Deloitte

Deloitte

July 13, 2005 10:46 ET

Television Networks Threatened with Extinction: Change or Die, Says Deloitte Report

TORONTO, ONTARIO--(CCNMatthews - July 13, 2005) -

Exploding Demand, New Formats and Devices Creates Challenges and Opportunities; Consumers to Get Variety of Innovative Products and Services

The global broadcast television industry is undergoing fundamental, unstoppable change that is rendering the network model obsolete, says a new report by Deloitte's Technology, Media & Telecommunications (TMT) industry group.

The report, "Television Networks in the 21st Century: Critical Mass in a Fragmenting World," argues that the model of a few dominant network channels - funded by advertising - has long been disappearing and may soon be gone for good. However, these changes also create new opportunities - for networks that can evolve into a multi-dimensional, highly adaptable, customer-focused model. They also are expected to result in a variety of innovative products and services for consumers.

"Today's consumers are seeking content across an expanding array of transmission media, channels, interactive platforms and devices," said Garry Foster, National Director, Technology, Media and Telecommunications Group, Deloitte Canada. "As a result, consumers - and their pocketbooks - will be increasingly spread across a wider range of options. Audiences will splinter into many smaller pieces, even in countries that have undergone fragmentation for years. Networks will no longer attract mass audiences, and therefore they won't be able to charge premiums to advertisers. Their legacy business model will no longer be viable."

"However, there is also good news," said Foster. "Demand for content is exploding in all forms of media, and this creates significant opportunities. Cable subscription revenue has tripled since 1997, and DVD revenues have skyrocketed by a factor of 15. New mediums - such as Internet Protocol Television (IP TV) - have the potential to drive revenues even higher."

The report predicts that successful television networks will adapt to this new world by minimizing the fragmentation of their audiences and generating income from entirely new activities. They will:

- Offer content and programming across a variety of media channels and formats.

- Re-package and market content - not just as products but also services.

- Significantly extend the content's lifespan, by offering more digital content that can be quickly and easily packaged, and sold or rented across a wide range of media - including physical packages such as DVD, VHS and memory cards and electronic downloads via wired and wireless networks.

Some of the future products and services that may be available to consumers include:

- On-demand content - A warehouse of audio and video content for a wide range of uses, such as web-casts, radio airplay, mobile phone downloads, and Video-on-Demand.

- Interactivity - Participation, voting, purchasing, news and information, on-line games, questions and comment submission, and web-based chat.

- Events - Tie-in events such as the concerts based around the Pop Idol and American Idol series.

"These new products and services will enhance the television networks' relationships with consumers, while at the same time providing a reliable stream of subscription revenue and repeat business." concluded Foster.

For more information on Deloitte's "Television Networks in the 21st Century: Critical Mass in a Fragmenting World" please visit www.deloitte.ca.

About Deloitte's Technology, Media & Telecommunications (TMT) Group

The TMT Group is composed of service professionals who have a wealth of experience serving technology, media and telecommunications companies throughout the world in areas including cable, communications providers, computers and peripherals, entertainment, media and publishing, networking, semiconductors, software, wireless, and related industries. These specialists understand the challenges that these companies face throughout all stages of their business growth cycle and are committed to helping them succeed. Deloitte is a leader in providing strategic, financial and operational assistance to its technology, media and telecommunications clients

About Deloitte

Deloitte, Canada's leading professional services firm, provides audit, tax, financial advisory services and consulting through more than 6,100 people in more than 47 offices. Deloitte & Touche LLP operates in Quebec as Samson Belair/Deloitte & Touche s.e.n.c.r.l. The firm is dedicated to helping its clients and its people excel. Deloitte is the only professional services firm to be named to the Globe and Mail's Report on Business Magazine annual ranking of Canada's top employers for two consecutive years: 35 Best Companies to Work for in Canada in 2001 and 50 Best Companies to Work for in Canada in 2002. "Deloitte" refers to Deloitte & Touche LLP and affiliated entities. Deloitte is the Canadian member firm of Deloitte Touche Tohmatsu. Deloitte Touche Tohmatsu is a Swiss Verein (association), and, as such, neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the name "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu" or other related names. The services described herein are provided by the Canadian member firm and not by the Deloitte Touche Tohmatsu Verein.

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