Changes in the Audiovisual Market
IESE’S First audiovisual workshop analyzes the outlook for the sector

What impact will new technologies have on the audiovisual sector? What will happen after the switch from analogue television to digital in 2010? Will television continue to dominate as the principal source of news and entertainment or will the internet achieve ascendency? These were among the questions discussed at the First Audiovisual Workshop held at IESE's Barcelona campus, organized by the school's the Public-Private Sector Research Center (SP-SP).

Barely two decades ago had the news and entertainment industry in developed economies begun to note the emergence of the new information technologies which have revolutionized the way we consume information. Eli M. Noam, director of the Columbia Institute for Tele-Information and professor of economics and finance at Colombia University Business School, identified the main drivers of this revolution and their impact on news and information providers’ business models.

Technological changes have given rise to two important trends in audiovisual industries: convergence and fragmentation. The convergence in devices delivering content in different formats has been accompanied by a plethora of media companies offering to provide it for the consumer. In the 1970s, consumers bought records or cassettes from record companies and listened to them on the appropriate devices. Fast forward 30 years and sales of compact discs, the disruptive technology which usurped records and cassettes, are in free fall as consumers prefer to download music from the internet.

At the same time, companies from different sectors have emerged to compete in the same market, with a range of devices, standards and infrastructures delivering content. At the end of last year, Nokia unveiled its “Comes With Music” initiative that will enable consumers to buy a Nokia cellular phone with millions of tracks preinstalled.

Faced with these changes, Noam said that “Companies must focus on becoming specialists with global reach and an integrated structure, bringing together a broad range of experts. Meanwhile, governments should help by providing cultural support, creating an ideal business climate and encouraging the growth of integrating companies.”

“The future is already here,” according to Carlos Abad, director of Sogecable, provider of Spain’s leading pay-per-view television channels such as Canal+. Abad pointing out that audience fragmentation is already a reality along with new media delivering content. The CEO of Spanish TV channel, Antena 3, Maurizio Carlotti, said the fragmentation offers "a great opportunity to gain a better understanding of consumer demand.”

In another example of devices delivering content in different formats Joan Manel Espejo, director of strategy for Abertis Telecom, discussed the launch of television on cellular phones in 2008. Espejo also looked at the impact of the switch to digital in 2010 and the launch of three-dimensional programming in 2015.

Call for greater regulation

Looking ahead, Spain’s industry minister Joan Clos said the three key features to monitor are digitalization, internet connections and wireless networks. According to Clos, the sector is in urgent need of regulation. “There has been a proliferation of abuses and illegalities in recent years,” he said. Carlos Cavallé, president of SP-SP and  dean emeritus of IESE, agreed with Clos, calling for “a stable framework of regulation for a sector embarking on an era of increasing mobility and great change.” Josep Maria Carbonell, president of Catalonia’s regulatory body for the audiovisual industry, was also in favor of a legal framework for the sector. “The government should reconsider whether the switch from analogue to digital is sustainable, and then decide how best to make use of the newly created space on the radio spectrum,” he added.

Lisa Di Feliciantonio, Executive Officer of the Directorate for Market Analysis and Competition, Italian Communication Authority (AGCOM), gave insights on regulation from the Italian perspective. “The market is not capable, on its own accord, of guaranteeing the type of protection required by users, and there is a lack of certain filters and limits, which could lead to problems for the future.”