What you need to know 

• Audience shifts towards streaming has left traditional TV lagging, creating a market of "two halves" per Ampere Analysis' Guy Bisson. 
• Changes in technology have turned traditional entertainment production and distribution ecosystems on their heads, dismantling time-based and geographical constraints, he told last months Future of TV Advertising conference. 
• But rather than "get their knickers in a twist" about global platforms eating away their revenues, Bisson says local media owners should reposition to "leverage the growth" of new players for their own benefit.
• That requires the industry to completely rethink the way it has traditionally looked at the market and think beyond linear distribution. Local broadcasters, per Bisson, need to "combine" or "collaborate" with and "copy" from new media, if they want to compete. 
• YouTube is an easy way in - via a collaborative approach to distribution, local broadcasters can drive significant gains in incremental audience - the UK's ITV has seen a 23 per cent lift by distributing on the platform. Bisson projects even greater results for local broadcasters Nine and SBS. 
• But, he's yet to solve for how media owners would differentiate the value of advertising between linear, streaming and YouTube. "You cannot suck the value out of the bottom of the market by becoming fully reliant on a platform that has a lower CPM," he caveats. 

As global platforms eat away at local media budgets, Australian broadcasters have found themselves at a crossroads: fight off the encroachers, or join them. And Ampere Analysis’ Guy Bisson reckons they’ve got a better chance at the latter.

Speaking at the Future of TV Advertising last month, the media analyst urged the Australian TV industry to flip the narrative on the global media incursion - i.e. to “stop getting your knickers in a twist about YouTube eating your lunch” and reposition the platform as a distributor.

But getting to that point, he said, requires the sector to entirely rethink the way it views the entertainment ecosystem – and that involves acknowledging that things aren’t looking so good for the legacy players.

Per Ampere Analysis’ data, online video (US$1.19) now drives more market value per TV household per day than broadcast TV (US$1.17), and streaming is catching up (US$0.86).

Globally, there’s evolved a “market of two halves” with “old world media” revenues projected to continue shrinking over the next five years as “new world media” grows.

It’s a direct “reflection of the fundamental shift in the way that the audience is consuming entertainment”, said Bisson, and one that’s only been exacerbated by what he called the “broadcastifcation of streaming” - the entry of streamers into the traditionally broadcast TV-dominated domains of crime, reality and sports content.

“Three key areas that were really the bread and butter of broadcast TV are now absolutely targeted by the streamers, and that brings them into more direct competition,” he said.

The upshot? Per Bisson: “We need to rethink everything – the way that we thought about entertainment; the way that we extracted money from it. It is just no longer fit for purpose.”

Streaming convergence:

So what’s the reframe? Bisson said conferencegoers needed to be across two forces that were at play, the first being the convergence of all media business models into a single primary means of distribution: streaming.

At the same time, the biological concept of convergent evolution – whereby organisms subjected to the same environmental pressures will adapt in the same way – can be used to describe how audience pressures (a shift towards streaming) are forcing similar adaptions across the media value chain.

The trend sits at odds with how the industry has “always extracted money from entertainment” per Bisson.

That traditional model saw content production and delivery (or distribution) separated into two distinct markets (though major media conglomerates would typically aim to control assets across both).

Traditional delivery pathways -  including theatrical (cinema), transactional (where consumers purchase or rent content), subscription, free-to-air and licensing -  are subject to geographical and time-based constraints and the same were usually imposed on content production. For example, Nine commissions and produces content primarily for Australian audiences.

“We used geographic segmentation and windowing, so moving content through different windows of exploitation, each one extracting more money from that piece of content. And we did that in a very linear fashion,” explained Bisson.

But, the entrance of streaming has dismantled the geographical and time-based structures, meaning the old model “doesn’t work anymore”.

“Streaming, by its nature, is global, and windows have compressed into increasingly a single segment," said Bisson. 

“[Theatrical is] still out on its own, but everything else is converged into streaming and of course, increasingly, that is on a single screen. And that is why YouTube is now on your television and is increasingly competitive and increasingly butting heads with more traditional forms of entertainment.”

Combine, collaborate, copy

While he paints a rather gloomy picture for legacy media, Bisson is optimistic there’s an opportunity for local media to reposition to “leverage the growth” of the new players.

With the market converged on streaming, he said we’re left with four “simple ecosystems”: global production and distribution (streamers), regional production and regional distribution (local media), regional distribution, and global distribution (YouTube and social media).

Media companies, thus, need to focus on “honing their fitness” within their own ecosystem, but should “leverage opportunity and growth from other ecosystems”.

“The future of collaboration, of M&A activity and I’ll call it inspiration… is diagonal across those four ecosystems, not in a vertical way, not in a horizontal way, as we traditionally think of media, but across these different forms,” said Bisson.

It’s already happening in market, with Dazn’s acquisition of Foxtel an obvious local M&A example, and Prime Video’s channel strategy ‘inspired’ by the traditional cable model. And British free-to-air broadcaster ITV demonstrated the collaborative approach when it recently began posting full-length TV episodes on YouTube.

YouTube as a distributor

YouTube might present the easiest win for local broadcasters – distributing content on the platform takes a similar shape to the revenue-share underpinnings of traditional licensing deals.

Bisson used ITV as a case study. Per the chart below, the broadcaster drove greater incremental audience lift on YouTube than it did on its streaming platform ITVx.

“YouTube would add 23 per cent additional reach of people who do not watch the linear channels and do not watch it VX. Of course, they wouldn't necessarily watch the content, but it gives you that reach that is not otherwise addressed, for a combined reach of 83 per cent.”

Bisson argued that the YouTube gains could be even bigger for Australian broadcasters.

Using the same numbers, he projected circa 36 per cent additional reach for Nine, and 50 per cent for hybrid public broadcaster SBS.

Per Bisson, the video platform isn’t just good for short form content but is also performing solidly on full-length content for some broadcasters. 

Here, the UK’s Channel 4 is proving YouTube’s potential to serve a “dual role” – 31 per cent of the broadcaster’s videos have a duration of more than 30 minutes. While 5 minutes seems to be the sweet spot for most broadcasters, Channel 4 sees a second bump in performance for videos just below the 50-minute mark. Per Ampere Analysis, it accounts for high views on full episode uploads of unscripted shows like Gogglebox, 24 Hours in Police Custody and Love Cheats.

It’s all very promising for local broadcasters, but Bisson admitted there’s still no clear answer as to how advertising is valued across the different distribution channels, being linear, streaming and platforms like YouTube.  

Whether it’s a matter of “advertising around the content, rather than round the count on the eyeballs” remains “a big unanswered question”, he said.

“Because you cannot suck the value out of the bottom of the market by becoming fully reliant on a platform that has a lower CPM.”