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Keytrends 2016: Entering the age of (user) experience

From the Internet of Things to VR and AR, a new report by the Canadian Media Fund takes a deep dive into the year's biggest shifts.
February 2, 2016

From the Internet of Things to virtual and augmented reality, the future is upon us, changing how we perceive, respond to and interact with the content we consume, and driving connection and interdependence between content and technology.

That’s the big-picture focus behind a new report by the Canadian Media Fund, a not-for-profit organization created to fund and support content development from Canadian creators.

The report, entitled Entering the Age of Experience, is the fourth of its kind from the organization. As they have in previous reports, they identify and analyze major industry trends – the “tectonic shifts” that continue to evolve, accelerate and change the industry in fundamental ways on a permanent basis.

This year, analysts Pierre Tanguay and Sabrina Dubé-Morneau, along with Catalina Briceno, the CMF’s director of industry and market trends, take a deep dive into the user experience.

“Consumers are behaving differently and have ever higher expectations,” the authors write in the report, available on the CMF site. “And with this experience comes another experience: the user experience needs to lead content creation and distribution today.”

To that end, they’ve identified six “key trends” to watch out for in 2016:

1. Always On: The “All-Smart Things” world is on our doorstep

With more than five billion in the world expected to be connected to the internet by 2020 (according to the World Economic Forum), the next phase of hyperconnectivity lies in the Internet of Things (IoT), according to the report. In turn, this worldwide market will affect every industry, attracting an estimated $6 trillion in investments over the next five years.

The authors describe the IoT trend — that is, the network of internet-connected objects able to collect and exchange data — as key to the entertainment and content sector’s long-pursued ambition of creating a seamless all-platform user experience – “one that is much more tailored to the tastes and preferences of individual consumers, thanks to better harnessing of the power of Big Data.”

“Personalization, user engagement and participation, and fast prototyping and audience testing will be of unprecedented important,” the authors state. “As well, consumers will rely more than ever on algorithmic and social media recommendations to navigate a sea of over-abundant content.”

But this new reality is not without its challenges: Tensions between artistic creation and progressively automated ecosystem will only grow, the report suggests.

“Creators will ask, ‘Who’s in charge? People or processes?’ and ‘What’s more important, an idea or an algorithm?’.”

2- Screen convergence: Mobile, mobile, mobile…

Mobile streaming is fast becoming the go-to source for content consumers around the world. The percentage of Canadians adults (over 18 years old) streaming video on their smartphones leapt from 35% in 2013 to 62% in 2015, according to the report. Mobile now accounts for 56% of all time spent on the internet among Canadians.

To capitalize on that trend, telecommunications services that enable cost-efficient mobile data will be key to continued growth for mobile video consumption in the future, the authors write.

Among the potential hurdles that must be overcome first, however, is an effective means of content curation and personalization, as well as the growing fatigue and shortening attention span of digital consumers.

“The rise of online video highlights, once again, that not only are screens and platforms converging, but content and telecomm industries are as well,” say the authors.

3- Transmedia: VR and AR take off

After years of research and development, virtual reality (VR) and augmented reality (AR) devices are poised this year to see wide release int0 the consumer market. Technology giants are aggressively entering the arena, releasing devices at prices consumers can now afford. But where does VR and AR content currently stand for content makers?

Some analysts forecast that AR devices may play a role similar to mobile phones. They could become effective platforms for streaming existing formats of TV and film content in the future, either in 2D or 3D. On the other hand, VR may bring about completely new forms of immersive long-form content and games.

The report suggests that content businesses must prepare now if they hope to compete in the industry over the next five to 10 years. To that end, there are already major players in the VR space, including Toronto-based studio Secret Location and Montreal’s Felix & Paul Studios (which recently announced a deal to write, direct and produce a slate of VR projects for the Oculus platform). Many other film and TV producers, as well as those in gaming, news and education, are also developing VR experiences for home, work, school and business.

 4- The Power of Many: Is the generation gap materializing?

It’s no secret that millennials and Gen Zers are consuming content differently than older viewers. Notably, young viewers are more accustomed to making their own content decisions, including when and where they want to watch a movie, series or even a six-second Vine.

At the same time, viewers aren’t cutting the TV cord in any great numbers. Canadians viewed 27.4 hours of television per week in 2013 to 2014, compared with 28 hours in 2009 to 2010, according to the report.  And even though cable and satellite subscriptions continue to decline (down an estimated 1.5% year-over-year in September 2015), the phenomenon has yet to make a big dent in consumption patterns.

The take-away? All signs point to a generation gap, with the study authors noting “the industry must quickly adopt new entrepreneurial strategies to serve groups on either side.”

5- Monetization: Fragmentation and challenges of the advertising model

The industry still faces a number of challenges when it comes to many of its revenue models, according to the study, which cites the rise of ad-blocking technology as a major obstacle to established ad-supported video platforms.

In fact, the study reports that ad blockers will cost businesses $41 billion globally in 2016 (up from $22 billion in 2015).

Combating ad blockers will lead to the increase in anti-ad-blocking technology, using native ads and native mobile apps (so ad blockers can’t react), tailoring ads to audience experiences and expanding monetization strategies beyond ads through methods such as transaction and subscription. (The latter move was employed by ad-supported video giant YouTube, which launched its ad-free, subscription VOD service, YouTube Red, in October. Vimeo CEO Kerry Trainor has also spoken about the rise of paid online video models, as Vimeo gravitates toward more transactional forms of monetization.)

Other strategies include capitalizing on impulse buys on social media by including more e-commerce functions in platforms like Twitter, Facebook and Pinterest.

6- The big and the agile: Big TV and big tech dominate, yet niches could be the next frontier

While the SVOD scene appears to be dominated by major players like Netflix, Amazon and Hulu, the report found a rise in the number of smaller, progressive players that are reaching audiences through niche, localized content.

To fight back, larger SVODs can (and are) starting to  imitate winning techniques employed by these smaller, more localized players (like free Asian VOD Viki and France’s Afrostream, described as “the Netflix for African and African-American movies.”)

For example, Netflix, which recently expanded to another 130 countries, is currently producing its first original Japanese and Italian productions. The SVOD will also soon turn toward creating original Bollywood and anime programming following its recent expansion.

YouTube, meanwhile, is now localized in 85 countries and is currently developing a tool that will allow creators to professionally translate their videos. According to YouTube’s statistics, 60% of a channel’s views come from outside a creator’s home country.

“The Big still get bigger, but they’re also more agile,” the authors note.

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