FUTURE OF BROADCASTING VI - Accenture
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FUTURE OF BROADCASTING VI
OUR POINT OF VIEW IS GROUNDED IN ACCENTURE’S LATEST SHAREHOLDER
VALUE ANALYSIS (SVA) OF KEY PLAYERS IN THE GLOBAL BROADCASTING AND
DIGITAL VIDEO INDUSTRY
CBS
ProSieben Nippon
ROIC
Time Warner RTL Disney
Spread
Televisa Vivendi Discovery
Cost of capital
Scripps Foxtel ACCENTURE’S
VALUE CREATION
BCE Sky ROADMAP
Mediaset TF1 Organic
Growth
Globo Dish NBCU ITV
M&A
Netflix Seven West
21st C. Fox
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 2CONTENTS EXECUTIVE SUMMARY VALUE ANALYSIS: OVERVIEW AND KEY FINDINGS EMERGING THEMES VALUE CREATION OPPORTUNITIES Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 3
EXECUTIVE SUMMARY
VALUE CREATION
SVA HEADLINES THEMES OPPORTUNITIES
• TRS has fallen to negative • Rising Cost of Premium • Continue to use Competitive
levels in the last year and Future Content Advantage
Values have also dropped
• The rise of hybrid organisations • Refine Operating Model to
• Margin erosion continues to service more channels, support hybrid organisation
products and business models
• But overall industry Growth still • Multi-speed IT – Develop
expected – greatest growth • Tech developments in audience next generation IT Platform
rates from digital sub-segments measurement and tracking to to support breadth of
e.g. digital advertising and OTT drive monetisation of digital services and teams
streaming advertising
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 4SHAREHOLDER VALUE ANALYSIS HEADLINES
But overall industry
TRS has fallen to negative growth still expected –
levels in the last year and Margin erosion greatest growth rates
Future Values have also continues from digital sub-segments
dropped e.g. digital advertising
and OTT streaming
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 5OVER THE LAST FIVE YEARS BROADCASTERS HAVE DEMONSTRATED POSITIVE
TRS, BUT FROM 2015 TO 2016 GROWTH HAS FALLEN DRAMATICALLY IN FREE-
TO-AIR AND PAY TV SEGMENTS TO NEGATIVE LEVELS…
1-Yr Avg TRS (03/31/2015 – 03/31/2016)
New media 72%
Pay TV -09%
Free-to-Air -10%
Ø 17.5%
Source: S&P Capital IQ, Accenture Analysis
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 6MARGINS ARE BEING ERODED YEAR-ON-YEAR ACROSS THE THREE SEGMENTS
(PAY TV, FREE TO AIR AND NEW MEDIA)
EBIT Margin (%) – 1, 3, 5 Year Period
5-Yr Average Margin 3-Yr Average Margin 1-Yr Average Margin
03/31/2011 – 03/31/2016 03/31/2013 – 03/31/2016 03/31/2015 – 03/31/2016
Ø 15.8% Ø 15.5% Ø 14.8%
This is especially true for Netflix which has seen its large
investments and international expansion strategy hit profitability.
Notes: Margin refers to EBIT margin. For Walt Disney, Vivendi and BCE, only broadcasting segment margin has been taken.
Source: S&P Capital IQ, Accenture Analysis. New Media includes only Netflix, For ‘Pay TV’ and ‘Free-to-Air’, please refer Appendix
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 7THE NEED FOR IN-HOUSE ORIGINAL CONTENT ALONGSIDE DIGITAL
CAPABILITIES HAS ALSO DRIVEN INVESTMENTS
Broadcasting and Cable /
Cable / Satellite Satellite
Broadcasting, Cable and Satellite They acquired $1.4bn of
companies acquired $4.4bn of technology companies in 2015
TV content businesses in 2015
Acquisitions are made to build
As licensing fees have risen and the capabilities necessary to
viewers demand high quality content compete as industries digitise
the need for in-house original
content has increased
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 8BUILDING ON THE SHAREHOLDER VALUE ANALYSIS, WE HAVE DRAWN SET OF
“MOMENT IN TIME” CONCLUSIONS ABOUT THIS RAPIDLY EVOLVING SECTOR
We have identified three key themes
Rising content costs The rise of hybrid New technical advances
organisations in audience measurement
will drive monetisation
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 9IN NEXT 3 YEARS, WE FORECAST CONTENT COSTS TO GROW BY 36% WHILE
VIDEO REVENUES WILL GROW ONLY 18%
Revenue vs. Content Costs – US Video Providers
250
216,926
203,658
200 192,260
184,129
174,947
166,653 167,158
155,276 156,286
146,033 139,046
150 135,743
121,064
108,571
99,684
100 90,624
77,435 82,213
62,752 68,301
57,197 57,251
50
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Video Revenues ($Bn) Content Cost ($Bn)
Sources:
Revenue data pertains to major US video players – Scripps, Discovery, Viacom, Walt Disney, Time Warner, CBS, 21ST Century, Dish Network, Netflix.
Content costs are calculated using a proxy from SNL Kagan data.
Capital IQ, SNL Kagan, Accenture Research
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 10THE MEDIA AND BROADCASTING ECOSYSTEM HAS EVOLVED AND
ORGANISATIONS ARE DIVERSIFYING TO STAY COMPETITIVE
The new hybrids support multiple revenue, distribution, cost and offering models
REVENUE DISTRIBUTION COST OFFERING
Players continue to As incumbents spread The desire to play and The new ecosystem
experiment with new their offerings across compete in multiple contains a growing
business models which multiple channels, players pockets of the video number of players
combine advertising, globally see value in OTT value-chain leads to adding video to enhance
subscriptions, propositions. Over half additional cost burden for their offerings. These
transactions and the main players in US companies, in the form of organizations spread
licensing. launched OTT services in content acquisition or offerings across and
the second half of 2015. production charges as outside traditional
well as carriage fees. segment lines.
Hotstar ITV Starz HBONOW MUBI Discovery Facebook Amazon
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 11SO FAR THE ABILITY TO UNDERSTAND THE ACTIVITY OF THE DIGITAL
AUDIENCE HAS PROVED CHALLENGING BUT NEW TECHNOLOGY COULD MAKE
THIS A PROBLEM OF THE PAST
Online Advertising – User Tracking
Emerging solutions
Nielsen has created a Total Audience
Advertising occurs Measurement framework. The aim is to enable
across channels the measurement of audiences across all
Consumers engage digital content types and platforms with
Aspiration / with broadcasters metrics comparable with television. The first
challenge across channels release in 2016 is in partnership with
Facebook to enable publishers to access digital
Insight is required to These insights enable content ratings for their Instant Articles.
understand who is the business to target Barb’s Project Dovetail aims to combine
viewing what content, consumers with insights from meta data tags in content and
ads along with panel insights. This will provide
when and how appropriate ads
a means of understanding cross-platform
viewing. Beta reports will be available from
2015 with full cross-platform insights expected
by 2017.
Source: PRNewswire, BARB
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 12IN A FAST-EVOLVING ENVIRONMENT, IT IS IMPORTANT TO SHAPE STRATEGIES,
BUSINESSES AND PLATFORMS FOR THE FUTURE
Evolving viewership Evolving delivery infrastructure
Changing viewer behaviour moving away Dramatic changes in scale and capabilities
from linear broadcast towards on-demand of available cloud, network and CPE
and personalised content delivery platform technologies
Evolving viewing experience Evolving delivery organizations
Maintaining high quality of viewing Reducing time to detect and resolve end-
experience to a fragmenting device base user issues without delaying feature rollout
• Whole home multiscreen is driving organizations towards DevOps
• Out-of-home mobile
Evolving development processes Evolving business and
With service velocity at high quality as the operating models
highest priority, agile development and Digital video business models require
automation processes are essential different operating models and capabilities
in order to maintain growth and profitability
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 13WE HAVE IDENTIFIED THREE OPPORTUNITIES FOR VALUE CREATION, WHICH
WE BELIEVE WILL HELP BROADCASTERS IN THEIR SEARCH FOR
FUNDAMENTAL GROWTH
Value Creation Opportunities
Use Competitive Refine Multispeed
Advantage Operating Model IT Delivery
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 14USE AND MAINTAIN COMPETITIVE ADVANTAGE – BROADCASTERS CURRENTLY
HAVE THE LEAD ON CONSUMER TRUST BUT THIS MAY SHIFT IF SERVICE
QUALITY, PREMIUM CONTENT AND INNOVATION ARE NOT SUSTAINED
Trusted Service Providers – % of users selecting one preferred provider from the below options
TV broadcaster-
n/c 31%
satellite operator
Overall
Cable TV company -3% 23%
Telecommunication-
-6% 16%
broadband provider
Internet video
n/c 15%
providers
+/- percent change from 2015
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 15THE COMPLEXITY OF MULTIPLE CHANNELS, PRODUCTS, BUSINESS PARTNERS,
ETC. REQUIRES HYBRID ORGANISATIONS TO RECONSIDER END – END
OPERATING MODELS…
What is our Technology Strategy?
Evaluation and Direction
3. 4.
Value Levers
1. 2. Customer Corporate &
Consumer Innovation &
Digital Governance & Execution
Mgmt. & Supply Employment
Journey Invention Chain Productivity …AT THE SAME TIME THE
INTEGRATION OF NEW
TECHNOLOGY ALSO NEEDS
5. 6. 7. TO BE CONSIDERED IN THE
Digital Digitally Capable Digital Joint Ventures/
CONTEXT OF THE BUSINESS
Enablers
Core Team Organisation Partnerships
8. 9. 10.
AND OPERATING MODEL
Insight Technology Security & Risk
and Data Platforms Management
Operating Model
What is the Resulting Impact on the Operating Model?
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 16DEPLOY MULTI-SPEED TECHNOLOGY DELIVERY CAPABILITIES
Set the strategy Pilot Transform the Technology Operating Model
Know where to start… …and start fast Enable multi-speed delivery in your organisation
Tools Functions
Performance Processes
metrics Technology & methods
operating
model
Organisation,
roles & Infrastructure
& architecture
sourcing
Governance
Copyright © 2017 Accenture. All rights reserved. Proprietary and confidential. 17You can also read
