Richard Halton, CEO of connected TV platform YouView, offers his predictions and what's to come in 2018.
In the first episode of the BBC's new high concept, globe-trotting Night Manager-esque Ruski-drama McMafia, Russian gangland boss Semiyon Kleiman asks James Norton's character Alex which global franchise he studied at business school and why. McDonalds' Alex shoots back. When he hesitates describing their formula for success, Kleiman says briskly, because everywhere Burger King built one outlet, McDonalds built two'.
I can't comment on the veracity of this as a fast food strategy, or as Semiyon advocates, the model for a Chechen based mafia outfit, but it certainly seems as if Misha Glenny wasn't just anticipating Netflix and Amazon's production values when he wrote the book the glossy new drama is based on. He also neatly described the global race for dominance their respective business strategies would represent too.
Netflix, Amazon and now Facebook and Apple as well as the veterans at Google and YouTube are in the process of rolling out their services worldwide. This poses a new question for UK broadcasters - and the friendly platforms like ours, Sky, Virgin and Freeview which support them - is this is a war they can afford to fight. And assuming they can, on what terms will victory be declared?
On the face of it, it's a race for the high ground - more and more money being ploughed into top end drama exploited on a global scale.
Good news for consumers, a field of battle well-trodden by the BBC and ITV Studios as well as the UK independent production sector and a major boost to the global creative economy. And to turn the idiom around, clearly a case of new dogs learning the old tricks.
As is becoming more and more apparent, this isn't just a fight for attention, or TV subs, or viewing share which represent the old metrics of broadcast TV. It's a campaign for the retail delivery relationship, the household data set, or as a Google Executive put it rather chillingly at a panel I was on last year, the ownership of the OS of the connected home.
Put in cold numbers, it's a war worth $4,300bn, the value ascribed recently by Accenture to the value of the global IoT market in 2024, dwarfing the mere $85bn expected to be generated by the connected home market in 2020 which broadly compares to the scale of the entire UK Creative Economy today.
In that context, does Rupert Murdoch exiting his $80bn entertainment interests look like a prescient foretelling of doom for seemingly subscale UK operators like the BBC?
And even for other worthy owners of the UK connected home like BT - particularly when you compare the combined scale of BT with Amazon - add together the market capitalization at BT with Sky and you still struggle to get to a tenth of the extraordinary $550bn represented by Jeff Bezos's Seattle operation.
In the week before CES, the global tech fest in Las Vegas, I would like to argue this is a battle that the incumbents can win, albeit on new terms. And in our way, one that YouView, as well as the other friendly platforms in the UK, can help all sides navigate as the world of media turns on its axis.
More importantly it is a war where the consumer will dictate the terms and ultimately reign supreme. To that end, here are my predictions for 2018, why I think they matter for UK media and what we at YouView expect to do to contribute:
Content everywhere. The seeds were sown for peace before Christmas. YouTube and Amazon brokered terms for access to each other's devices; BT and Sky called an end to a nearly ten year stand off for pay TV channel distribution. YouView has new players to celebrate too in 2018. What next? Netflix on Sky and Amazon on Virgin Media are the ones to watch out for. There are challenges here too - the battle for prominence will continue to rage as UK PSBs seek to protect the advantages they have in the linear world in an IP environment - friendly platforms like YouView are vital to set the standard for the rest
Virtual partnerships. The days of the branded ecosystem are over. Apple plays Spotify through Sonos. Auntie talks to YouView through Amazon Alexa. The new partnerships are virtual as consumers rightly demand proper interoperability between devices. At YouView we're looking at how our cloud services can enable content sharing across different devices - browsing PVR recording lists with a mobile app as we do today, or using PSB metadata to power contextual voice search, coming soon.
Data drives value. David Abraham powerfully described data as the new oil' of the TV industry, ironically the year before the launch of Tesla's first electric car. While the electric car may not need oil, it sure generates data. Connected platforms are the next frontier for broadcasting - better information about consumer behaviour (did you know that 13% of the viewers to the first episode of GBBO on Channel 4 hadn't seen the previous series on the BBC? YouView were able to tell Channel 4 that before the overnights were published), but also about how consumers find content. Challenges here too - the new GDPR regulation in May is good news for consumers and for the UK - there is plenty to do for the US platforms to match the new normal for privacy across the EU.
Re-invention of ad technology. Hat tip to Sky on this one, ad smart was with us in 2014, but we're going to see ad insertion in the linear broadcast stream move into the mainstream in 2018 as commercial broadcasters seek to wrest back control of delivery of commercial impacts, with household level targeting backed by real time data. YouView will trial this end to end this year and the winds of changing are blowing already - BT announced this week that Channel 4 Media are replacing Google as providers of BT Sport's online targete
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Richard Halton, CEO of connected TV platform YouView, offers his predictions and what's to come in 2018.
