In the words of the great Ernest Hemingway, things can happen “gradually, then suddenly”. This musing seemed particularly poignant recently when Sony announced the discontinuation of Betamax, once the future of entertainment, but for many of us has long-since been consigned to the scrap heap of technologies we joke about at family gatherings.
While the discontinuation of Betamax is something to joke about today, it’s also a timely reminder of the tremendous and never-before-seen disruption that’s currently taking place in the media industry and attendant change this is also creating for telecoms networks.
After video cassettes came DVD. In 2003, DVD rentals finally outnumbered VHS rentals for the first time in the USA, having first hit the market in 1997. You could be forgiven for thinking that was the start of a new technological dynasty. Shortly over a decade later and the DVD is the new punch line of millennial jokes about prehistorical technology.
Now we face a new apocalypse, one which many swore would never come. The pay-TV industry, which has become one of the world’s strongest, most sustainable businesses, is under fire. For years, even as YouTube superstars raked in millions by hosting weekly videos, the television industry held steady, weathering the move to on-demand and online streaming far better than the DVD.
Last year, PewDiePie – a Swedish YouTuber who records himself rambunctiously playing video games – brought in $7.4 million. Meanwhile, 9-year old EvanTubeHD brought in $1.3 million by reviewing toys. In the land of television, ad spending is decreasing on a global scale, replaced largely by spending on “digital” – short for the desktop and mobile internet.
The latest worldwide report from Strategy Analytics found that television ad spend is down nearly a percentage point from 2014, while digital grows some 3.2%. Even as consumers clamoured for à la carte programming, the mega bundles have remained. Despite plenty of chatter, there was little to no business incentive to embrace the change that now seems inevitable.
Media stocks have been battered as of late, hot on the heels of news that many are ditching their pay-TV packages. To boot, so-called “cord nevers” have shown little interest in forking out hundreds of dollars for a static lineup of channels.
We’re witnessing large-scale disruption across entertainment, whereby future stars will be made on platforms that are distributed via the internet rather than a pay-TV package, and entertainment consumption will take place on virtual reality (VR) headsets and smartphone panels rather than a traditional TV.
So what does all this mean for networks?
As the shift occurs, our data networks will be responsible for sustaining the added load. In the years ahead, we’ll rely more on an internet connection for more than access to the web – we'll lean on it for access to TV. We’ve already seen the early impact on data consumption when looking specifically at Netflix viewing. As TV is increasingly distributed via the same medium, the importance of a reliable network stands to grow.
Indeed, we’re at the tipping point of traditional television’s decline. As 4K content becomes mainstream and traditional TV “channels” become a relic of the past, the world will eventually consume and create TV-style entertainment over the internet.
All of this puts tremendous demands on networks. There must be a focus on cultivating networks that are capable of delivering and accelerating television, web content, videos, and live streams to audiences from any distribution point from across the globe to individual consumers wherever they are. The network must also be flexible enough to deliver a high quality viewing experience across any platform.
Above all, they must not only be robust enough to handle critical voice and data, but also strong enough to sustain the influx of traffic created by this new wave of entertainment viewing.
So, while Betamax systems will become a relic of the past as of March 2016 – ask yourself one question. Did you ever think the old video player you had to remove your living room window to install would outlive the television you watched it on? In some ways, it very nearly did.
