The future of television

October 2006

”Broadcast TV has been telling you what to see, when you see it and how you see it. Technology has changed all that forever.” (Nelson Gayton, Wharton)

Proventus and television
Proventus is a leading owner in the largest commercial broadcasters in Scandinavia, Sweden’s TV4 and MTV in Finland. Shifts in technology and political change have transformed the television world. New technology has already made possible the proliferation of satellite and cable channels, and is now responsible for the impending digitalization of terrestrial broadcasting. Regulatory change means that the marketplace is shifting equally radically. The fragmentation caused by these changes forms one part of the picture. In European markets, state broadcasters no longer share their monopoly with a single commercial channel. Entire countries no longer watch the same programme at the same time.

The other part of the picture is the increasing interactivity and mobility of content. The result is not just a much wider assortment of viewing options, but also a fundamental change to the nature of the product as both the viewer and the potential advertiser experience it.

Television is traditionally a passive medium. But it is also increasingly taking on another form, and is creating a more active consumer. The remote control has the potential of becoming the key to a two-way process. And TV content is already being delivered to laptops and cellphones. New technology allows the audience to skip the ads – and it has become more difficult to keep an audience for long periods. But it also means that advertising can become much more specific, and target individuals more efficiently.

For Proventus, the only way to differentiate TV4 and MTV from the pure entertainment channels distributed by satellite is to emphasise quality, and continue to develop an approach to programming that has a broader appeal. It will also be necessary for both TV4 and MTV to exploit the strength of their brands and to use their audience base to develop additional sources of income.

In order to be competitive in the long run, it will be necessary to become more efficient and to make better use of resources to allow both broadcasters to invest in stronger programming.

In the long-term we believe that both TV4 and MTV, which each represent quality positions in smaller language markets, will need to further increase cross-Nordic cooperation to prosper and grow.

Mattias Fyrenius on the changing television world
Mattias Fyrenius, head of TV4 New Media, gives his view on the rapidly changing television landscape:

Today every traditional broadcasting company struggles with questions like: When will we be watching TV? What will we watch? Which devices will be used? What kind of distribution? How will the television business model respond to changes?

– It’s absolutely clear that a shift in consumer behaviour is under way, especially when it comes to our relation to time, content and place. We – the broadcasters – have traditionally been the ones deciding what programmes should be delivered to your television in your living room. The trend now is towards ‘anytime’ (on demand), ‘anywhere’ (laptops, mobile phones) and ‘anything’ (unlimited range). However, I think we should have a humble attitude towards the fact that our behaviour won’t change overnight. Today, the ‘anytime-anywhere-anything’ counts for only a few per mille of our viewing. Also, human beings enjoy collective experiences, i.e. watching Idol at a certain time becomes more interesting if you know that lots of other people are doing likewise and this increases the willingness to subject oneself to predetermined viewing. Live broadcast will always have the power to attract crowds here and now. Moreover, the definition of TV will change – is YouTube TV? – and become a much broader concept, thus making today’s definition of a ‘TV-viewer’ obsolete.

David Leonhardt writes in the New York Times that “TiVo is not going to kill advertising, and it won’t kill the networks: the odds that we have entered a post-advertising age are about as good as the odds that Jack Bauer gets killed next week”. In the light of what you just said about changing consumer behaviour, what do you think about the future television business model?

– Traditional TV-advertising is not dead. Big TV networks are not dead. However, the traditional 30 second spot won’t be as dominant as it used to be – for several reasons: the number of really big hits like Idol, the ones that drive brand advertising, is radically decreasing, and the range of advertising channels has dramatically increased. The author of ‘The Long Tail’, Chris Anderson, points right at it when he argues that the challenge for broadcasters is not so much about making sure a programme/channel reaches millions of viewers but rather making sure that millions of programmes/channels reach a few viewers.

What are the most interesting developments in the television world today?

– In my view there are three really exiting trends: First, the explosion of moving images within new media: a broadband penetration above 50% and over 1 million 3G subscribers [in Sweden] means radical changes for both the web and the mobile phone. From having been predominantly text based media, spiced with some moving stuff, web and mobiles are now predominantly moving media, spiced, if necessary, with some text based content. This will have fundamental implications for viewers as well as advertisers and media companies. Second, the media consumer’s increasing power over media: bloggers, citizen journalism, viewers’ top lists…consumers are not only also producers, but editors and distributors as well. Third, new distribution forms for traditional TV: the virtual explosion in numbers of TV channels have important effects on our business.

On November 27, 2006, TV4 launched its own YouTube called FejmTV.

Television Business International Magazine on the European television landscape
Daniel Sachs and others give their views on the European television landscape in the October/November issue of Television Business International Magazine [pdf 487 KB]:

Read more:
Proventus' engagement in TV4:
Proventus' engagement in MTV:
Nordic Broadcasting Concludes Acquisition of
Schibsted’s Shares in TV4: