WebTV insights and perspectives - A web 2.0 phenomenon is coining new TV usage patterns
WebTV - an integral part of the living room entertainment sphere
WebTV has moved out of its niche position of providing entertainment for teenage users to become a serious rival in web entertainment. In the US, the number of videos streamed over the web to the PC has increased by 66% in 2007, reaching more than 10 billion videos viewed. In Germany, the figure is 2.1 billion, and the average viewer there already spends more than two hours a day watching 90 WebTV videos per month. According to the study "WebTV insights and perspectives – A web 2.0 phenomenon is coining new TV usage patterns" by Roland Berger Strategy Consultants, WebTV is becoming an integral part of the living room entertainment sphere. Once on the TV screen, WebTV will compete directly with established players, benefiting from interactivity, on-demand accessibility and extensive communication and personalization features. This trend will be reinforced as the majority of ad-funded WebTV offers will probably remain free for end-consumers in the future.
The industry analysis is derived from project experiences with major international telecommunications operators as well as medium and large media players.The future development of WebTV offerings will be strongly influenced by multi-device accessibility and multi-screen consumption patterns. Computer, mobile and TV screens will become similar in importance but have different implications on the design of WebTV offerings.
In particular, the convenience of accessing WebTV offerings via TV screens will create competition with established operators and broadcasters. WebTV players will offer HD megahit VoD libraries or aggregate their contents in premium and niche linear content offerings. "These mainstream products will massively compete for media time and budgets with established premium offerings – once they've been enriched with WebTV capabilities. These include interactive advertising, time and place shift functionalities, socialization and personalization features as well as publishing and communication possibilities," says Alexander Mogg, Partner and broadband and media expert at Roland Berger Strategy Consultants.
WebTV will remain free – for the most part
In the long run, WebTV is even likely to fully converge with IPTV from a TV consumer perspective. The reason is that growing bandwidth allows for better picture quality, and IPTV operators are increasingly integrating browser functions into their offerings. Although loaded with premium or high quality niche content, a significant part of WebTV offerings will probably remain free in the future. "Ad-funded revenue sharing models for expensive premium libraries are already a reality in the US and will soon become standard in the eyes of the consumer," expects Felix Iblher, telecommunications expert at Roland Berger. "Consumers will consequently become less willing to pay for content. At the same time, ads are likely to become more accepted as formats become more subtle and relevant due to personalized targeting." In comparison to traditional TV, however, ad load is likely to remain rather small as higher costs per impression make up for lower exposure.
Media companies and operators must react now
In particular, the convenience of accessing WebTV offerings via TV screens will create competition with established operators and broadcasters. WebTV players will offer HD megahit VoD libraries or aggregate their contents in premium and niche linear content offerings. "These mainstream products will massively compete for media time and budgets with established premium offerings – once they've been enriched with WebTV capabilities. These include interactive advertising, time and place shift functionalities, socialization and personalization features as well as publishing and communication possibilities," says Alexander Mogg, Partner and broadband and media expert at Roland Berger Strategy Consultants.
WebTV will remain free – for the most part
In the long run, WebTV is even likely to fully converge with IPTV from a TV consumer perspective. The reason is that growing bandwidth allows for better picture quality, and IPTV operators are increasingly integrating browser functions into their offerings. Although loaded with premium or high quality niche content, a significant part of WebTV offerings will probably remain free in the future. "Ad-funded revenue sharing models for expensive premium libraries are already a reality in the US and will soon become standard in the eyes of the consumer," expects Felix Iblher, telecommunications expert at Roland Berger. "Consumers will consequently become less willing to pay for content. At the same time, ads are likely to become more accepted as formats become more subtle and relevant due to personalized targeting." In comparison to traditional TV, however, ad load is likely to remain rather small as higher costs per impression make up for lower exposure.
Media companies and operators must react now
Media companies need to choose a clear-cut cross-media strategy. "Possible options include launching converged WebTV products to leverage their brands, or accelerating market diffusion and growth through targeted acquisitions," says Mogg. The current state of WebTV is putting pressure on media companies to decide on their future positioning. They must hold their own against the new "over the top" competitors that could potentially harm long awaited IPTV subscription and VoD download revenues in the near future. "Strategic options range from cooperating to imitating and defending," says Mogg.The results of the study can be summarized in nine key statements:
- WebTV today plays a key role in web entertainment.
- The WebTV audience is commercially very attractive.
- While user-generated content is still far from dying out, commercial (premium) content offers are on the rise.
- The majority of WebTV offers will probably remain free in the future.
- Supported by its short formats and on-demand accessibility, WebTV will fast become integrated into mobile devices.
- Through integrated devices, WebTV is becoming an integral part of the living room entertainment sphere.
- Once on the TV screen, WebTV will position itself in direct competition with established players.
- WebTV is likely to converge with IPTV in the long run.
- Traditional media companies and telecommunications operators must react now to keep WebTV companies from establishing their brands in the minds of the consumers.
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