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1 P R E C O M M E R C I A L 1 N E W B U S I N E S S M O D E L S O F I N T E R A C T I V E T V CONTENT 1. Interactive TV in a world environment Digital TV and its demand New standards environment and HbbTV Globalization of digital interactive television... 6 ANNEX. Business CASE OF STUDY: ITV player... 7 Some ideas for successful GLOBAL ITV Business models... 8 REFERENCES LIST OF FIGURES Figure 1 relation between digital content industries... 2 Figure 2 Entertainment and media global market numbers... 3 Figure 3 New content development model... 5 Figure 4 itv business plan [3]... 8 Authors: Alfredo Lango (MOMO STUDIO) & A-CING February, 2015 Page 1 of 10

2 Alfredo Lango, Founder - CEO and R&D Director of Momo Studio, Mexican company devoted to the creation of content for television, films and multimedia, and Jaime Mancebo and Julián Seseña from A-CING -GLOBAL ITV Council Secretariats- talk in this article about Interactive TV in a short-term global environment, and show a business case study about the British TV Network ITV and its way of monetize its own content, besides of classic broadcasting and advertisements. 1. INTERACTIVE TV IN A WORLD ENVIRONMENT Interoperability between standards of interactive TV can be the key for pacing the way to new models and rules that will globally lead TV, changing business models by developing new ways to sell contents in a quicker and more efficient manner. This new business models should be adapted to new paradigms to communicate and entertain end users, getting the most advantage of interactivity. The emergence and rapid development of information and communication technologies (ICT) has led to major changes in the global economy, allowing companies to incorporate such technology in a multitude of activities, causing changes in the patterns of global production. Technological innovation in networks, software and hardware, including mobile and wireless services, as well as new forms of consumer demand, have been important factors for the development of digital content and its distribution. The digital content is playing an increasingly important role in world economies, which are shifting their focus from manufacturing tangible goods to intangibles high value added ones. Digital content is being present in areas that previously were not considered as producers or consumers of content, such as service industries, education and health, public sector and trade sector. Also in the shaping the digital content industry, other areas are involved such as the arts and cultural ones, and other industries in the field of creativity. FIGURE 1 RELATION BETWEEN DIGITAL CONTENT INDUSTRIES Page 2 of 10

3 The costs related to the distribution of entertainment and media on converged platforms is expected to grow at double-digit rates and will carry on with more than half of overall spending. Within the next five years, half of the total growth in this sector is expected to be generated through online and wireless technologies. PriceWaterhouseCoopers 1 developed a study in this way. As a result of this study, the fastest growing region in the global entertainment and media market in recent years is Latin America with growth rates above 10%. The global market for media and entertainment is growing at an average annual rate of 5.6% to about $1.8 billion. Latin America will have greater growth with growth rates above 10%. Entertainment and media global market Market region Annual growth rate [%] Market size in 2014 [billions of dollars] North America 3,9 558 Europe, Middle East and Africa 4,6 581 Asia- Pacific 6,4 475 Latin America 8,8 77 TOTAL FIGURE 2 ENTERTAINMENT AND MEDIA GLOBAL MARKET NUMBERS In recent years the share of the global market has increased in a wide range of activities ranging from interactive television to animation. Some of these economic regions have become established, while others are in early stages of development. 2. DIGITAL TV AND ITS DEMAND Markets are changing as human communication around the world does, giving greater importance to the interaction through social networks and video games than to classical television and films in their total turnover. Users are increasingly seeking interaction in electronic media and so TV channels are changing their way of producing content, incorporating to their content social networks and videos for marketing. Advertising has a positive trend towards interactive media and digital content, as well as an increasing number of producers and channels are using this pathway to be known or to promote a product or service. But there are still major obstacles that must go through in order to develop a suitable manner to a large and growing market hungry for content, as: 1 Page 3 of 10

4 - expert human resources - the need for a global and local market development - financial issues - finding a look - Industry-academy links - Research and development - Educational programs - Infrastructure - Legal framework (IPR) - ICT industry links - Sales channels - Social activities - Events. Currently the main television broadcasters produce their contents with high budgets to be distributed through various media such as broadcast television, cable, satellite and IPTV, but demand increases and the number of independent producers also increase as demand grows. Therefore, the need to look for support outside their companies is a relevant framework to analyze. The four main axes are: - Companies: SMEs with interest in development of productive projects, interest in generating links with other countries and generating high value added services. Besides their continuous searching for improving processes, products and services through the implementation of new technology that allows them to be more efficient and competitive. - Universities: the need is to generate links with research centers, prioritizing the ones that have prior work in research laboratories and efficient training processes in productive projects. This is where a hotbed of new entrepreneurs and research talent is born. - Private investment: Investment funds, seed capital and clubs of investors and business consultants involved in developing business plans for companies. - Government: Government Agencies focused towards linking funds for technology sectors, research and culture. Page 4 of 10

5 Pulse para añadir un título Pulse para añadir texto FIGURE 3 NEW CONTENT DEVELOPMENT MODEL In addition to the above, it must be established that all television content must be Transmedia, focused on the selling for different media where they can exploit the contents in a better way. 3. NEW STANDARDS ENVIRONMENT AND HBBTV The standards have always led the way in which the broadcast networks do business and there is a globally demand for higher quality production. However the actors remain the same, especially in developing and emerging countries, where few big chains dominate the market. The analogue switch off just changes the way to produce content and transmit it, but the same players remain, looking for new business models that provide more interaction with the viewer. The marketing of new global systems drastically reduces production costs and increases the number of viewers not only watching but also involved in the creation of content. So, a twist market research is needed to change the way television programs are made and to focus more not just on a schedule or a rigid programming system. In this way, it will become much more attractive to advertisers. Page 5 of 10

6 4. GLOBALIZATION OF DIGITAL INTERACTIVE TELEVISION GLOBAL ITV project is addressing ways to ensure interoperability towards de facto worldwide standards in the interactive television domain. In this context, recent announcements that the ATSC 2.0 system will use the HbbTV 2.0 will further push the efforts that GLOBAL ITV is currently pursuing regarding the Brazilian context. Page 6 of 10

7 ANNEX. BUSINESS CASE OF STUDY: ITV PLAYER ITV [1] is the oldest commercial TV network in the United Kingdom (not related at all with GLOBAL ITV!!). ITV is a network of television channels that operate regional television services as well as sharing programmes between each other to be displayed on the entire network. ITV Player [2] is an online video on demand service accessible though: - Web platform: the main ITV website - Television platforms: o BT Vision o Freesat o Now TV o Roku o Sky o Samsung Smart TV & Blu Ray Players o Virgin Media o YouView - Game consoles: o Play Station 3 o Xbox One and Xbox360 - Mobile platforms: o Android o IoS o Windows The service offers a variety of programmes from homegrown programming to imports across ITV, ITV2, ITV3, ITV4 and CITV. Some sports programming is available to watch again via the service, the 2010 FIFA World Cup and highlights being examples. Until October 2012, the ITV Player business model [4] was based solely on the generation of revenues via advertising, shown before and during streamed programmes. In October 2012 ITV introduced a different business model whereby revenue would also be generated by adhoc user payments for access to individual programmes from ITV s archive or online premieres, which are shown without advertising and typically priced between USD 0.76 and USD Total long-form video requests from ITV Player across all platforms in 2012 were up by 22% from a year earlier, to 458 million. According to ITV, growth was buoyed by the improved quality of the ITV Player. Total annual long form video requests from ITV Player have risen by over 300% in three years, from 150 million in 2009 to 458 million in So, getting paid by end users has increased their video requests, by investing in enhancing the quality of the offered videos. Page 7 of 10

8 In the following picture we can see the business model of ITV: FIGURE 4 ITV BUSINESS PLAN [3] This is not a pure interactive TV example, as it is more an OTT created from a classic broadcaster, but some good practices can be highlighted. SOME IDEAS FOR SUCCESSFUL GLOBAL ITV BUSINESS MODELS - Interactive TV may not be considered per se, all alone, as something independent from the rest of activities of the broadcaster. A holistic approach is needed for a broadcaster s business model. - The scope is global. - Investment in technology and high-quality products seems to be a good idea Page 8 of 10

9 - A multiplatform solution seems to be a must (no more just TV sets to consume advanced video contents!!). - Users are ready to pay for high-quality TV content, even not on-line or live content. - Multiple ways of getting revenues (ads, users payments) can (must) coexist. - Several layers of services can be stablished, following the well-known scheme free content with ads, premium content just for premium users. - Integration of roles: a broadcaster who is a producer who is an OTT who is an innovation investor who is a multinational Page 9 of 10

10 REFERENCES [1] en.wikipedia.org/wiki/itv_%28tv_network%29 [2] en.wikipedia.org/wiki/itv_player [3] ar2013.itvplc.com/strategic-report/overview/business-model [4] [5] Page 10 of 10

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