Global Information, Inc. presents "Future TV: 2020 Taking it to the web" by IDATE.
"The migration to the Web calls existing revenue-sharing schemes into question, with channel operation being the weakest link in the chain and facing a dual threat: seeing new entrants win control of selling ad space, and seeing copyright owners and distributors form a direct alliance to market paid services," says IDATEs deputy CEO, Gilles Fontaine. "It is only by retaining their core functions on the Web that TV networks, in a not terribly dynamic market, will be able to enjoy even slight growth. To achieve this, it is crucial that they maintain tight control over programming rights."
IDATEs view of the video market in 2020
Parsing three extreme scenarios, IDATE has modelled a core, figure-backed scenario.
In terms of total market value, the three scenarios and our core scenario converge. We consider that advertising and pay-TV market revenue can only vary to a limited degree. As a result, we estimate that the global video market will grow at an average annual rate of 4% between 2010 and 2020 (2% in France, the UK and the United States), but live services will grow by 2%, compared to 20% for advanced video services.
The four scenarios vary with respect to the weight that new services have in the video market as a whole: according to IDATE, new video services combined (fixed and mobile) will account for 10% of the global video market in 2015 and 20% in 2020.
The scenarios also vary in terms of the weight that advertising and paid services have in the new services market. We estimate that the global video market will grow at a slightly higher rate (4.5%) than the pay-TV market (3.7%) between now and 2020. The traditional pay-TV market is expected to be the main source of market growth from 2010 to 2015, but OTT advertising will take over in the following years, i.e. from 2016 to 2020.
According to IDATE, OTT will account for 51% of the new video services market in 2020, mobile for 27% and managed networks for 22%.
Changes in how ad revenue is shared
IDATE analyzed the impact that changes in the value chain will have on the distribution of advertising revenue, based on three possible developments:
- Television networks maintain their position in the supply of channels and of new services.
- Copyright owners and distributors gain control of the supply of new video services.
- Distributors earn a fraction of live TV advertising revenue.
IDATE estimates that TV networks will be earning 30% of televised advertising revenue in 2020. They will increase this share slightly if they secure the function of supplier of new services. Under the worst-case scenario, however, their share would drop to 25% in 2020 and decrease in terms of absolute value.