2012: The Year in Review

NEW YORK: World Screen takes a look back at some of the big media stories of 2012, and what they could mean for the business this year.

For every news story about increased online-video consumption last year—and there were many—there was one touting the strength of linear, live TV. (And there was perhaps no greater proof of the power of live television than the Summer Olympics, which, beginning with Danny Boyle’s opening ceremony from London, broke viewership levels across the globe.)

TVB, which represents the interests of American commercial broadcasters, reported last summer that television is still the most dominant medium when it comes to time spent and consumer engagement, with adults spending 5.2 hours watching television per day as compared with 3 hours spent on the Internet. The study, conducted by Knowledge Networks, also found that television reaches 88 percent of adults 18-plus per day. “The power of television remains undeniable…television remains the central entertainment and information hub for consumers,” said Steve Lanzano, the president of the TVB.

Deloitte, in its 2012 Technology, Media & Telecommunications Predictions, reflected a similar sentiment, predicting that 95 percent of TV programs watched in the year would likely be viewed live or within 24 hours of broadcast.

Nevertheless, amid study after study showing an increase in online-video consumption, broadcasters stepped up their efforts last year to protect their turf. This included launching their own OTT services, making more content available on streaming and download-to-own sites, and lashing out at competitive threats. Aereo drew the ire of a number of U.S. networks, including FOX, Univision and PBS, over alleged copyright infringement by the startup, which plans to give users web access to live broadcast TV. Pay-TV platform DISH also angered the broadcast networks with its AutoHop DVR functionality that lets subscribers skip through ads.

For pay-TV platforms in general, the threat of cord cutting continued to hang over their heads in 2012, but reports of a slowdown in subscriber additions were mainly attributed to the struggling economy in the first half of the year, rather than to the impact of services like Netflix and Hulu. Research firm Ovum indicated that OTT services still have a long way to go before they can serve as adequate alternatives to traditional pay-TV services. But other surveys did not bode as well for legacy pay-TV operators; one study, from ABI Research, said that 20 percent of online consumers consider Internet video as a replacement for pay TV. With pay-TV rates expected to continue rising in 2013 and OTT operators’ aggressive content plays, that threat could be even greater in 2013.

For Netflix, its high-profile original programming initiatives will bear fruit this year—as it faces a new competitive threat from Redbox Instant by Verizon—with the premieres of Arrested Development and House of Cards. It will have to wait till 2016 to see the results of its other major move in 2012—securing the exclusive U.S. subscription TV rights for first-run feature films from The Walt Disney Studios. Hulu, too, announced some high-profile content partnerships last year, including one to co-produce the new season of Armando Iannucci’s The Thick of It.

Elsewhere in the digital space, social media was a major theme for the content business last year as broadcasters sought out new ways to engage with audiences. Sky in the U.K. invested in social-media startup zeebox, which also has pacts with Comcast, NBCUniversal, HBO and Cinemax in the U.S. and Network Ten in Australia. Myspace also has a social TV service in the works, slated to launch this year.

With digital consumption and second-screen interaction now the norm for many consumers, media companies are eager to start understanding, and measuring, how content is being used on multiple devices. Nielsen has begun to answer that call, partnering with Twitter, but the pressure on audience-measurement firms to come up with better ratings systems for the new on-demand era will likely intensify this year across the globe. Indeed, streaming and download-to-own services picked up steam in numerous international territories last year, including in emerging markets across Asia and Latin America. Research firm GfK reported last year that consumers in markets such as China, Brazil and India are using Internet-connected television more than those in the U.K., the U.S. and Germany.

In Latin America, in particular, digital is expected to reshape the media landscape this year. Grupo Salinas is taking on incumbent Netflix with its own streaming service, and major broadcasters like Televisa and Globo are harnessing the power of social media, increased broadband penetration rates and high mobile-phone ownership to find new ways to serve their audiences. At MIPCOM in October, the emerging opportunities in Latin America took center stage, with Adriana Cisneros, the vice chairman and VP of strategy of the Cisneros Group of Companies, declaring that “we are living the Latin American decade,” and Televisa’s Emilio Azcárraga receiving the Personality of the Year award. The chairman and CEO of the leading Mexican broadcaster has been credited with driving the group’s international expansion, which last year included the launch of a U.S. arm, with Lionsgate, that is producing English-language content. This adds to its existing American business—owning a stake in market-leading Spanish-language broadcaster Univision.

The U.S. Hispanic market was the focus of much attention in 2012, particularly with the launch of MundoFOX, a new channel from News Corporation and RCN that is aiming to take a slice of the Spanish-language ad pie away from Univision and Telemundo.

News Corp., however, made more headlines for a host of other reasons last year: the continuing fallout from the phone-hacking scandal, Ofcom’s investigations into BSkyB being a "fit and proper" owner of a broadcast license (the regulator decided that it is), the role of James Murdoch at the company, Elisabeth Murdoch’s fiery MacTaggart speech and, most recently, Rupert Murdoch’s decision to split the company into two, one focused on entertainment and one on publishing.

Murdoch’s U.K. troubles were eclipsed in the British press by the drama at the BBC stemming from the Jimmy Savile sex-abuse scandal. After being appointed as Mark Thompson’s successor, George Entwistle served as director-general of the BBC for just over 50 days. Incoming chief Tony Hall is charged with leading the venerable broadcaster out of its current crisis. The pubcaster’s commercial arm is also undergoing a major restructure ahead of new CEO Tim Davie taking over in March.

Also dominating headlines this year were some very big merger-and-acquisition deals, most notably Disney’s $4-billion takeover of Lucasfilm—including the Star Wars franchise—Mediaset offloading its remaining investment in Endemol, Bell Media’s attempted purchase of Astral Media (a transaction that has been rejected by Canadian regulators), and, most recently, Discovery Communications agreeing to buy the SBS Nordic operations from the ProSiebenSat.1 Group for $1.7 billion.

Looking ahead to this year, forecasts are optimistic, with ZenithOptimedia predicting adspend growth of 4.6 percent to $525 billion. Television’s share of the global ad market continues to rise steadily and is expected to reach 40.4 percent this year, its highest ever.

All of these stories, and more, were covered by World Screen’s portfolio of online newsletters last year. It was another year of tremendous growth for our bouquet of digital assets, which were joined by two apps—one in English, one in Spanish—delivering news, program listings and more. Our electronic newsletter family grew further this week with the launch yesterday of TV Kids Daily, and on Tuesday we’ll roll out TV Drama Weekly. On the heels of producing our largest-ever issue in October (at 654 pages); the launch of a new magazine, TV Brasil, in Portuguese; and the marking of the landmark tenth anniversary of TV Formats, we have big things planned for 2013. We’ll be doing more premium research reports, like last year’s popular program price guide and U.S. cable surveys, adding a new pre-MIPTV and DISCOP West Asia issue, expanding our library of video interviews and, of course, continuing to land exclusive interviews with the biggest names in the media business.