A New Realm of Television: Netflix, YouTube, Amazon, Oh My!
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My attempt at providing insightful recommendations on how cable TV networks can safely hedge against the digital disruption of the Pay TV model by focusing on: Content, Distribution, Advertising & Collaboration © 2014 Jessica D. Lane
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A New Realm of Television: Netflix, YouTube, Amazon, Oh My!
- 1. A New Realm of Television Jessica D. Lane
- 2. Objective Provide recommendations on how cable TV networks can safely hedge against the digital disruption of the Pay TV model by focusing on: Content, Distribution, Advertising & Collaboration.
- 3. Discovery Methodology Solutions Conclusion
- 4. Before Kellogg, I worked in Interactive Marketing at TBS & TNT, where I developed interactive programming experiences â online, mobile & social â for shows like Conan, Men At Work, and Tyler Perryâs For Better or Worse. My job was to build products, experiences and campaigns to engage fans and build fan loyalty from week to week. This led to my current research, trying to understand how legacy media companies can tackle the new television space.
- 5. From Content to Social. 20 Industry Interviews From Disney to Microsoft. From Marketing to Digital Distribution. From Cynopsis to Deadline. From Mintel to Nielsen. Over 25 Panels From Aereo to Yahoo.
- 6. CONTENT DISTRIBUTION ADVERTISING COLLABORATION
- 8. Pay TV Ecosystem Is Not FailingâŠYet Pay TV in slow decline; growth in Streaming Video On Demand (SVOD) Pay TV Revenue SVOD Revenue Cord-cutters account for 6.5% of US households only $7.5M of the Pay TV industry There is a small, but growing, threat looming on the horizon
- 9. TV Content Costs Are Skyrocketing Yet, YouTube producers have found an efficient & effective process Pilot Costs Production Costs $200 Per Minute $P6ri0ntk Per Minute $6M Average cost of TV Pilot Pilots down 5% this Upfront Season & Fox declared Pilot season dead The current TV Development & Production model bleeds money Is there a way to better leverage technology to repair this?
- 10. TV Ad Business Losing the War Media companies now need to compete against the Tech Giants Entire TV Ad Revnue $78 Bn
- 12. The One-on-One Experience Building an Immersive, Socialized Experience Millennials expect multifaceted, personal experiences they can feel and influence PewDiePie (25M subscribers, 265M monthly views) TobyGames (6M subscribers, 38M monthly views) Leverage partnerships with digital natives Start by identifying content producers with an electric hold over their audience
- 13. The Live Event Experience Building an Immersive, Socialized Experience MTV Video Music Awards 2013 âą Ranking as the biggest VMA day in history! âą Their performance = 306K tweets/minute âą Miley Cyrusâs album jumped to #5 on the iTunes chart âą Robin Thicke saw a 306% increase in sales Millennials want experiences that cross live, digital and social simultaneously Build brand-defining tentpole events Live Events and the social layers it produces are the ânewâ content Itâs a premium experience unmatched by standard TV content
- 14. Building an Incubator for Content Create a digital platform thatâs more than a home for TV Everywhere Build out a digital platform to serve as an incubator for innovative content and innovative content forms. Use this platform to grow cheaper talent, test innovative content, expand the digital audience Start with partners who have credibility and awareness Leverage your own brand identity and network assets to drive additional awareness Leverage viewing data to make smarter development decisions across digital & linear
- 16. SVOD Drives Revenue & Exposure But, TV syndication commands more revenue Syndication vs. SVOD Revenue $200-250M Approx. $200k per episode Serialized Dramas Sitcoms Draws the Make significantly less money in syndication most money in syndication Easier to air run of schedule. Each episode lives on its own Do well on platforms where you can catch-up and watch from start to finish $500k per episode $1.4M per episode Syndication or SVOD ï How do you determine?
- 18. Native Advertising Solutions: Branded Content Brands are stepping to YouTube for innovative ad solutions âBrands go after YouTube networks because itâs a highly targeted audience â high reach & little waste.â Provide more opportunities for advertisers & influencers to collaborate for authentic, engaging content Need a varied programming mix â one-on-one programming â that allows for these opportunities Leverage digital platforms to provide sharp measurement of audience for advertisers
- 19. Tech-Driven Advertising Solutions: Huluâs Latest Products Media companies need to steal share back from digital players Digital Ad Products need to engage more and target more effectively In-Stream Purchase Unit ï can target the right audience & purchase without leaving Hulu Cross Platform Interactive Ads ï an interactive experience on all platforms, serves an experience specific to their device Hulu 360 Ad ï mobile-focused ad, to deliver a ground-breaking mobile experience
- 21. Growing Tech Expertise Media companies now need to compete against the tech giants Invest in or acquire the expertise to build better Ad products & better measurement Look into acquiring or poaching talent from ad tech companies. Donât just go for content producers Like AOL, build a dual strategy focusing on content & ad solutions of the future
- 22. Building A Unilateral Agenda: TV Everywhere Networks need to work together to ensure success Only 6% of Pay TV subscribers use a TV Everywhere (TVE) app & there are still networks without an app Increase the brand awareness & convenience of offerings using both network & Pay TV resources Standardize offerings. Every network and TV provider needs to offer a TVE solution with a guaranteed level of quality
- 23. Building A Unilateral Agenda: Data & Measurement Networks need to work together to ensure success Addressable ads have arrived. But, to be most effective partnership is necessary Addressable Ads presents an opportunity for operators to partner with networks to increase ad value NBCU+ powered Comcast could model the success of a true partnership Networks need the data from cable boxes and operators need the ad inventory
Hinweis der Redaktion
- Good evening everyone and thank you all for being here! Iâm going to take you through my research and findings on âThe New Realm of Television.â
- My objective for this research was provide actionable recommendations on how cable TV networks can safely hedge against the digital disruption of the Pay TV model by focusing in four key areas⊠Content, Distribution, Advertising & Collaboration.
- But before we get into the recommendations or solutions, hereâs the path that Iâll be following. First, Discovery where Iâll tell you why I chose this research problem. Then, Iâll talk briefly about the methodology. Next, weâll dig into the key recommendations or solutions and finally, Iâll wrap it up and open the floor for questions.
- When I applied for this program, this problem was top of mind. Because I lived it. When I started at TBS & TNT in 2008 â working in Marketing â TV launches were all about finding the right audience â a big audience and getting all those eyeballs to tune-in for the premiere. Everyone focused TV spots, spot testing and seeing your key art on billboards and magazines you intersected everyday. This was the priority and this is what everyone wanted to work on. The interns, which is sort of what I was, worked on things like radio and this new platform, no one really knew anything about, social media. And, I excelled.
- For the methodology, I went back to my journalist roots: to conduct several interviews with industry professionals, attended conference like the Variety Entertainment & Technology Summit and Digital Hollywood, talked with 3 Media Start-ups and countless articles in trades and research databases,
- Now, weâre at the point where we can get to the good stuffâŠwhat you really care about. So again, my solutions are going to hit for key areas: Content. Distribution. Advertising. Collaboration.
- However, there is a small but growing threat looming on the horizon. Letâs talk about the State of the Union, while these are not solutions, these insights I discovered are key to my final recommendations. The Pay TV ecosystem is not failingâŠyet TV Content costs are sky-rocketing The TV Ad business is losing the war against Tech
- The conversation in the space rightâŠespecially if youâre reading the tradesâŠwill have you thinking the TV ecosystem is on the verge of collapse. Thatâs just not the case. In Experianâs Cross Device Analysis, they found that 84% of US Adults still watch live television at least once a week. Additionally, 1 out of 6 adults still watch 40hrs of television or more per week. However, that saidâŠ.there is a small but growing threat looming on the horizon. Pay TV Pay TV sales peaked in 2011 at $89.8 billion and itâs forecasted to slide gradually to $79.7 billion in 2018. This means, they wonât be able to grow Average Revenue per unit, (ARPU) â which is a key metric for Tv operators â nor the number of subscribing households. And the biggest issue, is that their growth and success depends on the elusive 18-34 audienceâŠtheyâre does not like the current offerings. (Mintel Pay TV, Oct. 2013) SVOD Annual sales growth at 26%! The streaming industry hit $6 Bn in 2013 and is projected to grow to $24bn by 2018. (Mintel Streaming TV, Dec. 2012) Cord Cutters Despite the intense media coverage, cord-cutters account for only 6.5% of US householdsâŠ.which is about 7M homes and only $7.5 million dollars per year from an $86 billion industry DONâT READ â KEEP IN BACK POCKET: And only 12.4% of millennial households are cord-cutters or cord-nevers. However, this represents an increase of 44% since 2010 and its still growing.
- Next up, TV Content Costs. Some would say, actually Netflix would say, as I heard their Chief Product Officer speak, that the TV Development/Production model is broken. TV is hit driven business. And TV has been built on a model where large investments are made across the board to find the biggest hits that will ultimately drive all the sunk costs into profitability. TV is extremely expensive with the average cost of a TV pilot equaling $6-8M. Once the series is greenlighted, the costs can be as high as $3 million per episode or $60k/minute, especially for a hit show like Walking dead. Now I started with Netflix, but there is something to be said about whatâs going on in the YouTube space that capturing the eyes of billions of Millennials. Independent producers are programming their own channels and creating their own content, Their model is several small investments, in short-form, lower quality contentâŠthey release them and use YouTube/Google analytics to see what works and adjust their programming in almost real-time. The YouTube content creators can create a program at approximately $100-$200 per minute. According to the CEO & Co-Founder of mitu networks â a Latino-focused network â she said, âWith the money you can create a pilotâŠI can create a whole series with the analytics to prove why this will workâ (Mintel, Streaming PayTV, Dec. 2013)
- If you look purely at the advertising revenue numbers, theyâre losing the war to the techâŠnow advertising giants. According to Nielsenâs State of Advertising, the entire TV AD spend was $78BN. Google alone brought in $50BN in ad revenueâŠ.and all the other players up here are poised for growth. Now that weâve set the stage with key insight into whatâs happening in the TV space. Letâs dive into the solutionsâŠand the first area weâll tackle is Content.
- For the sake of future growth, meaning to get this Millennial generation off of YouTube and back to cable brands. These networks have to grow the skills to create the multiexperience, multiplatform, immersive content this audience is drawn to.
- Millennials expect these multifaceted, personal experiences that they can touch and influenceâmeaning get engaged and immersed. They want to feel like they have a one-on-one connection to these stars or personalitiesâŠ.they want to talk to them and they want them to talk back. This trend is largely driven by social media and social TV efforts. The best YouTube creators do an excellent job at this. Take a look at Maker Studioâs top 2 accounts â PewDiePie and TobyGames - and their content is basically them talking to camera and playing video games. But, they ask questions to their audienceâŠthey respondâŠand they sometimes create video solely to address questions or suggestions to fans. And because of that PewDiePie has 25M subscribers and average monthly views of 265M. Networks need to add more content that drives this same one-on-one connection --- in old school terms, itâs called talk shows but in new school terms it looks like YouTube. To do this, I would leverage partnerships with digital natives to start playing with this type of programming, similar to the mash-up between Vevo & NuvoTV OR MyDamnChannel partnering with HLN for their latest series Videocracy I would start by identifying individual content producers who have an electric hold over their audience and is willing to stay active with that audience across the social space.
- Next, the biggest area of growth â related to this new type of experience â is live events. Networks need to build out brand-defining tentpole events to connect with consumers wanting an experience that goes across live, digital and social simultaneously. Live Events and the social layers it produces are becoming the ânewâ content. Itâs a premium experience unmatched by standard TV Content. You can track this trend in the increasing success of music festivals â like Coachella, Bonaroo and Lolla. And in some of the live events programming that has recently popped. An example of this is the 2013 MTV Video Music Awards which was their biggest VMA in history in terms of ratings and engagement across the digital space. They had 10.1 million viewers, a 66 percent increase versus 2012. And their biggest moment was the Miley Cyrus/Robin Thicke performance which broke a twitter record for tweets per minute. But the really interesting part, was the immediate sales effect. That night, Miley Cyrusâs album jumped to #5 on the iTunes chart and Robin Thicke saw a 306% increase in sales.
- Now to build this new type of content and to build this well, I recommend networks start creating digital platforms to serve as an incubator for innovative content and innovative content forms. This should be run separately as an internal digital studioâŠbut be charged with managing their own P&L to have an isolated case study to track the success of new business digital business models Use this platform to grow cheaper talent, test out shows before huge investment on linear, grow a digital audience base that will drive additional advertising revenue Start off with partners with credibility and awareness in the space Leverage your own brand identity and network assets to drive awareness Lastly, like YouTube and Netflix, they should leverage viewing data to help make smarter development decisions Next up, solutions for distribution.
- The biggest recommendation is to avoid content overexposure to strengthen future revenue streams While SVOD can drive additional revenue and exposure. Networks must maintain a careful balance between these benefits and overexposure or devaluing of content.
- Itâs very tempting for studios to maximize value upfront â especially when management presses distribution to get the biggest dollar. However, if the outcome devalues contentâŠthis harms the ecosystem and every studio is dependent on the ecosystem. And this is what I mean⊠The current ecosystem depends on getting high prices when content moves to TV syndication. Top shows like Big Bang Theory and Modern Family command $500k to $1.4M per episode. But, there needs to be a strategy of what content you hold off on versus maximize revenue on SVOD. Serialized dramas do well on platforms like SVOD, where you binge watch from start to finish. They also traditional donât do well in syndication because itâs harder to run these episode run of schedule. Sitcoms are the exact opposite, they command way more money in syndication because programmers can freely place episodes. Sitcoms should avoid SVOD until they maximized value on syndication
- As mentioned earlier, TV is still important and still commands the most eyeballs. But there are several trends going on in the advertising space that networks needs to pay attention toâŠthe two Iâll discuss is native advertising and tech-driven advertising.
- Thereâs something else to be learned from the way digital players are rethinking their business models. YouTube networks are focused intensely on branded contentâŠcatering to advertisers new needs for content marketing. My colleague from media-buying agency OMD: âBrands go after the YouTube networks because itâs a highly targeted audienceâŠwith high reach and very little waste.â Additionally, branded content opportunities on networks can cost 3-4xs more than a play on YouTube. Networks need to more opportunities for branded content or for advertisers to collaborate with key network influencers. And this goes back to my earlier point, that networks need a more varied programming mix that allows for one-on-one content which is what content marketers love to tap into.
- On the tech-driven side, networks just need better digital ad products â both digital only and cross platform products - that engage and target more effectively. Networks need to steal share back from digital players by creating opportunities that only networks can provide, i.e. cross platform, which will be key to advertising growth in the media industry. Advertisers are increasingly asking for better digital and cross-platform solutions and TV networks are not yet equipped to match this In my opinion, Hulu has some of the best, most innovative advertising products. This is a snapshot of what the offered at their most recent upfronts. To them, measurement goes beyond digesting what audience should get what ad â although they do that well too â theyâre interested in what device your using to serve the proper experience. In-Stream Purchase Unit: I never seen this doneâŠbut with their launch partner, Pizza Hut, you can order a pizza without ever leaving Hulu Cross Platform Interactive ads: If you buy this ad on Hulu, viewers will get a unique interactive experience for the device their viewing Hulu. Hulu 360 Ad: This is a mobile playâŠ.and it promises a unique and immersive viewing experience on your mobile device.
- And finally, our last, and in my opinion the most important, solution area â collaboration.
- If building better advertising solutions means better products and better measurement...the TV industry needs to invest in or acquire the knowledge to build these products and processes for data. Media companies now need to effectively compete against the tech giants â social and search. If Tech giants are crossing into areas â like content â why are networks not crossing into technology? The future is moving toward highly targeted and highly measured advertising solutionsâŠwhere tech reigns supreme. Media companies are gobbling up digital content producers, i.e. Maker Studios, perhaps they should be looking into technology companies to help them better compete in this new space. AOL Practicing a dual strategy â ramping up original content with 16 original shows â as debuted in their NewFront presentation â while significantly enhancing their tech expertise to create high margin advertising products. This year alone, theyâve made 3 acquisitions in the Ad Tech space. And theyâve, announced a deal with Nielsen TV to measure their content in a way that is truly comparable to TV
- Next, Iâm advocating a unilateral agenda where the members of this fragile ecosystem need to start working with each otherâŠstop competing against each other to maintain the health of the industry. The biggest hindrance I see to collaboration is all this in-fighting related to subscriptions and retransmission fees. There needs to be an end to networks trying to extract value from operatorsâŠthey need to focus on building revenue in advertising and partnering with operators. The first two things on the unilateral agenda need to be standardizing TV Everywhere and strengthening measurement capabilities for high margin advertising products Building A Unilateral Agenda: TV Everywhere Right now, just 6% of pay-TV subscribers use a TVE app once a week or moreâŠand there are still major networks without a TVE app. E! just launched their first TVE app 2 weeks. Thatâs just unacceptable! Time Warner CEO, Jeff Bewkes got the industry on an excellent start when he initiated a unilateral approach to TVE. But if this is supposed to TVâs armed offenseâŠ.theyâve got a long way to go. Need to standardize offerings ï everyone needs to get onboard (all major networks and major cable providers) and offer access to their top content Need to increase brand awareness of offerings and the convenience of these offerings ï these options canât increase the value of your PayTV if youâve never heard of it or youâve never used it
- Next on the unilateral agenda ï Data and Measurement Networks need to partner with operators to get the best data & measurement. Weâre starting to see how valuable operators data can be as we start to enter the era of addressable advertising, Targeted Advertising ï Addressable Ads Addressable advertising inserts targeted ads into programming only when the TV is on and household meets the target â specified by advertisers. DirecTV is a leader in this spaceâŠbut their inventory is only 12M homesâŠthey could use the reach of network inventory to make this a truly viable option for advertisers We see the partnership potential with NBC+ powered by ComcastâŠwhich combines NBCâs reach and sales power with Comcastâs data and access to households. This presents an advertising opportunity that only Pay TV can offer with targeting abilities to guarantee higher margins. (Mintel, TV Advertising, April 2014)
- In conclusion, there are four main areas I focused on: Content, Distribution, Advertising, Collaboration. And here are the final solutions: Build immersive, socialized experiences Avoid content overexposure to strengthen future revenue streams Invest in better ad production & more relevant measurement The future of the media industry will be depend on collaboration Â