Competitive Struggles Among Television Platforms

Since the emergence of cable and satellite television services there has been struggles among platforms to increase their attractiveness to audiences and to draw market share from terrestrial television in developed nations. These struggles have had affected content producers, broadcasters, platform operators and regulators attempting to fashion socially optimal broadcasting systems.

In the first competitive struggles between terrestrial broadcasters and cable operators, broadcasters controlled the highest quality contemporary programming and cable operators primarily competed by offering a wider variety of channels and providing premium movie channels. In many locations broadcasters actively sought regulatory policies to keep their channels from appearing on cable in order to reduce its attractiveness as a competitor.

As cable matured and satellite services emerged, the nature of the struggle shifted as greater subscription and advertising revenues allowed cable networks to offer higher quality contemporary programming. In this competitive phase, terrestrial, cable and satellite operators began struggling for exclusivity of content that would drive audiences to the platforms. Gaining exclusive rights to first broadcast runs of motion pictures, sporting, musical and other events, and high quality original programs became primary goals. In this environment, producers of content and owners of event rights sought to maximize their returns across the platforms. while platform operators sought to maximize their returns by gaining market power through exclusivity. This led to negotiations based not only on transmission rights but exclusivity rights as well, which dramatically pushed up costs of some content—especially sports rights.

As cable garnered a larger audience share, broadcasters that had previously been opposed to carriage of terrestrial signals on cable because asking regulators for ‘must carry’ rules to require cable operators to carry terrestrial channels so they could have additional access to audiences or audiences in places their terrestrial signals had not previously reached. This was especially useful for advertising supported channels, both public service and commercial.

In recent years, the widespread success of cable and satellite platforms and the shift of wealth from terrestrial to other platforms has led broadcasters to demand payments from cable and satellite platform operators for carrying their channels. The newer platforms are resistent and in some nations the struggle over payments remains on-going.

The digitalisation of terrestrial, cable, satellite, and broadband platforms has now created multiple opportunities of distribution of audiovisual materials and is creating a new environment in which additional competitive struggles are taking place among platform operators. At stake are the significant potential gains from advanced paid video-on-demand services and IPTV. Platform operators—DTT, cable, satellite, and telecommunications firms that offer broadband services—are now struggling to ensure that they are not competitively disadvantaged compared to other operators. Operators that control or have high market power over platforms, especially broadband links and systems needed for advanced services or interactive DTT services, will have significant advantages in the next generation of services. Consequently, there is a great deal of effort on the part of major platform operators to acquire access to all platforms and services through ownership, alliances and joint ventures and in many cases there are outright efforts to control those platforms and servcies.

The trajectory and outcome of this competitive struggle is particularly important because it will have significant impact on the range of services and costs for services available to the public. These developments also have significant importance for the relationship between content producers and platform operators because the means of compensation is likely to evolve from current transmission rights and exclusivity rights payments to one involving revenue and profit sharing. This has significant implications to the funding and ways that contemporary terrestrial television programming is created and role of terrestrial broadcasters in the new environment.


Gonzalo MartĂ­n said...

In my view, broadcasters have a great competitive advantage over cable or IPTV platforms: at least in Europe, they cover the whole population. That does not happen for cable or IPTV. Satelite does cover the whole territory, but it only gets a not so big share of households.

Of course, pay services tend to attract the most affluent population which is at the same time the prefered target for advertisers. But as the availability of free to air options grows because of DTT, and because of those so many options, broadcasters that own more than one licence are implementing pay-tv services thanks to DTT technology. Therefore, they are going to compete for premium movies and sports rights as it is already happening.

Giving access to the whole population for some of the most valued traditional cable services in a new and convenient pricing (you don't need to pay for the traditional "basic package" of cable operators, just the soccer channel you really want to see), I think it would give broadcasters a big say in who can get exclusivity. Cable operators are competing offering new technical developments: HD, 3D and so on.

On the other hand, in countries like Italy and Spain, boundaries between cable and broadcasting are blurring from a competitve viewpoint. Cable/SAT and free to air licences are owned by the same corporations which are buying rights for both windows and implementing those rights in order to get the greatest income offering some content free, some in a subscription model and some in a pay per view scheme. The same corporations controlling all the business models available and optimizing their incomes.

Armil@cable tv said...

This is true and I totally agree with this" This led to negotiations based not only on transmission rights but exclusivity rights as well, which dramatically pushed up costs of some content—especially sports rights."

Some of them never see the importance of some aspect that would be affected.