Accenture: How To Thrive In The Digital Video Market

A new report from Accenture examines a time of almost unprecedented disruption and intense competition among a growing array of players in the video industry.

Bringing TV to Life: Charting the Course to Success focuses on two types of video companies. The first consists of traditional video content providers and distributors such as TV network broadcasters. The second group includes video content aggregators such as traditional cable TV companies and pay TV operators.

The report identifies several challenges these companies face such as:

• Rising operational costs to create content.

• Growing consumer resistance to pay for content.

• Struggles to present content engagingly.

• Intensifying difficulties monetizing video products and services.

• Elusiveness of relevant customer data such as which video scenes do not work, which actors turn off viewers, and how far into shows audiences continue watching programs.

The report also specifies competitive advantages that new types of disruptive “digital native” companies, such as Internet platform providers, possess compared with traditional video companies. These include:

• More cash.

• Original content differentiators and global monetization.

• Adjacent market pursuits.

• Ecosystem power.

• The ability to quickly and broadly respond to viewer behaviors.

According to the report, digital disruptors such as Google, Amazon and Apple enjoy healthy future valuations compared with many traditional media companies. The report offers several recommendations for how companies can succeed in the digital video market.

Distributors and aggregators alike must evolve the right collaborative business model, the report says. In some cases, both types may reside within the same company. In other cases, they will continue to compete to establish the strongest position in their value chain.

Distributors are threatened by the shift in consumer behaviors. As customers fragment their media consumption, the channels-to-market of a distributor are also fragmenting. This means that distributors need to figure out how to monetize these audiences.

Aggregators must often make immense investments in infrastructure, even though the physical delivery of content is becoming commoditized. Many households in wealthy nations already boast regular DSL, 4G cellular, cable and satellite connections.

Thus, aggregators will need to live up to their name: they must be the easiest and most engaging place to find the content that consumers love across a number of distributors and digital native providers such as Netflix and Amazon.

Among the report’s conclusions is that “successful aggregators and distributors will be the ones   that embrace change, but use the value of their traditional assets and capabilities in the emerging value chain. These companies will make sure that investments can strengthen their core assets and capabilities while positioning them effectively for new business partnerships and  models.”