2013 tipping point as smart devices change media delivery models
Joseph O'Halloran | 25-04-2013

The emergence of the smart mobile device platform as a preferred means to access digital media could change fundamentally the traditional business model of media and entertainment companies, according to new research by MRG.

Such a dynamic, says MRG, may mean that media companies will be forced to enter the over-the-top (OTT) services business or establish relationships with OTT service providers to control content access in order to profitably accommodate these new consumer behaviours.

The analyst says that 2013 will be the first year in which smart mobile device shipments surpass those of computing and digital media devices combined, leading to a new reality in media distribution.

In its analysis of the home of the future, MRG stresses that what makes smart devices so important is the fact that they are at the intersection of industries that have to date remained separate. That is computing, media and entertainment, and wireless mobile services.

MRG calculates that by 2017, shipments of smart mobile devices such as smartphones and tablets will reach about two billion while computing and digital media devices combined will barely reach 900 million, representing a CAGR of 20.7%. Moreover, 2013 is set to be the first year in which smart mobile device shipments surpass the total shipments of computing and digital media devices combined.

Driving the trend, according to MRG, is that that these devices’ operating systems — that is Apple iOS, Google Android and Windows RT — have been developed for smart mobile devices and are creating a platform upon which media and entertainment companies can build media applications that provide significantly more value to end consumers while fundamentally changing the relationship between consumers, their pay-TV service providers and digital content access.

Yet the analyst warns that such proliferation will also lead to a number of challenges to the value of traditional media and entertainment digital content delivery business models. For one, MRG argues that media companies can no longer use their delivery assets (i.e., broadcast technology) and customer premise equipment (CPE) to control consumer access to digital content since smart mobile devices access content directly from the distribution channel.

Additionally, MRG cautions that since smart mobile devices are generally linked to individual consumers, and consumers are using these devices to access digital media content directly from the distribution channel, the relationship between the pay-TV service provider and the consumer is fundamentally changing.