The Four Trends that Will Cause Major Disruptions in the Media & Technology Industries
Here are four trends, already well underway, that will cause major structural changes in the media and technology industries:
1. The switch from linear pay TV to OTT services: In the same way that mobile phones replaced wireline telephone service, the linear pay TV business has started a long decline because people want an anytime, anywhere “pay TV” service that they can access anytime, anywhere – and on the device of their choice. The switchover from traditional linear pay TV to OTT services, which will offer both enormous libraries of content as well as live streaming, will cause monumental changes in the pay TV industry. After all, OTT services, whether subscription- or ad-supported, are pay TV services that can be watched on many devices, not just TV sets.
2. Increasingly robust broadband and home networking: The broadband and home networking industries (both wired and wireless) are beefing up their networks to handle the coming surge in 4K content but the linear pay TV services are not – except for the satcos. The pay TV services’ failure to deploy 4K will cause consumers to start watching more broadband delivered content, which will accelerate the pay TV industry’s decline. Fortunately for all the wireline pay TV services, they also own a broadband service – so as the revenue from pay TV declines, the revenue from broadband will increase. Although their increase in broadband revenue increase won’t equal the decline in pay TV revenue, the profits will – because broadband is much, much more profitable than pay TV.
3. The coming 5G wireless technology will increase even more so the use of mobile devices for viewing videos. 3G and 4G wireless services are already used by millions of consumers as their main, or at least occasional, source of videos. That will increase with the faster speeds and greater coverage of 5G, which will also bring wireline-like broadband speeds – 100 Mbps and up – to millions that cannot now access those speeds. Of course, the only videos that are available currently are from OTT services, a fact that lures billions to OTT and away from linear pay TV.
4. 4K and HDR will lure billions of eyeballs to OTT services and away from pay TV. The wireline pay TV industry’s best hope in staving off the surge in 4K from OTT services is HDR, which does not require anywhere near the amount of bandwidth that 4K acquires. Whether they will move quickly to offer HDR remains to be seen. If they do, their market will be limited, at least initially because few 4K TVs in use now support HDR. That will change starting recently because makers of 4K sets have started offering HDR capability in most of them and will, probably by next summer, in all of them. When pay TV services start offering content in HDR, consumers will be motivated to buy HDR-capable TV sets – all of which support 4K. That will prompt users to start looking for 4K and HDR content and will find that most of it is on OTT services, which will further cause consumers to migrate to OTT as their default “pay TV service.”
These are the trends that we report on in The Online Reporter.