The "Journey" is the Message at VideoSchmooze

The great and unprecedented change occurring in the media industry today is taking many twists and turns. Many of the panelists at the recent VideoSchmooze spoke of the consumer and the content journey as it wends through various platforms and takes on different forms and formats. Some described it as a "journey" of discovery. 

Making sense of these journeys is the key to success for media companies and requires astute strategists that cull through big datasets for insights. What we accept as common wisdom may not be true at all. We need to differentiate historically accepted shibboleths from the current realities.  Here are some trends identified at the VideoSchmooze and what they really mean for the future of the business.

VideoSchmooze is an annual event hosted by VideoNuze (www.videonuze.com), an online publication that provides daily industry analysis and curated news for industry thought leaders. President and founder Will Richmond focuses his firm on online and mobile-delivered video.

Help the Consumer Discover Content but Expect Upheaval
According to Dounia Turrill, Nielsen's SVP of Client Insights, those companies that focus on positive consumer experiences in discovering content will succeed. "There is now an ease of use and accessibility of devices to provide content that is seamless and provide the viewer with a good experience.” And while technology is driving the increasing number of content choices for viewers, this can upend the other industry sectors. Turrill noted, “SVOD has a long term impact on syndication.”

Consumer Behavior Does Not Necessarily Pull Industry Trends. It Could Be Industry Push.
Bruce Leichtman, President and Principal Analyst of Leichtman Research Group, spoke of the losses and gains in the pay TV industry. “The industry”, he said, “is controlled primarily of the big players where the top 13 providers control 95% of the market.” These big players impact industry trends. "The industry has a seasonality to it – subscriptions are up in the first quarter and down in the second every year."  But what causes these trends? According to Leichtman, it is not consumer holiday shopping, for example. "Consumer adoption has nothing to do with consumers. Subscriptions take off because of industry push not because of consumer pull."

We Talk a Brave Game but Dark Clouds Are Gathering
Leichtman rattled off a series of findings, “Cable is slowing losses though year to year. Share shift is happening. Telcos added 1.1 million. Satcom gaining too. Empirical data says major providers lost 0.1% of industry. The industry is saturated. Penetration is decreasing. The industry started to decline in the digital transition. 2011. All the housing growth in last ten years is renting.” What all of this means is that there is little actual current growth. It is more shifting loyalties where one type of MVPD gains at the expense of another. And since homeownership for the future generations is deferred, future growth is not assured. 

But we have the wherewithal to forge a great future for television --

Personalization is Here and Enhances Viewing Experience

The viewer experience continues to improve. Technology is enabling companies to more easily personalize content for their customers. This is especially evident in sports programming as Clark Pierce, SVP of Mobile and Advanced Platforms for Fox Sports explained, “We can get that granular - seeing one team play on your television on one side of the street and see another game on the television on the other side of the street.” Even Big Data is being used more strategically and individually to improve and sustain viewer satisfaction. Chris Ambrozic, Senior Director of Products, Digitalsmiths (a Tivo subsidiary), said, “We need to get the heartbeat of a subscriber with second by second data and what motivates and drives their satisfaction. With the Pay TV industry, the heartbeat of subscriber correlates with success. “When you make the viewing experience more enjoyable and make it easier to pay for it, piracy should go down. Greg Clayman, General Manager of Audience Networks at Vimeo, believes that “the easier you make it to purchase than it is to pirate, the more people will buy content and not try to find it for free.”

This article first appeared on www.mediapost.com.

Parsing the Media Prognosticators

After attending a range of media events in 2013, I found that there were pronouncements and predictions at one conference that often contradicted those at others. Is cord cutting generational, shaved or non-existent? What is responsible for the slow pace of a standard cross platform measurement? What is the future of set top box data and Big Data in general? How will (choose one or more) dynamic ad insertion, addressable advertising, programmatic buying etc impact the sales side of the industry?

Some interesting assessments could be found at the VideoSchmooze Online Video Forum which offered lively de-constructions of media shibboleths. Nothing was sacred.  And because it was scheduled in December, it provided a last word, of sorts, before the end of 2013.

According to industry analysts Craig Moffet and Bruce Leichtmen, there are conflicting stories in the press about whether cord cutting, Netflix, fragmentation, the bundle, the internet, you name it, is a threat to the standard business model. Their session “A Deep Dive into Video’s Tectonic Shifts” demonstrated that all is not what it appears to be.

As we look back at 2013 and forward to 2014, Moffet’s and Leichtman’s provocative panel separates the truth from the hyperbole. See a short video here.

 

Cord Cutting

Is cord cutting an issue? According to Moffet, cord cutting de-accelerated in 3Q13. That means it is going down, unlike what was reported in the mainstream technology press at the time. The fact that it was misreported as accelerating indicated to Moffet that “it speaks to a desire in the tech press for parables – overthrowing the oppressive MVPDs. But the math tells you otherwise.” Yes, there are those households that are cutting the cord. “There is no question that people are cutting the cord but it is not a torrent. It is a trickle.”

Pay TV

What does seem to be losing ground is Pay TV and that is because cord cutting, or lowering your media bill is economically driven.  Moffet noted that the past twelve months were the worst performing months in Pay TV history. Why? “Economic reasons and alternatives at the low end of the spectrum” posits Leichtman. Young people actually crave full subscription cable and are deferring their subscriptions until they can afford it. Moffet, citing a sample of one – his 27 year old daughter – reaffirmed this theory. “If you have cable it means that you are rich and it is cool to be rich”, he says, she says.

Netflix

Somewhat surprisingly, Netflix was cited as a company that has a “dirty little secret” according to Leichtman. “Netflix churn was 70%. Now it is 50%. It is low price and high churn which gives it a low barrier to entry and a low barrier to exit. Netflix is up to 32 million subscribers but its target is 60-90 million.” Obviously this has not negatively impacted the stock price but it is still surprising to hear. However, Netflix can hurt the ecosystem by gaining rights to programming from the studios and networks which may undervalue certain content. In fact, Moffet says that licensing to Netflix is like crack to the networks. “The networks are addicted to licensing content to Netflix.” The problem will exacerbate at the time when digital demands only the good content from networks instead of all content.

Bundling

Don’t expect unbundling to happen anytime soon according to Moffet. “It is harder to blow up the ecosystem than you think. The reason you can’t get networks unbundled is that programmers don’t want to sell it that way.” The forced packaging of smaller niche networks (or highly expensive but not universally popular networks) with their larger mainstream siblings keeps both programmer and MVPD profitable.

The future of media is still to be written. But right or wrong, many of these ideas are provocative and make good talking points. It remains to be seen whether they have stamina in the marketplace and predictability of what will come. Stay tuned.