways. This will dramatically change the landscape of the industry.
As studios and publishers embrace this change they will begin to include app experience as a key part of their production process introducing new challenges and opportunities. The future is interactive.
For more information please contact:
Nick Bailey - Commercial Manager, UI Centric