Broadcasters should start to seek alternatives to their traditional advertising-based revenue models in order to combat the ad-skipping facility offered by personal video recorders (PVRs) and, more significantly, the rise of home media networks (HMN).
A report from consulting firm
Booz Allen Hamilton warns that home media networks (the convergence of digital media into a single, networked, interactive home entertainment portal) will exert even greater pressure on broadcasters’ revenues that has been anticipated from digital cable channels and PVRs.
It says that as consumers add to their choices with on-demand entertainment and personal digital content, audiences for mass entertainment will fragment ever further. Consequently, media that depend on advertiser support will find their revenue and profitability under pressure.
“While television and advertising executives debate the impact of TiVo and other PVRs, they have barely noticed the HMN phenomenon creeping up and rearing to bite them,” said Mike Katz, senior vice president at Booz Allen. “The rise of HMNs certainly undermines the traditional television advertising model, but it also creates new marketing opportunities.”
The report goes on to say that the ability of media owners to aggregate an audience, such as during a prime-time TV programme, will be severely weakened. However, it claims that content owners and cable operators will be able to create new revenue opportunities through HMN users. As an example, the report says that they could consider providing specific channels with a hybrid of on-demand and subscription pricing for ‘narrowcasting’.
“Entertainment companies will have much more detailed information about individual consumer preferences. They can use this information for micro-marketing their content and offer advertisers unprecedented targeting,” said Randy Lake, a senior associate at Booz Allen.
