Evolve to gain new audiences

Between 2011-2016, traditional TV viewing among 18-24 year olds in the U.S had fallen 40% and migrated to other activities or streaming. Amongst Canadians, there was a 20% increase of streamed content in 2016 vs. 2015. 

How do we evolve to better service our current and future customers?  Let’s start with our business model.  In its simplest form, the Pay TV ecosystem is a content distribution system, designed to deliver content to viewers.  For decades, content was neatly packaged under a local, national or global brand and sent into Canadian homes in a relatively closed system.  Consumers thought of their cable bill as a fixed monthly cost, analogous to a utility bill.

That was then, this is now.    

Content has changed. Global franchises or niche home-grown, the supply side is robust. There is equal enthusiasm for content that is professionally made or produced by our peers. We can watch Icelandic drama and Egyptian documentaries in our Canadian homes thanks to savvy programmers, export-focused creative industries and new markets developed by OTT platforms. We can be entertained by a niche web series or learn how to do virtually anything by watching YouTube.  We can turn on Facebook Live on our smartphone and become a micro-broadcaster with a miniature audience, mini-metrics and instant audience feedback.   

Platforms have changed. Oh, how they have changed. We have wireless devices that have opened up new hours of video viewing in the day, especially out of home. In the home, we have sophisticated systems to time-shift, lookback, look up, restart, cross-promote, sell, pre-order, rate and binge.  It’s a long list of functional capabilities that represents millions in capital.   

Distribution has changed. Analogue to digital, tape to ftp delivery, SD to HD, 3D to 4K, Go apps, VOD, IPTV, broadband growth, rise of mobile, industry consolidation, vertical integration, and the introduction of pricing and packaging rules from the regulator, to name a few changes. There is competition with new products, OTT services that battle for audience time, mindshare, wallet share, program supply and customer loyalty.  

Audiences have changed.  Literally.  Millennials make up 27% of the Canadian population and will soon outstrip Boomers in sheer numbers and purchasing power. Digital natives, Millennials are fluent with accessing their content through multiple sources and accustomed to a world of information in their hands.[1]  They’ve lived through a recession, and now earn less in a world that costs more. They accept that they need to exchange their attention (advertising) for free content.  Many create some form of content every day, even if it’s only a Snapchat or a post to social media.         

What hasn’t changed?

Audiences love content.  They love stories. Always have. Always will.  Audiences spend significant hours every day watching content.  The primacy of content and its ability to convince, to entertain and to learn is indisputable. Whether they are called Customers, Audiences or Consumers – even if we call them Millennials - we are all people and we all love content.

How do we attract the growing segment of Canadians that are watching content elsewhere and make the content distribution ecosystem financially sustainable?  We collaborate to meet the challenge, rather than cost-cutting each of our operations for short term gain.  Here are two ideas for our consideration:

1)     Drop the barriers to consuming content. Improve the platforms and the program supply to better serve customers/audiences. Work together to improve the delivery side and the program supply side will create powerful product connections and give the content distribution system the ability to demonstrate value and build loyalty.     

2)     Collaborate on data.  Collectively, we turn big data into smart, insightful data to reach customers, audiences and our third partner in the Pay TV ecosystem – consumers (via advertising). Imagine the power of all the partners and their collective perspectives working together to continually improve our ecosystem with informed insight.

 

Drop the barriers

We’ve got an amazing supply of programs in our ecosystem, but are hampered by finicky rights & windows that audiences should not be expected to understand. We’ve got VOD, TVOD, YouTube, Roku and Netflix all on our Set Top Box, but wade through multiple remotes to just turn our televisions on.  Design is not as intuitive, as audience-centred as it could be. Case in point, some operators organize their VOD content display by network ownership, presumably imagining that the only entry point to VOD content is via awareness of the linear television service – or that audiences know and remember that the funny clip they watched on their Facebook news feed is a CBC show.  Along the way to building a sophisticated content distribution ecosystem, we seem to have built barriers to the very content our audiences want. Netflix broke down some of those barriers and grew a business that none of us can ignore, entirely changing the way consumers value television.

The good news is that the desire for video content is unabated. Watching is up, way up.  Nielsen’s Q4 2015 Total Audience Report on 18-34 year olds in the US market report audiences consume an average of 4 hours per day of television, with live television comprising the majority at 2:45 hours per day and the balance on a TV-connected device[2].    

In more good news, Nielsen looked further at Millennials segmenting them into three life stages (Dependent Adults, On Their Own and Starting a Family), Nielsen found that during the On Their Own life stage, 16% were a broadband only home. When they transitioned to Starting a Family life stage, that number shrank to 6% and total percentage of cable households grew from 72% to 79% [3]. Nielsen infers that that “doing without cable and solely relying on internet-streamed video may be a life stage choice rather than a permanent decision”[4]

In Canada, we are seeing less pronounced versions of the same trend. The CRTC’s 2016 Communications Monitoring Report notes a decline in viewership of traditional television in the 18-34 demo, averaging 19.7 hours per week, down from 20.6 the previous broadcast year.  TV viewing online has increased from 5.1 hours per week in 2013 to 5.8 hours per week in 2015. Noting that 2014 data is unavailable, that’s a relatively small increase. [5] 

If the viewership is growing, how do customers feel about their service? In the Charlton Strategic Research report commissioned by CTAM Canada, loyalty to Paid TV Services among Millennials is challenged by these barriers: “Too much trouble/hassle” and “Don’t know where to look”.[6] Those are interface and discovery challenges that we can address. Yet, against the 35+ demographic, Millennials represent a higher proportion of satisfied subscribers and higher incidence of considering increasing their service[7]. Given their reported increasing use of OTT[8], Millennials still choose Pay TV and that’s good news.

Live television still matters. Where else could massive numbers of viewers participate in three of the biggest moments in live television in the past six months?  From the surprising results in the US Election to the Super Bowl to the Academy Awards Best Picture mix-up, galvanizing cultural moments were collectively experienced through live television, not on your favourite OTT provider.

Let’s make television the centre. We have the delivery infrastructure and an audience that has a massive appetite for video.  Savvy BDUs have included OTT streaming apps in their interface, keeping their customers within their ecosystem, a smart move that could neutralize price comparisons.  However, we must continually improve the user interface to meet the expectations of customers, and the generations that follow them. With deeper rights and longer windows supplied by content providers, from the EPG grid to the TVE and Go apps, let’s make content easy to find, relevant to our audience/customer, binge-able and accessible.  

Once we can deliver a seamless entertainment network hub, customers will keep returning to the biggest screen in the home.  According to Bharat Anand, in his book The Content Trap, consumers are willing to pay a “convenience fee”[9] for content that they could normally find elsewhere, even at a low/no cost.  Citing major digital brand offerings Apple Music and New York Times digital edition, both companies overcame the threat of free music or free/easily accessible articles online, respectively, and both built excellent products that gained and retained loyal customers and significant revenue.

Collaborate on Data

Customers, Audiences, Consumers. Whether a BDU, a Network or an Advertiser, we all value the human at the centre of this Venn Diagram.  Interdependent, we all bring unique insight into human behavior and yet we operate on assumptions, pre-conceived notions and even guesses in the current system. Set top box data is a powerful tool that will enormously benefit all partners with deeper knowledge about a BDU’s Customer, a Network’s Audience, and an Advertiser’s Consumer. Let’s open up that data and learn together, find new opportunities, and new revenue to build a financially robust system.

Set top box data has given BDU’s a jump on understanding per unit business costs, managing system load based on demand, and a powerful tool for rate negotiations. Let’s consider how powerful and smart that data will be once we involve all partners to better understand our customers, audiences and consumers.

For Networks, years of looking at Numeris data provides some insight into the audiences that channels exist to serve – on the linear service.   Where content providers have long focused and developed expertise on the flow of the linear schedule, they would benefit from understanding audiences’ use of non-linear content and could better curate to create an appealing and relevant organizing principle behind the content. With this knowledge, we would avoid commoditizing content and instead add value for audiences, regardless of their entry point.

Our third partner, the advertising industry is embracing advanced advertising techniques with digital/dynamic ad insertion but we need to deliver more opportunities as an industry.  With reported annual spends of $3.5billion on television [10] and $4.3billion spent on digital advertising (chiefly spent on Google & Facebook), we could repatriate Canadian advertising dollars to continue financial sustainability.

Collaborate to build business intelligence on key segments such as Millennials.  For example, we could test the power of emotional scheduling. The kid audience, despite their access to mobile devices and digital fluency, still watch linear television at predictable times of day. In fact, the 2-11-year-old audience was the segment that most increased linear television viewing in Canada in 2015[11].    And their Millennial parents co-view.  Harness a Network’s insight into their audience and their behavior and match that with BDUs need to demonstrate value, and both parties will better understand their audiences/customers and build loyalty.          

Make the technology intuitive and seamless across devices, supply more programming, make the customer your most important asset and work together to mine the data to inform and collaborate with all of the partners in the television content distribution industry and we will build a powerful and healthy ecosystem that continues to do what we do best: deliver content to viewers.

 

 

 

 

[1] Environics Analytics: January 22, 2016 http://www.environicsanalytics.ca/blog-details/ea-blog/2016/01/22/millennials-the-generation-du-jour. Retrieved March 1, 2017

[2] Nielsen Q4 2015 Total Audience Report, retrieved 28 February 2017 http://www.nielsen.com/us/en/insights/reports/2016.html?sortbyScore=false&tag=Category%3AMedia+and+Entertainment

[3] Nielsen, page 9

[4] Nielsen, page 9

[5] CRTC 2016 Communications Monitoring Report, retrieved 4 March 2017 http://www.crtc.gc.ca/eng/publications/reports/PolicyMonitoring/2016/cmr.htm#toc

[6] CTAM Canada 2016 Research, Paid TV Among Millennials, Charlton Strategic Research. Page 3, Retrieved March 1, 2017

[7] CTAM Canada, 5

[8] CTAM Canada, 7

[9] Bharat Anand. The Content Trap. (New York: Random House 2016) 43

[10] Statistics and Facts about the Advertising Industry in Canada.  https://www.statista.com/topics/1837/advertising-in-canada/ Retrieved March 9, 2017

[11] CRTC 2016 Communications Monitoring Report, retrieved 4 March 2017 http://www.crtc.gc.ca/eng/publications/reports/PolicyMonitoring/2016/cmr.htm#toc

Lisa Purdy