2011: Year in Review

January 5, 2012 World Screen
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NEW YORK: World Screen takes a look back at some of the big media stories of 2011, and what they could mean for trends this year.

 

Releasing its annual outlook in June, PwC declared that digital is the "new normal" in the entertainment and media business worldwide. The "device revolution," as PwC called it—with consumers embracing content on tablets, smart phones and Internet-connected gaming consoles and television sets—saw media companies in 2011 clamoring to make business sense of this new landscape.
 
And all eyes, last year, were on Netflix. The year was marked by the company’s fraught relationship with its customers, angered by the new pricing structure separating the streaming and DVD-by-mail services. Investors and analysts, meanwhile, were confused by the proposed spinoff of the DVD business—a plan that was scrapped about three weeks after the Qwikster brand was unveiled. When it announced its third-quarter results a few weeks later, Netflix revealed it had lost a whopping 800,000 subscribers. Heading into 2012, Netflix will be betting on some lucrative content deals and international expansion plans to boost its recovery. On the content front, Netflix’s first original commission, House of Cards, will premiere this year. On the heels of locking in the exclusive rights to Mad Men and DreamWorks Animation titles, Netflix also inked a deal to resurrect the popular FOX show Arrested Development. It is also acquiring fare from the international market—notably the Norwegian drama Lilyhammer and Tom Fontana’s Borgia—and is well into its international rollout, with the U.K. and Ireland set to join Canada and Latin America in the Netflix footprint this year.
 
Elsewhere on the OTT front, Hulu—which went on, and then off, the auction block—began its international expansion, in Japan, and its own forays into original and exclusive content. Amazon has been investing in licensing deals for its U.S. streaming service, Amazon Prime, as well as in the London-based LOVEFiLM, which it acquired in late 2010. Apple further extended the international availability of video content in the iTunes Store, securing deals with all the major studios to bring TV shows and movies to iTunes in Latin America this year. And YouTube, which remains the most-visited video site in the U.S., made an aggressive bid to up its catalogue of professionally produced content, launching a movie-rental service and unveiling plans for 100 original channels with providers like FremantleMedia and Electus, among many others.
 
The rising prominence of OTT platforms amped up fears about cord-cutting in 2011, and the verdict is still out as to whether or not consumers will cancel their pay-TV subscriptions in favor of cheaper—or free ad-supported—online services. TV Everywhere has become the mantra of the major U.S platforms and international operators are following suit, allowing subscribers to access channels online and on tablets. That development has added another element of friction between platforms complaining about rising carriage fees and channel operators eager to be paid for all that multiplatform access. Those spats will undoubtedly continue throughout 2012 as everyone tries to figure out how to value content in this new era.
 
Windowing also became far more complicated in 2011, as content owners tried to figure out when to make shows and movies available on-demand. FOX, breaking away from models used by its U.S. competitors, has instituted an eight-day window on the availability of its series online for consumers who don’t have a pay-TV subscription. Meanwhile, the major pay-TV platforms and the Hollywood studios faced the ire of cinema operators when they started launching premium VOD services delivering feature films to the home some 60 days after the theatrical release. For pay-TV operators, shorter windows mean a competitive advantage over services like Netflix and Redbox. For the studios, it’s a chance to make up for the erosion in revenues from the sales of DVDs. However, there are positive signs for the home-entertainment market this year, notably the acceleration in the sale of Blu-ray devices—forecast to reach 105 million shipped by 2015—as well as the UltraViolet initiative, announced early last year.
 
Available on shelves in the U.S. since October, DVDs bearing the UltraViolet logo are accompanied by a digital copy that can be streamed or downloaded onto any device. UltraViolet’s international rollout begins this year, in the U.K.
 
"The U.S. video retail business is in decline,” said Tom Adams, principal analyst and director for U.S. media at IHS, in a recent report on the home-entertainment market. “Although the rate of decrease moderated during the last two years from the double-digit drop in the recessionary year of 2009, we don’t see those declines turning into renewed growth without a fundamental change in the ownership proposition for consumers. UltraViolet delivers that kind of change…. If UltraViolet sparks just a 7-percent increase in consumer disc buying in the years ahead, it would pay off for studios as much as a doubling of the EST business."
 
While UltraViolet and Blu-ray may change the fortunes of the home-entertainment business, the segment is still taking a hit from Internet piracy around the world. Anti-piracy legislation certainly made a lot of headlines in 2011, a trend that will continue this year. In mid-2011, the leading U.S. Internet service providers (ISPs) agreed to a new system of "Copyright Alerts" that will electronically notify subscribers if an account is being used to download pirated content. Meanwhile, the year ended with Time Warner, Viacom, Disney, News Corporation and Sony, among other entertainment, sports and media companies, coming together to lobby Congress to pass two different bills aimed at curbing online piracy.
 
Another big technology story for media companies in 2011 was the rollout of Smart TVs, a development that is expected to pick up speed this year. Shipments are forecast to double to 52.85 million units in 2012, a recent report indicated, compared to 48.2 million 3D TV shipments. Despite the slower take-up of 3D TV sets, broadcasters around the world rushed to invest in the technology in 2011. Among the leaders in driving 3D content have been 3net in the U.S.—a joint venture of Sony, Discovery and IMAX—and Sky in the U.K., which partnered with Atlantic Productions to create a 3D content outfit.
 
Sky’s investments in programming did generate a lot of headlines in 2011, but they weren’t the biggest story at the British satellite platform last year. Last summer, News Corporation attempted to acquire full ownership of BSkyB, a move that had received provisional approval before the phone-hacking scandal exploded. Media spectators worldwide were riveted by the coverage of the turmoil at Rupert Murdoch’s media empire—including his testimony in front of a parliamentary committee (and his wife’s quick reflexes). Murdoch’s succession plan, and the fate of once-presumed heir-apparent James Murdoch, are likely to remain conversation topics in 2012.
 
At the start of this year, meanwhile, Rupert Murdoch was back in the headlines for another reason—his foray into social media. The media titan began tweeting this week and quickly amassed some 100,000 followers. Twitter certainly had an impact on the TV sphere in 2011, with networks rushing to use the platform to promote shows and strengthen ties with audiences. Facebook, too, is being used as a marketing tool by broadcasters, and last year began allowing its members to rent content, securing pacts with Miramax and BBC Worldwide, among others. It is expected to continue to build out its content lineup throughout 2012.
 
The other theme that will remain dominant in 2012 is the continued growth of the media sectors in emerging markets. India was a hub of activity in 2011, with A+E Networks’ high-profile launch in the market, RTL Group’s planned entrance there this year and Disney’s takeover of UTV. The Hollywood studios made some progress in China by signing deals with popular web portals by Youku and Todou. Time Warner upped its stake in Central European Media Enterprises (CME). News Corporation increased its interest in the Rotana Group in the Middle East. Saban Capital Group invested in the Indonesian media company Media Nusantara Citra (MNC), and expanded its Asian joint venture with Lionsgate to include Celestial Pictures, with the three companies partnering to operate a portfolio of pay-TV channels across the Asia Pacific. The potential of the ever-expanding cable and satellite universe across Asia shows no sign of diminishing in 2012.
In the developed markets, meanwhile, as the debt crisis gripped Western Europe and the U.S. economy remained sluggish, producers were finding new ways to deliver more with less last year. High-profile international co-productions made their way to broadcasters across the globe in 2011, and a slew are on tap for this year.
 
The good news for everyone in the content business last year was that the consumption of content was, and still is, on the rise. Live events—from the Royal Wedding to coverage of the Arab Spring protests and the Japanese earthquake and tsunami—drew record audiences to linear TV around the world. And according to ZenithOptimedia and GroupM, live events—notably the Euro 2012 and the London Olympic Games—will be key contributors to advertising growth this year.
 
Despite the strength of linear TV, digital media and audiences’ desire for on-demand content will continue to reshape the business throughout 2012, and we at World Screen will be here to help our readers make sense of an ever-changing landscape.
 
We enter 2012 on the back of our most successful year to date. We published our biggest-ever issue in October—at 610 pages—and scored interviews with a slew of icons of the media business, including James Cameron and Simon Cowell, among many others. Elizabeth Guider joined us as contributing editor and will be reporting on issues throughout the year. We dramatically expanded our online portfolio with the relaunch of TVReal.ws, TVEurope.ws, TVAsia.ws, TVLatina.ws, TVUSA.ws, TVCanada.ws and TVMEA.ws—featuring dedicated news, interviews, features, videos and more—joining TVKids.ws and TVFormats.ws in our stable. Visit those sites, and our flagship WorldScreen.com, to keep up with all the latest developments in the content business.


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