By Gavin Mann
Global Managing Director, Broadcast
During the upcoming 2017 NAB Show in Las Vegas, broadcasters will be focused on a number of strategic, technological and competitive challenges and roadblocks to growing their businesses.
One of the biggest challenges is the need to make broadcast services more resilient to cyberattacks. Other challenges include the rising costs of creating content, delivering differentiated hyper-personalized services that employ data analytics, and developing strategies to improve advertising efficiencies with artificial intelligence.
Data Piracy is the New Piracy
Concerns about data piracy and other cyberattacks are rising among many corporations. An Accenture survey of 2,000 enterprise security professionals finds that the average company experiences two-to-three successful targeted cyberattacks per month. The survey’s results are summarized in a report titled Building Confidence: Facing the Cybersecurity Conundrum.
Broadcasters are facing these same issues — especially data theft attacks. An Accenture survey of media and entertainment professionals reveals that 77% indicated their companies experienced an attempted or successful theft or corruption of data by insiders during the previous year. A leading entertainment company experienced multiple attacks that breached nearly 77 million customer records, unpublished movies, and internal confidential information. These findings are cited in an Accenture report titled The New Security Challenge: Are Media and Entertainment Companies Ready?
As broadcasters engage more directly with consumers, offer more personalized digital services, and collaborate with communications companies, they acquire a new asset equally as valuable as content — extensive customer data. Their use of open and standards-based Internet Protocol networks allows them to tailor content to specific consumer’s interests. But the inter-connected nature of these networks and services creates more security risks.
The growing amount of consumer data broadcasters are collecting makes these databases more vulnerable targets for computer hackers looking to steal much more than the latest movie. Because all this information is being generated through digital channels and mobile devices, it’s much more accessible to hacking.
This problem is bound to get more serious because of the accumulation of more high value data. Broadcasters are going to spend an increasing amount of money and energy to protect their companies, networks, and customers from security breaches. Ensuring end-to-end security is no longer just an IT issue. Protecting customer privacy, critical infrastructure and brand value is a daily agenda item.
Rising Costs to Create Content
A central revenue driver of the broadcasting industry is content. While a plethora of storylines about content will emerge at NAB, the most important could be the rising costs to create, acquire and distribute content.
A new Accenture report summarizes findings of its research and analysis of several key U.S.-based broadcasters. The “Future of Broadcasting VI” report reveals that from 2017 through 2020, the rate at which their costs will increase to create, acquire and distribute content will accelerate twice as fast as their revenues. This could intensify pressure to change their business models to compete more effectively and to drive more rapid industry consolidation.
The research forecasts that content costs will increase 36%, to $136 billion in 2020 from $100 billion this year. By contrast, video revenues will increase by 18%, to $217 billion in 2020 from $184 billion this year.
To reduce costs and increase revenues, broadcasters will increasingly focus on ways to more efficiently manage their costs by selecting which content they will and will not produce, and delivering more personalized services to customers.
Hyper-Focus on Hyper-Personalization
Consumers want broadcasters to increase the contextual and personal relevance of all content, including ads, to make every viewing experience engaging and meaningful. This is hyper-personalization.
One broadcaster taking a pioneering approach to hyper-personalization is the British Broadcast Company (BBC). In 2015, the BBC launched “myBBC,” a strategic platform to harness insight from audience interactions across the breadth of its digital properties. Empowering the BBC to build direct relationships with its audiences, the new platform increases engagement and consumption, and underpins a new data-driven approach to its operations across key departments including content commissioning.
At NAB 2017 broadcasters will be hyper-focused on hyper-personalization because it’s an imperative for remaining competitive with digital natives, such as internet platform companies. Focusing on hyper-personalization is also an opportunity for them to reinvent themselves using data, delivering true personalization to every person in their audience while increasing their brand value, viewer satisfaction and revenues.
Consolidating to Succeed
Consolidation of companies, platforms, services, and technologies among telecommunications, media and entertainment companies will be an important NAB story. Consolidation is increasing because growth among many of these companies is either decreasing or flat, and low-cost digital natives are intensifying the competitive landscape with compelling video platforms, content, services, and disruptive business models.
Stand-alone content providers are finding it challenging to compete with digital native platform providers that have larger scale, more customers, and global content. As the media habits of consumers continue to shift and become more liquid, many broadcasters lack the resources to compete head-to-head with digital natives.
Through consolidation, however, communications, media and entertainment companies can create mutually beneficial opportunities. Content creators such as broadcasters can merge or collaborate with communications service providers that have the infrastructure pipes to deliver that content. Combining platforms, distribution, advertising, programming, and customers will help them be more competitive.
Getting Smarter About Artificial Intelligence
The advertising and broadcasting industries are confounded by an avalanche of disaggregated and unreliable data about consumers. To address this problem they are increasingly using machine learning — the ability to program machines to learn from new data — to improve targeting and reach of advertising. A type of artificial intelligence, machine learning enables advertisers to more accurately predict customer advertising preferences and serve them targeted ads more effectively. Processing large amounts of historical user data, the technology can predict users’ interests, behaviors, and purchasing actions with more precision.
At NAB there will likely be story lines focused on the use of machine learning to improve advertising. Advertisers recognize its potential for focusing sales efforts and forecasting sales, as well as targeting messages with personalized and relevant content and increasing revenues.
Gavin Mann is a London-based Managing Director and Global Broadcast Industry Lead at global professional services company Accenture. He has been associated with the company since 1993 and is a 1998 graduate of Northwestern University’s Kellogg School of Management MBA program.