The Tipping Point in Media

December 29, 2021

The Tipping Point in Media

December 29, 2021
25% of viewing behaviour in the Netherlands is on demand according to the latest analyses by SKO. Linear television will lose importance over time.

In the early part of the millennium, Canadian author Malcolm Gladwell wrote an interesting book about the Tipping Point. He argued how major social changes were preceded by small steps, which suddenly gain momentum. An interesting analytical thought that of course also applies to the media world.

Revolutionary changes have occurred many times in media. A good example is the decline of the large networks in the United States: these money-making machines were suddenly surpassed in the 90s by the many small cable channels. This development is beautifully documented in the classic book Three Blind Mice. The cable channels started small, but in this millennium grew beyond the big channels. A true turning point!

Another good example is the development of the advertising market in the recent decade. Television had already surpassed print at the beginning of this century, but in turn was gradually overtaken by digital. Google and Facebook grew fast and quickly caught up with television. The turning point was in the middle of the previous decade when digital overtook linear television. It caused a huge shift in the advertising landscape, where the digital players with their fantastic targeting capabilities became the preferred advertising medium.

The question is what the current situation is regarding consumer viewing behavior. It is clear that young people hardly watch linear television anymore. Many do not have a cable or satellite connection and turn to the internet for all video consumption. Video-on-demand and all sorts of other video snacks, especially on YouTube, are preferred. Instagram and Snapchat are in the spotlight. In addition, many 'elderly' people also see the benefits of VOD. Delayed viewing takes off, but with a little good will, it can still be classified as linear television. However, SVOD and AVOD are also increasingly preferred by this target group. Worldwide, the number of SVOD subscriptions will grow from 1.2 billion to 1.6 billion in the next 3 years. Linear television is also going well: the public broadcasters achieved good viewing results in the COVID disaster year 2020, and commercial broadcasters have one of their best years in 2021.

However, as mentioned above, it is undeniable that on demand is the future. 25% of viewing behaviour in the Netherlands is on demand according to the latest analyses by SKO. Linear television will lose importance over time. It is not for nothing that the RTL group came up with a new meaning for TV a number of years ago: RTL no longer sees TV as Television, but as Total Video. Interesting point remains when the Tipping Point will take place: when will video on demand become more important than linear television? Step by step VOD is gaining ground and it is only a question of time when it will overtake linear television. Many at the broadcasters think that this is still at some distance in the future. But for them the message could be tough: the Tipping Pont is already behind us!


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Transformation

Change in the media sector occurs at the speed of light. Just over ten years ago, Netflix was a relatively unknown phenomenon and began its first major original production, House of Cards. This month, Dutch Telecom Paper came with remarkable news: in the Netherlands, streaming has surpassed broadcast in terms of viewing time. It's not different in other countries in Northwestern Europe, not to mention the USA. A true paradigm shift!

It is clear that broadcasters, both public and commercial, need to change fundamentally. A paradigm shift, like the one mentioned above, requires profound changes in business operations. After all, these organizations all face the task of changing from traditional broadcasters into digital media organizations. Top-notch change management is required, and the question is whether they have the courage to take major steps. Some broadcasters believe they can keep their heads above water with a few minor adjustments. Often, they talk about transformation, but in reality, there is little of it. Simply tweaking things isn't enough; a fundamental change of course is needed. Thinking digital-first becomes essential, which has a massive impact on business operations.

Ask TV4 in Sweden and TV2 in Norway, and in their wake SVT and NRK. In Scandinavia, Netflix and Amazon Prime had an early impact. The leadership of these broadcasters quickly realized that these new competitors would make life difficult for them. As is typical in Scandinavia, swift interventions were undertaken, and strategies were overhauled. It soon became clear that this was not going smoothly: two years after formulating a new strategy (with a strong focus on streaming) then-CEO of TV4, Casten Almqvist, concluded that the TV4 ship had not yet changed course. What became apparent? The existing management had no incentive to change and was blocking the necessary transformation. Taking employees along on that journey and, if necessary, replacing them is the core of a successful transformation.

In Britain this now is understood. The BBC was early with its iPlayer. ITV has been fully committed to ITVX for the past two years and is making significant strides. Lastly, Channel 4 is moving full steam ahead, with more than thirty percent of its revenue coming from digital. RTL Nederland is the uncrowned king in the Netherlands and has managed to turn Videoland from a problem child into a promising digital platform. In Germany, broadcasters are also beginning to undergo a profound transition, with commercial channels operating a lot faster than their more conservative public counterparts.

Netflix founder Reed Hastings once called Sven Sauvé, CEO of RTL Nederland, a dinosaur when he refused a licensing deal. But it wouldn't surprise me if a large number of European broadcasters will manage to survive in these turbulent times. As long as they transform!

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Podcast met Jonatan de Boer, Tess Scholten en Britt Messing over Gen Z

Jonatan bracht in 2013 het Multi Channel Network Mediakraft naar de Benelux en was daarmee de eerste die hier op grote schaal een business model introduceerde voor social media influencers. Vandaag de dag geeft hij advies aan allerlei publieke figuren en organisaties over hun (social) media strategie, was hij recent interim COO bij Buma/Stemra en vervult hij nu de rol van interim Director Broadcasting bij NEP.

Tess en Britt startten zo’n 3,5 jaar geleden For You Agency. Dit begon met het managen van TikTok-creators maar is inmiddels uitgegroeid tot een allround social media marketing agency dat merken helpt om Gen Z te begrijpen, te bereiken en zich daarmee te verbinden. For You Agency doet dit door social media accounts te beheren, creators te managen en allerlei campagnes te bedenken en te produceren.

- Waarom groeit TikTok van alle social media platforms het snelst, voornamelijk in de jongste doelgroepen?

- Wat is het grote verschil tussen het media maken met en voor Gen Z, ten opzichte van bijvoorbeeld Millennials?

- En welke (media)bedrijven begrijpen dit spel? Welke nog niet? En waar zit dat in?

De antwoorden hoor je in de 3Rivers: Joost Mag Het Weten podcast

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Moonshots

In the 1960s, the United States fell behind in the space race with the Soviet Union. Yuri Gagarin was the first human to break through the Earth's atmosphere, a monumental achievement. Unable to accept this, the United States - through President John F. Kennedy - established the goal of landing the first person on the moon within a timespan of 10 years. The rest is history and the wording of such a distant, grand objective became known as the 'moonshot goal.'

Stating such a goal is even more important when things are a bit difficult. That was the case with Kennedy's example and is the case for many public broadcasters in Europe. The sentiment in politics is generally unfavorable, budget cuts are commonplace, and digital competition is capturing viewership share. Young people are increasingly unable to find public broadcasters, and consequently a significant strategic crisis has emerged. This is the situation in Scandinavia, Germany, the United Kingdom, and in our own country. Let alone the situation in Poland and Spain.

So, there is a crisis in public broadcasting in Europe, precisely at a time when polarization is increasing, and misinformation is rampant. Especially during such times, it is crucial to prioritize neutral reporting and foster a sense of community. Excellent leadership is invaluable in such circumstances. And it's not the first time that the BBC has set an example during such times. Tim Davie, the excellent Director-General of the BBC, spoke at a Royal Television Society event last month. His argument centered around the fact that the future of the United Kingdom is at risk in democratic, social and cultural terms. He saw three roles for the BBC in countering this threat. Pursuing truth with no agenda by reporting fearlessly and fairly. Backing the best British storytelling by investing in homegrown talent and creativity. Lastly, bringing people together by connecting everyone to unmissable content.

That's what you call a moonshot goal! Because what follows from this? The BBC must serve its 'customers' from every platform, at all times. BBC Three will be closed as young people will find BBC content online, via iPlayer. New services are being developed, such as BBC Verify: the future major fact-checker. Interventions will be made in the BBC organization to make all this possible. And finally, the BBC will also explore whether a new, better funding system than the archaic licensing fee can be developed.

Isn't it wonderful? In the United Kingdom, significant changes are being developed from a strategic perspective. In the Netherlands, we only see politically motivated cost-cutting measures within the public broadcaster, neglecting the pursuit of deliberate strategic advancement in the media sector. I rest my case...

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