(Or why Google TV should have launched in Europe first)
This is a guest post by Tom Weiss, CEO of TV Genius, the company he founded four years ago to solve the growing challenge of content search and discovery in the TV space.
The USA is known as the best place for start-ups and entrepreneurs, but there are many reasons that Europe is a better place for a TV start-up. Here are my top five:
1. The US cable operators
The US is dominated by a handful of cable operators that have historically operated in a monopoly market. These firms can be slow to move, and typically develop technology platforms in-house. They stand to lose a lot from innovation, and are currently focused on defending their existing market positions.
As a result innovation is held back, as seen by the recent blocking of content to Google TV. This environment makes it hard for small innovator to reach the critical mass needed to flourish.
The EU, on the other hand, is a much more competitive market. Most TV providers are forced to innovate to stay ahead of their competitors. This gives substantial opportunity for start-ups to launch new services.
2. European public service broadcasting
Many EU markets have dominant public service broadcasters. Although not all are of the scale of the BBC, public broadcasters have substantial R&D budgets.
Their business goals are primarily based on reach rather than profit. As a result they are more willing to support new technologies that increase reach, without having to worry about cannibalisation.
As an example, most European Public Service Broadcasters are already supporting connected devices. These launches make it competitively unacceptable for the commercial broadcasters not to follow suit.
As a result, Europe has a healthy amount of content provided over the internet to a plethora of devices. This provides opportunities for start-ups which simply don’t exist in the USA.
3. Location, Location, Location
The geography of the USA makes launching new services more complex. While advertisers work in New York, technology is developed in Silicon Valley, the movie studios are in Los Angeles, and the networks are spread nationally. The logistics of coordinating distant parties makes it much more difficult to set-up new deals.
In Europe, the advertisers, content owners, broadcasters and technology companies are all based in the same cities.
As such, a start-up can have 5 meetings in the same day with key players from each part of the industry.
This massively raises the chances of pulling of more innovative deals that involve a number of different stakeholders
4. There’s more potential to change viewing habits in Europe
Consumer behaviour varies substantially between the USA and Europe. Watching multi-channel content is already ingrained in American consumer behaviour: Americans watch 13% of available channels, while Europeans only watch 1% of channels on average.
At the same time, the number one complaint that European viewers make is that there is nothing to watch on TV. This provides a tremendous opportunity for European start-ups to broaden the viewing habits of viewers.
Clearly there is a lot of room for new technology to pave the way for growth in European content consumption. With recent research from Ofcom showing that UK consumers are particularly like to be early adopters, the marketing strategy seems clear: the UK, Europe, and then further afield.
5. America’s more likely to buy if it’s worked in Europe
A tried and true formula is always an easier sell. The US TV industry is an extremely big business and is therefore fiscally conservative. When there’s a lot of money at stake, you want to reduce your risk.
As such, America has been adopting new TV formats such as X Factor only once they have been proven in overseas markets. The same can be seen with technology, with Red Button technologies rolling out in the US 10 years after they were first launched in the UK.
When it comes to the internet, America might lead the way, but with TV, start-ups are much more likely to be successful if they have already proven themselves in Europe.
The TV industry in Europe has to adopt new technologies to remain competitive. The industry in the USA has too much to lose and will only adopt once technology has a proven record.
Go team Europe!