If content is king, then telecom operators are queen. Or maybe the audience is queen.
To a panel of broadcast and telecom executives yesterday at CommunicAsia, the analogy seemed funny enough to be worth re-spinning so many ways.
Yet, in a world where they themselves are no longer the king of the hill, each of them will be smart to realise the future will be shaped by smaller, nimbler and more innovative over-the-top (OTT) players such as Netflix.
Two years ago, I wrote that telcos were at a crossroads, having to provide better quality networks while seeing profits squeezed by Net-based players that had become more attractive to users.
Today, traditional broadcasters and telcos are still facing the same issues and haven’t got rid of some really old-school thinking. From the rollout of 4K broadcasts to the business of delivering content, many are still stuck in yesterday’s world.
No doubt, content is still king because that’s what people consume on ever faster networks. And good content is very much desired.
The problem is, there are not just many ways to distribute content but also new sources of content today.
If broadcasters and telcos were worried about Netflix the cheap online distributor of content in the past, they should worry about Netflix the content producer today.
If you still haven’t watched House of Cards, please do. Created for Netflix, the drama series is not an one-off experimental project for a Hollywood A-lister like Kevin Spacey.
The actor genuinely believes the old way of creating and distributing content is not what users want. He wants to shortcut the process and give control back to users.
The technology and business case have always been there. Now, great, original content is also coming through to that US$8.99-a-month Netflix plan that lets you watch the entire season of House of Cards at one go.
And in ultra-sharp 4K resolution too. While broadcasters at CommunicAsia and sister show BroadcastAsia discuss about delivering 4K over cable, satellite or some specialised Internet-based system, you can already watch House of Cards in 4K, even in Singapore.
Last week, upstart fibre broadband provider ViewQwest showed off 4K streaming over its network. How did it make its network 4K-ready? Just ease up on that favourite telco trick – traffic shaping – that throttles a user’s available bandwidth once he is detected to be streaming a movie.
So today, if you sign up for a ViewQwest broadband service, it automatically hooks up to the United States to give access to services such as Netflix. If your TV supports 4K, your stream will be delivered in 4K. Simple as that.
Where does that put local broadcasters and telcos such as MediaCorp, StarHub and SingTel? Nowhere. They are not part of the value chain from production to delivery of the new content (unless you count SingTel’s stake in the nationwide broadband network).
What should they do? Start ramping up on 4K content and delivery earlier. Years after HD TV sets became common and now with 4K turning up in homes, MediaCorp somehow still has only HD5 as a free-to-air HD channel. Other countries such as Japan are already going onto 4K broadcasts.
Telcos such as SingTel and StarHub too are slow, understandably, because they have invested so much over the years in traditional broadcast equipment. Yes, they have started to offer more content on-demand and on the go, but these are often not even in HD, never mind 4K.
Going early onto 4K does not mean pumping money into new technology for the sake of it. The opposite is true – the technology is already here in the form of Singapore’s speedy fibre broadband network.
This is a readily available network to deliver the next generation of content, and broadcasters just have to tap on it instead of worrying about legacy broadcast systems. It’s like you have a new PC ready to go but you’re still logging in with a five-year-old machine because you paid too much for it in the past.
Of course, lousy content is still lousy content, whether it is in 4K or black-and-white.
Conversely, good content is something that people are willing to pay for. I say this with some qualification, because I’m not paying anything to SingTel to watch this month’s World Cup matches.
Using the UnoTelly unlocking service, I’m connecting to several free-to-air online channels from around the world to view the matches live. I can already hear content owners screaming, saying the content is not meant for audiences outside some of these countries and I must be somehow breaking the law.
The only law I’m sure of breaking is some sacred decree that says consumers must always line the pockets of content owners and partners, no matter how they carve up the world into neat parcels to maximise profit.
That kind of divide-and-conquer strategy once held everything in place. Content owners made the content then sold it to distributors who took their time to show it to various audiences – in cinemas, on video, then on TV – in various windows of opportunity to boost profit.
That just doesn’t work any more. This type of delivery doesn’t offer the instant gratification that today’s consumption devices such as tablets and phones and high-speed networks give to users.
And as users understand how the market works, the less they will empathise with their local telcos and broadcasters’ roles in this distribution chain.
The recent unhappiness towards SingTel’s World Cup prices shows this. Probably the most expensive place to watch the beautiful game on TV this year, Singapore has enough consumers willing to hand over the more than S$100 to watch the matches.
Yet, so many are turning to free streaming services, going through the hassle of setting up their PCs or tablets, to watch without paying. It’s not that they can’t pay – they just do not believe in feeding an industry so fat on profit and skimpy on innovation.
Taking all the consumer feedback in recent years, it’s high time that content owners, broadcasters and telcos stopped lamenting the bygone days of fat margins and little competition. They can start by unlocking the content, delivering it as best as they can, in whatever format users want.
Content is king, yes. But as one panellist rightly put it yesterday, users are the king of kings because that’s where the money comes from. The industry needs to remember that again.