BBC, ITV, C4, BT and the other leading TV players, face fundamental challenges to their businesses like never before. Gone are the safety nets of monopolistic or protected positions that have kept real competition at bay for decades. BT was the UK's lone telecoms and infrastructure provider, ITV was famously described as a "licence to print money", and C4 was fully underwritten in its formative years by ITV.
As such, these long-standing incumbents of the TV industry tend to be led by good "managers". Excellent at extracting profits from a strong business model, possessing the political nous and lobbying skills to keep regulations in their favour, and charming shareholders to get behind key strategic decisions. However, being a good manager is not enough when the business you are managing is facing fundamental challenges, including the following:
- The shift from mass media broadcast to personalised media delivery
- The shift from single device passive viewing to multi-device interactive and immersive consumption
- Broadband ubiquity and bandwidth improvements expanding the means of delivery and feedback
- The consumer's desire for more immersive interactivity and involvement with its TV entertainment
- The rise of digital advertising continuing to erode the value and share of traditional TV advertising, with impending disastrous impacts on the economics of broadcast TV
- Social media and alternative entertainment sources (eg gaming) permanently aging of the demographics of traditional TV
It is no coincidence that the tech driven businesses challenging the incumbent TV industry were created by entrepreneurs with little or no TV experience - YouTube, Netflix, Amazon, Facebook - no one from the TV world had any significant role in the genesis of these hugely disruptive businesses. Yet YouTube singlehandedly created the phenomena of user -generated content (UGC), and Netflix and Amazon created the "anytime, anywhere, any device" philosophy that is rapidly rendering scheduled TV to a second-class, older-skewing service. Future game-changing moves could come from anywhere.
What has been the response of the incumbent TV players? Not a lot, really - a collective burying of heads in the sand hoping the problems go away, the launching of "me too" OTT streaming services as a Canute-style response to the Netflix/Amazon tsunami, and a "too little, too late" jump on to the TV drama bandwagon so brilliantly initiated by the US Cable networks and accelerated by Netflix/Amazon. Oh, and let's make sure that we integrate Facebook, Twitter, Snapchat and Instagram into everything, somehow, "because that's where the kids are". It isn't good enough. The current managers of the incumbent TV industry trying to make sense of the situation are, one by one, realising that they're not the ones to figure it out.
So what can be done? Plenty, if you get the right people involved. What's needed, first and foremost, is an entrepreneurial mindset. Replacing great managers with more great managers will simply perpetuate the status quo.
Once installed, entrepreneurs and leaders with the right mindset will focus on the following areas to drive fundamental change:
- Building products and content with an even greater focus on the consumer, rather than the advertiser or commissioner. Paying greater attention to how people think, and what drives their demand for content and how they want to consume it.
- Embrace the early adopters and core fans. In a mass media world, a viewer's value is defined by the currency of advertising. In the new world of personal delivery and deep interactive, immersive possibilities, each consumer has a very different value, with core fans worth far more than the casual viewer. They should be valued differently, looked after, and activated, because they will define the demand for, and drive the value of, new content brands.
- Change business models accordingly - reduce reliance on advertising and shift to transactional, experiential, subscription, and data-driven models. Reward core fans for driving demand and value of content - new technologies are emerging that allow fan influence to be measured.
- Approach innovation and management seperately - few CEOs can do both effectively because of the fundamentally different mindsets required. Splitting responsibilities means the manager can optimise returns from the incumbent business, while the entrepreneur can drive the new.
The incumbent TV industry has the most to lose, the most to gain, and the best access to investment capital (existing profits). The key players need to embrace the current opportunity to recruit the entrepreneurial mavericks that can deliver game-changing growth strategies instead of continued managed decline, or worse! The phrase "disrupt or be disrupted" has never been more apt.
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