Where do traditional media fit in a complex world of cord cutters and cable subscribers?

By Michelle Wroan

With headlines referring to the “bleak” future of traditional TV and the increase in the number of “cord cutters” dropping pay TV, one might believe that fight is already over. Streaming service providers are triumphing over cable providers, ending decades as the overwhelmingly dominant provider of programming.

But some data says “not so fast.” Neither side can presently proclaim victory.

A CNBC consumer survey of cord cutters, and cable and satellite TV subscribers identified that 36% subscribe to both streaming and cable and satellite. A KPMG consumer over-the-top (OTT)) media services and cable survey found that 70% of the respondents subscribed to cable. Granted, the number of streaming subscribers is the fastest growing, as a VAB report showed that the number of cord cutters in the U.S tripled between 2013 and 2018. It’s at this point that the traditional make-up of the competitors is beginning to change, especially as acquisitions and technology investments have created new service offerings to consumers.

The rise of streaming over the Internet has removed the means of distribution as a differentiator for “TV” since the Internet offers anytime, anywhere access.   Some “cable” companies are already offering streaming services, and more will do so. We already have seen some technology companies that offer streaming services and some pure streaming service providers both characterized as becoming like cable companies. So-called “telecom” companies are gearing up to offer streaming services as well.

The key to earning a share of consumer spending is the premium content that a service provider can offer the consumers with the highest ease-of-use at the right price to produce the overall best value.

Where does the above scenario leave the traditional media companies? They have owned and been THE SOURCE of vaults of motion pictures, television programs, and other content for lifetimes. Now media companies find deep-pocketed, non-traditional competitors, former/current distributors and rising upstarts all chipping away at their position by undermining traditional distribution channels and competing for content production.

Indeed, the business model is changing, and for traditional media companies to thrive they will need to consider what it takes to go directly to consumers; what it means to battle new and traditional competitors for the talent to produce the content; and how quickly they can transform their own company, departments and operations to enable a rapid rise to a critical mass of subscribers to achieve their strategic objectives.

Media companies face an end-to-end challenge

Media companies will need to adapt to become direct-to-consumer and talent focused: Continue to deliver a strong value proposition to talent on the content supply side against additional competitors, and launch the best direct to consumer experience against existing competitors.

Combining streaming technology and content is not “plug and play” and requires grasping the complexities of strategy and technology. Streaming will require an operating model focused on the multiple channels to provide the best consumer experience. Is the media company’s operating model built to deliver the right customer value proposition to the right channel?

They should also consider whether their direct-to-consumer ecosystem calls for a complete refresh of their HR, Finance, and other operations as media companies aim to more efficiently and effectively compete for talent and technologists, who are in demand in all sectors. How do media companies create the attractive combination of an innovative culture, business processes and tools that are standard in tech, if it doesn’t exist already?  Both HR and IT transformation are critical to lure the talent that media companies need to become as technology savvy as the leading tech companies. 

To speak with Michelle about the media industry, please contact Mike Alva, mobile (925) 878-5488, malva@kpmg.com; Twitter - @michaelalva.

 

KPMG research

 

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Michelle Wroan

Michelle Wroan

Partner, Emerging Growth Media Lead, KPMG US

+1 213-955-8657


Media contact

Mike Alva

Mike Alva

Director, Corporate Communications, KPMG (US)

+1 415-963-5426