iDTV in Belgium : Strategic opportunities, consumer’s behavior and business models

iDTVStrategic opportunities, consumer’s behavior and business models

Introduction Digitalization Marketing & Strategic point of view Business Models Conclusion

Saky Kourtidis23 years old

Currently studying Business Engineering 2nd Master years at ICHEC Management School of Brussels

Context

Context of this workMission at Cleverwoodas a Trainee Business Consultant

PHASE 1 Problematic definition, sector apprehension,

questions preparation & Strategic persons identification

PHASE 2 Planification and organisation of interviewsSelection of questions most adapted to expertizes

PHASE 3In depth analysis of feedbacks and

documentations: studies, blogs, social medias, …

PHASE 4White paper redaction and Friday session preparation


Methodology

Laurent Kinet Managing Partner Early Stage

Olivier Beaujean Managing Partner Cleverwood

Fabian Tilmant Senior Media Consultant and Partner Cleverwood

Robbie Cop Product Manager Interactive Marketing WDM Belgium

Geneviève de Bueger Responsable Unité Télévision CSA

Patrick Janssen Fondateur Ebuco Digital

David Geerts Project Leader Mediacenter

Thierry Briers Marketing Manager Belgacom TV

Mariana Cocirdan Expert en télécommunications AWT


thanks to…

Context

Problems

Objectives of the work

How ?

Digitalization

« Broadcast » has to be rethinked

Complexification, radical changes

Future is blur

iDTV as an opportunity ?


Problematic

Strategic, marketing, business models

analysis

West Europa


Digital conversion

Europa

More than 50% of the West Europa population have digital TV> Boosted by TNT success in France, Spain, Italy

and UK

(Source: International Key Fact, Group RTL)

France


Digital conversion

One of the best reach in Europa> More than 70% have digital TV> only 17% are still dependent of analogical

reception


Belgium


Digital conversion

Good evolution since 2006> 1.600.000 customers/4.735.000> Emulation between Telenet

and Belgacom TV


Effects of

digitalization and technology convergence on television industry


Digital conversion

> Audience fragmentation

> Media consumption evolution

> Competition intensification

> Dynamic market


Digital conversion

« A radical change is

occurring in the world of

Marketing and advertising »(Source: Michael.Seaton)


Audience fragmentation

More choices

More and more productsIn 20 years, innovation has increased by

1500%(Source: Willemarck



More Media Today

• hundreds of radio stations • thousands of magazine titles • more than 80 TV channels/home

And the Web…. • Millions of sites • Billions of pages

No real mass media anymore…(Source: Thierry Briers)



New medias

Example: YouTube

13 hours of

movies uploaded

per minute

412 years to watch all the movies on Internet

(Source: InSites Consulting)



Moreaccess



Customers are not listening anymore

(Source: Thierry Briers)



“L’abondance de l’information

engendre une perte d’attention”

> Comment capturer l’attention du

consommateur?

> Comment cibler les efforts publicitaires ?

> Comment fidéliser ?

Herbert Simon

(Source: Alain Ejzyn)

Implication

Interactivity

Time control

MobilityMedia

Consumption


Media Consumption Evolution

Need for more

implication,

interactivity

Implication

InteractivityTime control Mobility

Media Consumpti

on



Possibilitiy & Need to

control the time

Implication

Interactivity

Time control Mobility

Media Consump

tion



Need for mobility

Consumer Media Control

Content Access

Open

Limited

passiveinvolved



Media Consumption Matrix (Source: IBM Consulting services)


Dynamic Market

Television market is dynamic> Growing demand projections

Growth factors> Technology convergence> Competition intensification> European uniformization> Consumption evolution> IPTV developement

(Source: PWV, Global Entertainment and Media Outlook: 2009-2013 forecasts)


Dynamic Market

More and more channels & movies

in High Definition



Dynamic Market

Example: Belgacom

Between 70 & 90 channels in basic offer

& up to

40 extra channels available in option



Dynamic Market

…andTV is a media with a significant economic power

PersuasiveActivation power

Passionating

(Source: International Key Facts, Group RTL)

Internet, the main threat for TV


Competition Intensification

?

June 2010

Internet consumption

> 14,2 hours/week

TV consumption

> 11,5 hours/week


Competition Intensification

Microsoft projections ?(Source: Microsoft)

>


Business Model of traditional TV ?

How will advertising budget

evolveon TV



Example: UKAdvertising budget on Internet (23,5%) OVERTAKESAdvertising budget on TV (21,9%)

(source: the Guardian)



Example: in Belgium55% of advertisers will invest less on TV advertising37% of advertisers will invest more on Internet advertising (source: UBA)



…so… business models of traditional TV is threatened



• Media environment more and more fragmented

• TV is expensive compared to other media

• Need for more targeting• Need for measurability• Not adapted to consumption evolution

> Possibility to « skip » advertising

Why ?



“Why would you change your media choice ?”(Source: The House of Marketing)

BUZZWORDS !


What about iDTV ?

iDTVas a leverageof television ?Interactivity as an industrial response to digitalization and communication technology convergence ?


Interactive Digital Television

Interactivity Digital iDTV

SpecificTechniques

Digital diffusion of programs



iDTV advantages(Source: AWT)

• Possibility to have more programs• Interactivity: TV games, instant message, vocal

communication• Programs management• T-business• Interactive advertising• On-demand• Participative TV• …



iDTV reach

Wallonie Vlaanderen

(Source: Digimedia)



iDTV reach

(Source: Trends)

Main actors



thanks to iDTV reach….


Strategic point of view



ProducteursEditeurs - Chaînes

TVDistributeurs -

Opérateurs

Value Chain

MajorsContent producers

+

TV channels

Public television

Foreign public television

Private television

Fixe (cable + IPTV)

+ CABLO

TNT

Satellite



Producers

Opportunities

New revenues opportunitiesMore diffusionNew types of content• Ultra-Thematic production• Games•…

On-demandNew trendCost reduction

Threats

Competition intensificationMore and more channelsTelecomsContent specialization




Edition - Channels

Opportunities

New revenues opportunitiesKeep content aliveOn-demand

Brand image - NotorietyContact and communication with consumer

Rights management

Threats

Advertising revenues Emergence of TelecomsNew advertising models managed by Telecoms ?

Dependence on technology



Cablô & Telecoms

Opportunities

Control on technologyTechnology convergenceStrong actor

Commercial opportunitiesBusiness models development based on identification tools

Threats

New entrantsEuropean uniformizationGlobal actors such as Apple TV, Microsoft Media Center, …



Strategic Power of actors

•Poor entry barriers•Technology = important reach power•Financials power

•Belgium = cabled market•Regional monopoles•Can fusion and take market shares

•Determining rythme of development•Behaviour is changing and take importance• market = oligopole

•Good position on the market•Know how•Take actively part to market development•Quality is essential•Brand imange, Noteriety

•Is the basis of all•Indispensable•Can adapt easily to consumer needs

TELECOMS

CABLÔ

CONSUMERS

CHANNELS

PRODUCERS



3 Big TRENDS?

ProducteursEditeurs - Chaînes

TVDistributeurs -

Opérateurs



1. Importance of Telecoms

Take increasingly more importance in the value chainWho is controlling technology is a strong actor !

Example: Belgacom



2. Market consolidation

Convergence around 3 sectors: TV operators, Telecoms and content providersNatural merging phenomenon

Example: Mergers that have created Telenet and Voo



3. Market confusion

Strategy volatility of the different actorFuture = blow, difficult to predict


Marketing point of view

What about CONSUMER behaviour ?



Consumption evolution

Choice

ActivePassive

Control

Implication

Consumption in group Individual consumption

Fix Mobile

Access



Consumer POWER is on the raise

(Source: P. Willemarck)



WEB 2.0

Consumer Centric Approach

interactivity

Consumers are creative

Consumer POWERReversing market



...is it the same on TV ?

It is only the beginning …



Impact of TV interactivity

on consumer behaviour ?



Interactivity

Personalization> Autonomy in the research of contents and time control

User-generated content development

and participative TV

Intrusion><



Interactivity is changing consumer behaviour !

(e.g. web)


Looking for business models

« where is the money ? »


Value proposition of iDTV

iDTVValue for

consumersValue for

advertisers



Value for consumers

More control

PVR, “pause live TV” and “instant rewind”

1



Value for consumers

More choices, more personalization

PVR, On-demand

2

Richer experience



Value for consumers

3

Participative TV via red button



Value for consumers

Passive or active, the consumer can choose

4



Value for advertisers

Differentiation

1

Customizable TV Interfaces• personalized design • interactive• improved user experience • intuitive browsing

…




Value for advertisersEXAMPLES of Customizable TV interfaces




Measurability

2




Targeting

3




Creativity& Loyalty

4


Problem ?

Business Models is

blur !


Problem ?

Advertising investments on iDTV = POOR

Largest media usage(Source: the house of marketing)


Problem ?

why ?

Advertisers issues

Consumers issues


Problem ?

WHAT are theAdvertisers issues?


Problem ?

Traditional vision of Media

> Necessity to

change minds

> Need for an evangelization process


Problem ?

Roles of iDTV advertising stakeholders are unclear

Who is doing what in

the process ?

Who is responsible for

the project flow ?

Who will take the lead ?



Problem ?


> Agencies indicate a lack of information on who

contact to set up an iDTVcampaign

> Other stakeholers think agencies should consider

iDTV more



Problem ?



> Operators are perceived as the stakeholders with a lot of information and knowledge but their role and responsibilities

are not clearly defined

> Broadcasting stations indicate they are willing to take the lead


Problem ?

Impact of iDTV advertising in Marketing Mix is unclear

Advertisers need to know more precisely the

impact of the interactive advertising on

consumer behaviour

> Psychological relation between brand and viewers

> Impact on brand image> …



Problem ?

Lack of figures & cases

Advertisers wait for facts and figures, positive cases that would justify budgets investments….


“Wait and see approach”>


Problem ?

iDTV advertising costsare not transparent

> Perceived as very expensive compared to good performing and well known traditional Advertising

Some argue that Internet advertising targets the same type of audience in a cheaper way



Problem ?

iDTV advertising costsare not transparent

Lack of clarity about the

money flow between the different stakeholders



Problem ?

WHAT are theconsumer issues?


Problem ?

Users have not yet developed a red button reflex


“Yet a marginalnumber of people are interacting with TV”

>


Problem ?

Users are not informedenough about the

possibilities offered by

interactivity on TV


Problem ?

Difficult to find business models based on advertising and collect enough figures when users

have not adopted iDTV…


Suggestions

How to find ...


Suggestions

Set up a clear manualDefining responsibilities and roles of the stakeholders

Opt for a cross-industry dialogRoom for discussion and collective solution resulting in a common belief

Set up transparent pricing modelsClarifying money flow, having clear offerings


Suggestions

Stress uniqueness of iDTV advertisingPositioning as a separate advertising technique with different impact and specific advantages


>Broaden the ROI argumentsiDTV advertising needs more arguments than the sole promise of a consumer pressing a redbutton. It is also about being perceived as innovative, enhancing awareness, creative, offering entertainement, …


Suggestions

Continuous research

consumer impactWhat is the impact of good iDTV campaign ?

Tracking data are needed



Suggestions

ExampleExperiment with consumer incentive

> Different incentives as a return for the consumer’ interaction result in different impact.

> Experimenting with different types of incentives and sharing the results with other stakeholders

> Creating best practices database.



Suggestions

Red button campaign

Studies in Belgium and Europa : factors influencing « click behaviour »

1. High click rate if visual call to action is supported by an audio message

2. Annoncing the interactive spot before is more efficient

1. Clear call-to-action 2. Avoiding call-to-action targeting only

to reach viewer looking for price reduction

(Source: IAB Belgium, Marketing Book 2010)


Suggestions

Report & shares: construction of successfull cases

> A quick win and one of the key factors that influence general adoption of iDTV advertising

is sharing detailed results and concrete

outcome of successful interactive tv campaigns.



Suggestions

Interactive solutions adapted to television

>Television is different from Internet

>Taking into account all the parameters

defining the television consumption context


Suggestions

People look for

entertaining

information

on Television

(Source: Prof. Dr. De Groof, Sociability Heuristic for interactive TV))

People look for

formal

information

on Internet

><


Suggestions

People view

Televisionin group


People browse

individually

on Internet><


Suggestions

People look for simplicityon TV

=> importance of ergonomy

« Le consommateur ne consomme pas un produit mais une expérience »

(Source: Prof. Dr. De Groof, Sociability Heuristic for interactive TV)


Suggestions

Viewers use a

Remote controlon TV

importance of

optimizing navigationonly with « arrows » and « ok » button.


><Viewers use a

keyboardson computer


Suggestions

Minimising Intrusion

& be discrete


Suggestions

Choice to interact


Opportunities

What are the

opportunitiesand the future business models

for iDTV


Opportunities

New revenues from Content

New revenues from Advertising


Opportunities


More and more consumers are familiarizing with paying on-demand content

Boosted by general media consumption evolution & new generation of Digital Natives

VoD


Opportunities


Example: Telenet (2008)

20 millions of

paying downloads (+ 81%)

Average of 3,5/month/user

VoD


Opportunities


4 types of business models

• Temporary download: location model• Definitive download• Fee model• Free download (advertising model)

VoD


Opportunities


In Belgium

Location model = dominantMain actors: Telenet & Belgacom

« Success will depend on volumes development, prices evolution & sharing between sells on computers and on iDTV » (source: Digimedia)

VoD


Opportunities


What is interactive advertising on digital TV?


Opportunities


Use Online & interactive digital TV platforms tocommunicate with viewers and promote brands,products, services, …(Source: Thierry Briers)


Opportunities


Interactive advertising on iDTV also creates a new bridge between traditional TV media and online opportunities contributing to:

• Increase online campaign activation• E.g. Send a reminder in my inbox

• Offer more content information• E.g. Participate to a contest and win

• Generate leads• E.g. Call me for an appointment to try this car

• Prolonge viewing experience with the brand• E.g. See the long version of a spot



Opportunities


1. Ad VoD2. DAL or Dedeciated Advertiser’s Location3. Interactive visibility – Call-2-action

• iADS or interactive Advertising spots• Interactive programs• Bradcaster’s portals

4. Sponsored Programs


Opportunities

Ad VoDTraditionnal (or interactive) video ad before (channel) VoDIncrusted in the video or Using Ad Servers



Opportunities

What about

monetization …

Traditionnaladvertising

Gross Rating

Point


Opportunities

CPM

Cost per mille

CPC

Cost per click

CPL

Cost per leads

CPA

Cost per acquisitions

What about

monetization …

…use web practices to monetize interactiveadvertising ?


Opportunities

DAL’sDedicated Advertiser’s Location


Opportunities

iADSInteractive Advertising Spots

Provide access and call-to-action to Advertiser’s site


Opportunities

iADSInteractive Advertising Spots

Provide access and call-to-action to Advertiser’s site

Gross Rating Point

Cost per Click (CPC)Cost per acquisition (CPA)


Opportunities

Interactive programsProvide access and call-to-action to Advertiser’s site

Participative TV & Extended TVvoting, playing along with


Opportunities

Broadcaster’sPortals on iDTVProvide access and call-to-action to Advertiser’s site


Opportunities

Sponsored programs


Opportunities

… and for the futureEnhanced product placement


… to summarize

DigitalizationTechnology convergence

Media consumption evolution

TV industry is changing

OPPORTUNITIES

but…PROBLEM => advertisers = not confident

suggestions

New revenues Strategic positionning iDTV value

ExperimentRoles descriptionTV context adapation…

Advertising

On-demand

Business modelexperimentMONETIZATION


… to conclude

« The interval between the decay of the old and the establishment of the new,

constitutes a period of transition, which must always necessarly be one of uncertainty, confusion, error, and wild

a fierce fanaticism »

John C. Calhoun (1850)


… thank you for your attention…

What about

YOUR suggestions

?

Contact us

Saky Kourtidis

[email protected]

+32 496 15 18 53

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