Every December, tech pundits set aside a few hours to predict how the industry might evolve in the coming year. And every year, these predictions hit the wires before we see what happens at the Consumer Electronics Show — the largest consumer electronics convention in the world.
For our media-tech predictions, we decided to wait and see what CES had in store for us. Now that the event is wrapping up, here’s what we think will happen in the media-tech world for the duration of 2015.
1) Tech firms buying TV networks
We’re already hearing rumors that Yahoo was (is?) interested in purchasing prominent TV network company Scripps Network, operator of cable channels HDTV, Food Network, and Travel Channel. Whether that’s financially feasible for Yahoo doesn’t really matter. What matters is that Yahoo understands what a slate of traditional, episodic television content could do for the company’s advertising plans — which currently involve enticing marketers/advertisers into one central hub for all their promotional spending (and tracking) needs.
Rival company AOL is also in this boat, and both AOL and Yahoo are now producing television-level original series. This kind of content is what creates the very valuable audiences that advertisers are willing to pay a premium price to target.
In 2015, it’s likely that a major tech firm will buy a large stake in an existing media company for ad-tech purposes. Most of these top TV network companies still have large valuations (Scripps’ market cap is about $10 billion, for instance), and there’s not much point in buying a lesser-known, financially struggling cable channel or group of channels. Tech firms like AOL, Yahoo, and Google want the valuable TV viewing audience — not the headache of figuring out how to make an audience return.
2) Programmatic video ads
Advertisers love programmatic ad buying (aka the process of placing ads via software that guarantees optimum placement) because it allows them to get the biggest impact for their money. Right now this has primarily been an area where text and display ads have dominated, but research indicates that video is a far better medium for delivering ad content. As more people move from linear TV to streaming video, expect this category to grow quickly.
3) Way more connected cars
While the age of AM/FM radio isn’t over, it doesn’t take a rocket scientist to know that the medium won’t last forever. Tech leaders like Apple and Google have responded with new platforms that attempt to merge their vibrant mobile app ecosystems with a car’s head unit (aka the thing that plays the “radio”).
Automakers are also building new platforms to support this upward trend, and they’re working with Apple/Google to integrate their respective Carplay and Android Auto platforms into their systems. Actually, this all happened in 2014, but mobile app developers are just recently starting to adapt to this connected car landscape. By the end of 2015, you’ll probably know at least one person with a connected car and several who want to buy a connected car at some point. I also expect at least one company to launch a version of Google’s Chromecast stick for car head units this year, thus making any car “connected.”
4) Radio industry, revitalized
People in the U.S. seem to universally agree that FM radio is awful for music listening when compared to the various digital options available today. But somehow, the radio industry has managed keep annual ad spending at a respectable $44.5 billion annually. Thanks to the increased number of connected vehicles and continued growth of mobile listening, this is the year digital radio services start eating up those terrestrial ad dollars. And with that will come lots of opportunities to make radio relevant again. We’re already starting to see this happen with podcasts slowly becoming viable businesses.
5) Optimized music licensing
Let me tell you one thing that absolutely isn’t going to change in 2015: Popular music artists with hit singles will still be criminally underpaid, and everyone will still be questioning where they stand on streaming music. If the music industry expects to compensate for lower revenue coming in due to the decline in digital download sales, ripping song libraries from popular services like Spotify isn’t going to help matters much. No, to do that the music industry will need new sources of revenue, which it can do through new, enterprise-esque licensing strategies. At some point, the startup world will produce such a strategy that allows record labels to move its licensing efforts beyond TV commercials, big budget movies, and streaming music services. There’s lots of untapped potential for music licensing deals for retail stores (both physical and web), mobile gaming, and more.
6) Facebook’s tightening grip on publishers
It’s a bit scary how important Facebook is to digital publishers‘ overall business health, specifically the referral traffic Facebook sends to these news publications. This is because most news sites still rely on advertising to pay the bills, and advertising revenue is (usually) proportionate to how many people visit their websites. But while Facebook produces lots of referral traffic, sometimes it doesn’t — leading many publishers to pay Facebook to artificially promote the article links shared on the site. Facebook was well aware of this in 2014, having observed news organizations scrambling when referral traffic declined due to Facebook tweaking its Newsfeed algorithm. Now Facebook has a “best practices for media” resource site and a slew of new publisher-focused tools. What we can expect from the giant social network in 2015 is a refined strategy for generating revenue from news publications in a way that doesn’t just include “pay to promote.” It’s still too soon to see how this will unfold, but a few guesses would be: Facebook taking on Medium/WordPress/Tumblr as a content management system, a premium analytics/audience measurement service, and/or a new advertising agreement. Whatever the strategy is, Facebook will make sure it’s invaluable to the business health of news publications.
7) The ebook subscription fight will intensify
In 2014, we saw ebooks take the “all you can eat” approach by offering voracious readers a way to consume a huge library of book titles for a monthly fee, courtesy of major players Oyster, Scribd, and Amazon’s Kindle Unlimited. I predict each of these services will follow a strategy similar to what happened with streaming video: signing bigger licensing deals for more/better content, adding perks (like an audio book option), and more. And adjacent to that, another war will reach critical mass between creators (or copyright holders) and the companies powering this new generation of “Netflix for books” services.
8) Shrinking theatrical release windows
Sony Pictures had a pretty awful end to 2014, which actually ended up becoming quite a huge win to kick off 2015. I’m of course referring to the massive cyberattack (allegedly) carried out by North Korea over the premiere of The Interview, which resulted in Sony releasing the film online to coincide with its theatrical debut and grossing upwards of $30 million. Who knows if Sony will end up making money off The Interview, but this scenario did prove that people are willing to spend money to rent a new big-budget blockbuster from the comfort of their homes.
Will Sony recognize this and try to play with the budgets on future films to ensure that it does come out on top financially for an online premiere? Again, who knows? What I am, however, predicting is that other studios will take notice, and they will more confidently take risks on less expensive (but still theatrical-level quality) films to premiere online soon after they hit your local cinema.
9) More TV networks with online subscription services
Companies that own broadcast and cable TV networks will finally start launching their own on-demand monthly subscription services as an alternative to paying for cable or satellite services from the likes of DirecTV, Comcast, Time Warner Cable, and others. We already know that CBS, HBO, and Starz are all planning to debut stand-alone streaming services in 2015. I’d expect we’ll eventually hear similar plans from Fox, NBCUniversal, Scripps, Viacom, Turner, and Discovery Communications before the year ends.