The media ecosystem is constantly evolving to embrace new forms of content, platforms, distribution, and technology. Social platforms, user-generated content, and streaming services all play a part in transforming the consumer relationship.
As a result, digital publishers increasingly look to a direct to consumer (DTC) business models as a go-to strategy for content distribution. For online consumers, access to a streaming video service is a daily connection point. According to Brightback’s third annual State of Industry Report, 98% of online consumers subscribe to streaming media. In fact, the majority (75%) of this audience subscribes to two or more services.
Subscription adoption
The pandemic is a key influencer in consumer adoption of streaming subscriptions. More than one-third (36%) of consumers state their subscriptions started with the onset of Covid-19. Significantly, 86% of subscribers say they plan to maintain their streaming services even after the pandemic. While many direct to consumer (DTC) subscription services registered increases compared to last year, technology-first subscriptions outpace physical goods subscriptions.
Managing cancellations
Online consumers want a seamless process from sign-up to cancellation. Some state regulators (i.e., California and New York) require digital subscription vendors with an online registration process to offer customers an online cancel option. And most consumers (60%) also favor an online cancellation option.
Interestingly, almost one-third (32%) of this audience changed their mind about canceling a service after being offered an incentive. Of those who did not cancel their service(s), the incentives included:
49% discount;
28% account credit;
26% pause plan;
25% downgrade;
22% skip payments;
21% switch product or plan; and
20% partner offering or bundling.
It turns out that cancellation is a big part of the consumer satisfaction equation. In terms of providing the best cancellation experience, Netflix ranks highest at 23%. Amazon Prime places second with 10% of participants’ vote.
Streaming subscription services offer a strong DTC distribution channel for digital content companies. They also offer new consumer engagement opportunities. And, according to Gartner, by 2023, three-quarters of DTC businesses will offer a subscription service but only 20% will succeed in customer retention. Growth is critical, but a positive overall experience — even cancellation — factor into keeping the customer satisfied and keeping the customer in the long term.
According to Deloitte’s Media Trends Report, at the start of 2020, consumers subscribed to an average of three paid streaming video services. Ten months later, in October 2020, consumers subscribed to an average of five services. However, while consumers have shown a large appetite for streaming content, the number of services is proliferating fast.
In this very competitive marketplace, streaming video services are spending heavily to attract new subscribers. In fact, an estimated $200 per year is spent on marketing to attract each new subscriber. To make back these costs, services must retain a new subscriber for up to 15 months. With high acquisition costs and little friction to cancel, streaming video services must work diligently and strategically to retain subscribers.
Choice and churn
Deloitte’s data shows that even while the number of subscriptions increase, consumers now cancel services more often. Twelve months ago, one in five respondents (20%) report canceling a streaming service. However, in October 2020, close to half of the respondents (46%) report canceling at least one service.
Further, in May 2020, 9% report that they both added and canceled a streaming video service. By October 2020, slightly more than one-third of consumers (34%) state they both added and cancelled a service. Unfortunately, less than half of all subscribers see their streaming video subscriptions as a must-have.
Engagement in this new era
Investing in content is expensive and necessary to differentiate a streaming video brand. More than half of respondents (55%) report they subscribe to a streaming video service because it includes a broad range of television shows and movies. Forty-three percent subscribe because the service offers both original and exclusive content and 27% subscribe to a new service because it offers ad-free viewing.
While content is king, consumers who subscribe for a particular show may not stay long enough to find another. In fact, 62% of respondents who sign-up to watch a specific show, then cancelled once they finish watching it. Obviously, engaging and retaining subscribers is critical to business. Respondents report the following offers help stop them from canceling a service:
28% a reduced cost, ad-supported tier of the service.
27% exclusive new movies or new series.
23% in-home viewing of a theatrical release the same days it’s released in theaters.
22% multiple people under the same account can watch at the same time.
18% watch movies with others on social platforms.
18% discounts on related merchandize and entertainment.
17% download and watch content offline.
Subscription (and ad) appeal
The impact of Covid-19 on household finances also appears to play a role in determining which services consumers hold onto for their entertainment. Subscriptions to at least one-ad supported service increased from 40% in January 2020 to 60% in October 2020. Individuals are willing to watch ads in exchange for a reduction in the subscription cost. On average, respondents report seven minutes of ads per hour is reasonable.
Streaming video services need to continually deliver value to their subscribers. In the subscription business, it is important to think beyond payments as a touchpoint. Understanding and getting closer to the consumer is the holy grail. The good news is that first-party audience data can provide highly useful insights.
Leveraging insights to tailor programs and memberships for different type of viewers can also offer a more personalized user experience. This way, audience fragments become super-served niches and loyal viewers become VIP members — who will stick around and pay off in the long term.
The proliferation of on-demand platforms and services combine to drive what Nielsen calls “the most profound media disruption of the last half-century.” Record-high audience numbers and time spent using streaming services and apps add up to make 2020 the biggest year yet for streaming.
But the real growth could be in serving culturally relevant content to underserved audiences such as Hispanics, which now make up nearly 20% of the current U.S. population. It’s a demographic that demands balanced content and appreciates diverse views and voices. It’s also an audience of cord-cutters that uses streaming services, smartphones and apps. During March, Hispanics increased their weekly viewing of movies or TV shows using a streaming service by “about 8 hours.” That’s well above the numbers reported by non-Hispanics.
It will be a stretch for many mainstream content companies to bulk up on content and capabilities to cater to this mobile-first audience with culturally relevant content. But not all companies will be in catch-up mode in 2021. Vix, a free Spanish-language ad-supported video-on-demand streaming service (AVOD) company founded in 2016, has a significant head start.
Inside Vix’s success
The move to acquire Pongalo, a market-leading Hispanic AVOD, in August 2019, has established Vix as the largest Latino AVOD player in the world, growing its audience more than 10x. Today, Vix, backed by Discovery Communications and HarbourVest Capital, creates, acquires, and distributes Hispanic-focused content to audiences in the U.S., Latin America and across the globe. It counts over 20,000 hours of Latino-focused films and TV shows.
Blockbuster and premium content is a crowd-pleaser. But it’s the company’s social media footprint, which includes 100 million Facebook followers, that keeps audiences engaged. Importantly, social media is also the motor that drives customer acquisition and allows a modest 50-person ad sales team to achieve ambitious growth targets and expand efforts to Brazil.
The company has also grown the number of partnerships (Amazon, Google and Roku). The top-ranked app (the #1 most downloaded entertainment app on Android devices in Mexico ahead of Netflix) recently became a top-five free film and TV streaming app on Roku in the U.S. Vix is the first-ever free streaming app to hit that benchmark.
Continuing our series of DCN video interviews, I talk to Rich Hull, formerly the CEO of Pongalo. Hull, now the Head of Streaming Platforms and Chief Strategy Officer at Vix, received Variety’s Dealmaker of the Year honors for his part in architecting one of the most significant media deals of 2019. He is also instrumental in growing Vix’s platforms and partners.
In this interview, we discuss why all media companies must acknowledge the demographic revolution and the requirement to serve up culturally relevant content to 60 million Hispanics in the U.S. alone. We also debate the future of streaming, the role of personalization and the business benefit at the “collision of advertising, international and content.”
Here are three key takeaways from our talk:
Drive discoverability through platform diversity
U.S. Hispanics are ahead of the curve when it comes to digital. They lead in the adoption of new devices and services. And they are the power users of mobile and over-index in video consumption.
To keep pace with consumers and cater to a growing and global audience for Spanish language content, Vix has maintained a mobile-first approach. It’s all about choice and letting consumers decide for themselves how they want to consume our content, Hull says.
To date, Vix is available on multiple platforms including Apple TV, Fire TV, Roku and connected TV devices from Samsung and Vizio. “We’ve put ourselves there so that they can discover us.” Following this strategy has allowed Vix to “punch above its weight” and leverage partnerships to build scale. Amazon counts Vix as its biggest supplier of Hispanic content, Hulls says. It’s more than an accolade. It’s also an inroad to Amazon’s Alexa, a platform Hull says is important for his company – and many others – to extend the brand and win new audiences.
Tap social media to fuel your audience growth flywheel
Social media presence boosts awareness and buzz. But there’s no reason to stop there. Vix has tapped its community to create a new kind of funnel, Hull says. The audience of 100 million Facebook followers alone is one that Vix cultivates and activates with content. “It’s a really massive audience that we can speak to and it’s a very powerful megaphone that we have,” he explains.
At a high level, Vix works with major brands to create content and branded entertainment to amplify key messages and recruit audiences. “So we’ll do things like say: Here are the top five J-Lo movies ever made and, as it turns out, we’ve got two of them, so click here to install our streaming service.’” The outcome, he says, is a “very elegant way to drive people down the funnel.” It’s also helping Vix increase organic reach and reduce dependence on Facebook or Google or Apple search ads to target audiences.
Engage consumers by making free content the “front porch” of your offer
In the search to find the right mix between subscription models and advertising companies, Hull says companies should widen the aperture of how they view the potential of free content supported by advertising. He points to the example of NBCUniversal. Rather than compete head-on with Disney, AT&T’s WarnerMedia and others that have launched subscription-based on-demand services to compete (or at least catch up) with Netflix, NBC has launched a free, ad-supported service. Free doesn’t just bolster audience numbers, he says, “As the space evolves, where [streaming] is monetized with ads, it is also becoming a better user experience.”
In addition to challenging the viability of locking content behind a subscription wall, Hull also debunks the myth that original content is the way to win audiences. Granted, Game of Thrones and original content has paid dividends for Netflix, but it’s a competitive space where smaller players can go broke fast. Instead, Hull advises companies to keep content free, and bottom lines in the lack, by curating quality content, not creating it. “For us, it’s about volume and choice,” he says. The value is in curating content in a “very authentic way.”
In 2020, the over-the-top (OTT) landscape shifted greatly, ushering in a new era for subscription-based OTT video streaming services. New players like HBO Max, Disney+, and Peacock joined the scene. All the while, service providers like Netflix, Hulu, and Amazon Prime Video continued to dominate the market.
So, what is next? OTT services are predicted to generate just over $158 billion in ad revenue by 2024.
As OTT experiences these major growths and investments, it brings about some key advertising questions – What are the best practices for selling advertising in this emerging channel? Which channels have the best measurement? How is OTT different from linear TV? And, more. With that, MediaRadar hosted a virtual panel to explore these recent and upcoming changes in OTT, plus what the future holds for this type of advertising.
Los Angeles Times reporter Wendy Lee moderated the discussion.And panelists included Bill Condon of Xumo, Justin Gutschmidt of Premion, and Matt Graham of Acorn TV, as well as myself. Here is a recap of some of the key insights discussed.
Ad innovation
While TV advertising has been largely the same for decades, OTT platforms are changing the game, offering new ways for advertisers to get their messages across. Hulu, for example, has a choose‐your‐own‐adventure‐type ad option, allowing viewers to select which of multiple ad options they would like to watch. Hulu also uses interstitial and binge ad options, a format where viewers can watch all their ads at once so they don’t have to be interrupted later.
After a lifetime of seeing TV ads presented in one way, these new, more creative ad options feel refreshing. They also help keep audiences engaged. With more of a change in what they’re watching, most people are much less likely to get bored. In fact, Hulu claims that the options provided by their platform lead to a 150% increase in brand recall.
Targeting
OTT advertising offers many advantages to brands looking to get more for their money, as well as more views, more click‐throughs, and more sales, and provides opportunities to get a message in front of the right people at the right time. Leveraging the audience data that OTT channels provide, advertisers are able to produce highly targeted campaigns. They can segment audiences based on geographic location, demographics, preferred content, and much more. Advertisers can also capture impression data for guiding future ad buys.
By narrowing down an ad’s audience to include only those to whom it is relevant and applicable, brands drive awareness. They also save money by not showing ads to obvious dead ends. Audiences also appreciate not being shown ads that don’t apply to them.
Consolidation
As OTT content becomes more popular, the industry is starting to consolidate. For example, Xumo was acquired by Comcast in February 2020. According to Bill Condon of Xumo, being tied to a larger company has boded well for them.
“Right before the pandemic hit, we were doing well. But, being tied to a larger company has been really beneficial. I’d say there’s four key areas in terms of what has been helpful to Xumo,” Condon explained.
Condon shared that distribution, discoverability, content, and data were four primary benefits of the merger for Xumo. With Comcast’s help, Xumo now reaches a wider audience and is easier for potential audience members to find. It has also seen a large increase in the content acquisition budget, and has access to more data and data processing tools. Other companies are likely to undergo similar merges and find similar benefits, moving forward.
The number of unique OTT providers will likely decrease, now that all of the major players have introduced their OTT platforms. The average OTT consumer is willing to pay for about 3.2 platforms. Past this threshold, they are willing to accept ad-supported OTT, which major leaders already offer (i.e. Peacock and HBO Max starting next year).
What’s Next?
At MediaRadar we track what happens to our customers and, out of those 2,400 customers we track, there was more M&A activity last quarter than any single quarter in our ten years of doing this. As for the number of OTT platforms, this consolidation is a strong sign that the industry is maturing. As the platforms band together for various benefits, we will soon learn what else they can offer.
With many big name players already on the scene, the future of OTT advertising will be interesting. As advertisers continue to capitalize on the benefits of OTT, it is only a matter of time before we begin seeing even more of its potential and profitability play out.
With a rapidly evolving digital media landscape, it’s not surprising that media companies — newsrooms in particular — have faced new challenges and new pressures. A significant decline in traditional broadcast and appointment-style viewership has coincided with an explosion in increasingly accessible digital and on-demand streaming. Technology has already radically altered many of the fundamental realities around content creation and consumption that newsrooms were built on.
Media professionals recognize the need to evolve to keep pace with these changes. But connecting with and retaining content consumers who now have a virtually unlimited range of options available to them is easier said than done. More importantly, finding efficient and cost-effective ways to produce, distribute, and monetize content can seem like a formidable hurdle. But it is possible, especially with new tools and platforms emerging that are designed to enable newsrooms and other traditional content creators to make the process better fit the realities of today.
Be an educated adopter
Every platform makes big claims. All promise new efficiencies. Educate yourself and understand how to examine those claims with a critical eye. Make sure whatever path you choose, your digital content solution can efficiently develop content and create and deliver high quality viewing experiences in a way that is impactful, profitable, and sustainable. The right solution should answer important questions for you, including how to balance live and pre-recorded content, how to access and insert ads, and how to do all that in a streamlined and efficient manner.
Utilize automation
For organizations where a large majority of on-demand content originates from their live programming or other sources of traditional linear content, taking full advantage of digital streaming requires some level of automated prowess. The goal is to minimize the number of toolsets needed to be deployed throughout the process of generating digital streaming content.
Automation and “hands-free” production can yield new efficiencies, saving time and money on tools, resources, and manpower at a time when media companies are often dealing with tight margins and are already making tough ROI calculations. In that context, the ability to effectively automate the process of generating more digital content is enormously valuable. Automated tools and solutions make it possible to accelerate the digital production and distribution of your content without interrupting what you are already doing.
Lighten the workload
For media companies, creating content is just the first step. It is critically important to find ways to streamline the workflow required to efficiently edit, develop and distribute volumes of new content to digital audiences. Fortunately, new suites of tools are becoming available that can make that digital/online transition possible.
Keeping fresh content in front of viewers is difficult. Instead of relying on tools that require manual curation of playlists – and thus a person on staff dedicated to the role – consider a tool with capabilities to populate playlists automatically. This frees up staff to focus on the actual process of creating the content, rather than managing it. And the best tools on the market today also can lighten the load in other ways, from auto-clipping a newscast to the seamless transition between live and breaking news to prerecorded video.
Prioritize simplicity
At a time when some newsrooms have had to entirely reorganize to accommodate much more extensive digital production and distribution needs, simplicity is an appealing prospect. Which is why it makes sense to invest in tools meant to automate the ingestion of incoming content. Whether it’s aggregating content from multiple newsrooms or introducing content from other sources, bringing designated content from a range of different sources into the digital content ecosystem of target audiences is a way to lessen the load on your team and your resources, while still delivering compelling content.
Another important feature for streamlined simplicity is handling all of the technical heavy-lifting server-side, which makes it possible to have a simplified workflow and create a unified viewing experience across all digital platforms.
Embrace efficiency
As newsrooms evaluate and leverage tools and technology designed specifically to help them take that all-important step to expand the distribution of streaming monetizable content, it’s important to understand how efficiency translates into revenue. Monetization opportunities are all about scale. More content yields more viewers, which subsequently creates numerous opportunities for monetization. In other words, efficiency isn’t just helpful, it’s a prerequisite for sustainable profitability.
To take the next step forward, newsrooms will need to embrace tools and systems that allow them to quickly, efficiently and automatically update digital content. This includes graphic elements, closed captioning, and added metadata.
Engage viewers
Recognize the importance of the viewer experience. Manage your content with tools designed to connect content with viewers and help them understand critical context about what they are watching. Creating a better viewing experience also means letting consumers know when something is breaking news, and then returning them back to what they were originally tuned in to watch. It’s the feel of live content with dynamic elements that elevate the standard static viewing model into something more engaging.
Viewer expectations are skyrocketing. And media companies are wrestling with complex (and often costly) changes they feel like they need to make to meet those expectations. But charting a path forward in our new environment might be easier than many suspect. Streamlined content creation tools can not only make the digital transition successful for newsrooms and their operational needs; they can enhance the online viewing experience and boost bottom lines in the process.
About the author
David Hemingway is the Sr. Product Manager, New Ventures at Bitcentral, one of the video industry’s most trusted and innovative software providers.
As more media companies enter the streaming video marketplace, consumers are presented with more choices and content. The good news is that, overall, consumers value the video subscriptions they subscribe to. Hub Entertainments’ annual Monetizing Video report finds that 62% of viewers feel they get at least a “good” value from their TV subscriptions. Hub’s research was conducted with over 2,000 broadband users, age 16-74, who watch at least 1 hour of TV per week.
Significantly, holding subscriptions in high esteem is not necessarily a side-effect of Covid-19. While lockdowns helped drive viewership and overall value, we have seen high levels before shelter-in-place orders. In fact, DCN’s Digital Subscription Economy research showed that 64% of consumers reported their subscription(s) offer high value.
Valued services
Across the different video/TV services consumers use, streaming services topped the list in terms of value for the money. Seven in 10 rated Netflix, Hulu, Disney+, and Amazon Prime as excellent or good value for the money. Boasting deep libraries of content, streaming are convenient and appealing entertainment resources. In contrast, only four in 10 consumers ranked traditional pay-TV as a good value for the money.
Consumers estimate they spend $94 per month for all their TV subscriptions combined. However, they believe they should only pay $72 per month. It is interesting that, even though they are paying $22 more each month, subscriptions services are still perceived as a good value.
Actual vs. reasonable price
Breaking down the payments across the television categories, traditional pay-TV subscribers (no SVOD) are the most likely to feel their total TV bill is higher than reasonable. They estimate they are paying $106 for their subscriptions but think they should only pay $69. The actual vs. reasonable gap is $37 more than they think they should pay.
Pay-TV only (including SVOD) subscribers estimate paying $107. However they think they should only pay $79, making the actual vs. reasonable gap $29. Consumers paying for streaming-services only (no pay TV service) estimate they are paying $60 and think they should only pay $54. This is the only cohort that thinks they are paying the appropriate amount.
Consumers ranked the kind and amount of content a platform offers right up there with pricing as the most important features. Least important features included both recommendations and notifications.
Streaming theatrical releases
Accessing theatrical releases at home is of high appeal among adults 18-34 years old. In fact, 63% of young adults, a key target audience in the theatrical movie business, say they definitely/probably would pay to stream a movie at the same time it’s released in the movie theater. Consumers 35+ differed greatly. Only 12% said they’d definitely/probably pay to stream a movie at the same time released in a movie theater. Further, 18-34 years olds show a strong willing to pay with 65% would definitely/probably pay $15 dollars, 65% would definitely/probably pay $25 and 57% pay $50.
Streaming theatrical releases is a completely different distribution dynamic, altering the window availability across the distribution timeline. The recent release of the big Broadway musical “Hamilton” on Disney+ serves as a promising start with more than 725k global downloads. This marks a 47% increase in app downloads compared to the average four weeks in June. Of course, not all movies will have “Hamilton” level success. Monitoring and evaluating new distribution patterns will be critical to understanding how wide-spread streaming and its adoption becomes for theatrical release.
About a third of
households are likely to adopt a vMVPD service within the
next year according to Parks
Associates research service OTT Video Market
Tracker, which analyzes the impact of new and existing video services
in the OTT space. Pluto TV, Crackle, and The Roku Channel are
the leading ad-supported OTT options, though Parks finds that no single service
currently dominates the vMVPD market.
Parks latest report finds that one-third of broadband households have trialed an OTT subscription service in the past six months. The good news is that two-thirds of those trialing OTT services subscribe to one or more of the services that they test.
That said, this is competitive market filled
with an ever-growing number of choices. Thus, Parks finds that churn is “particularly
intense in the pay-TV sector.” They
advise that “building a strong customer base over time and continuing to serve its
needs through content” is the best way to prevent churn. Netflix, Amazon, and
Hulu have substantially lower churn rates than less-established OTT players.
However, they point out that, particularly where differentiation is limited (as
in vMVPDs), tenure in the market may not be enough to produce loyalty.
Parks also finds
that:
Given
that vMVPD services are relatively new, service churn is high as consumers test
the different options available. Significant subscriber losses by DIRECTV Now
(AT&T TV Now) contribute to this figure.
A
preference by some consumers for pay TV, service contracts, bundling discounts,
and the hassle of switching providers all contribute to lower annual churn
rates for pay-TV providers compared with OTT or vMVPD services.
The
Pay-TVchurn figure for Q3 2018 includes all pay-TV services, including both
traditional and vMVPD.
OTT services are increasingly moving beyond customer acquisition as they seek to build a sustainable customer base. The upcoming market entry of Disney+, Apple TV+, HBO Max, and NBC’s Peacock (among others) has caused many industry players to reassess their approach to retention and consumers’ interest in subscribing to multiple streaming services.
By better understanding consumer attitudes, motivations, and
habits related to churn, service providers can more effectively create service
experiences will reduce churn and create a loyal customer base.
It’s a brand people have known and loved for four and a half
decades – as a magazine. Now People is focused on video, determined to
grow the brand and bring its content to new, and larger, audiences.
“The most important thing is that the brand has to have a
voice to begin with,” said Will Lee, SVP of Digital for the Entertainment Group
of Meredith Corp., a role he’s held for two years, which coincides with
Meredith’s acquisition of Time, Inc. “People has a very strong brand
voice that it’s cultivated over 45 years. We know what the consumer expects
from us. We have a very well-developed playbook for how the brand should sound
and look.”
People’s emotional DNA
That means sticking to the brand’s core emotional DNA when showing
work on Snapchat, for example. “We don’t say snarky, mean things about
celebrities. It’s not what we do.” So, even if Snap viewers prefer things a
little salty, People stays true to its own style, regardless of medium.
“We get a lot of data from Snapchat,” Lee said, “and that audience has evolved.
It’s very different from what it was three years ago.”
People’s video content focuses on what Lee called
“the three R’s, the content their readers just can’t get enough of: reality TV,
the British Royal family, and the red carpet. “Streaming is a different level
of engagement. The really passionate audience comes from reality TV.” So, Lee’s
team of 60 to 80 staffers produce a reality-based video show four nights a week
and a Royals show once a week. “Reality TV is a conversation starter,” said
Lee, of the genre’s powerful appeal.
Reality check
The numbers back him up. “We’ve done 100 episodes of ‘Reality
Check.’ And after four episodes, we already had the second most viewed show on
people.com, with 2 to 3 million views of show clips in a week. That is a pretty
good debut for us.”
Pivoting constantly is key and Lee knows how hard his team
works to keep up. “All the parts of video work closely together because we’re
constantly iterating product on a daily basis. It’s a very special kind of
producer who can do three or four formats and keep it all together.”
“What’s interesting about our model is that we’re not tied
to 26-week orders so we can adjust. We have a lot of flexibility which
differentiates us from cable. We can iterate and improve the product.”
Brand building
But, when deciding which next steps to take, “we have to be
very thoughtful, as a media brand with a history and the brand equity we’ve
built,” Lee added. “Where is the growth? How do we amplify the brand and move
into new markets?” Newer platforms like TikTok , he said, are “the solar power.
That’s where the future lies. We have a great brand, but that is no guarantee
of future growth.”
However, Lee feels confident that streaming is essential to
their success. “That’s why we’ve made such a big bet on it. If we’re not in
that space, we’re going to be left behind.”
Lee’s team also partners with Meredith Local Media Group , which has 17 TV stations across the country, which Meredith will leverage when it launches a new daily syndicated television show in September 2020. “That will be the centerpiece of our overall video product.” Lee acknowledged how ambitious this new product is: “Thirty minutes of daily broadcast level TV is a huge amount of work.” The magazine-style show, with “all new and original material really represents a pretty important next step for this iconic brand. It brings us more markets, and more audience. There aren’t a lot of media brands that will have this as part of their media ecosystem. In a company already producing print, digital and video, “this is going to be another evolution of how we all work together,” he said.
Entertaining audiences
When it comes to his other responsibility, Entertainment
Weekly, Lee says a new launch is imminent as well. “We’re really trying to
amplify the brand. We want to go to where the audience is, in local markets.
It’s important for us to reach those audiences.”
EW has announced that it will be working with Jeffrey Katzenberg’s short form mobile video platform Quibi, slated to launch in April 2020. The morning show, which will recap late-night TV, will take a similar strategic approach to the Lee he employs with People. However, he emphasizes that the brands are quite distinct, and that EW is “known as a cultural curator.” That should play well on Quibi, which offers a new audience that Lee is excited to reach.
It’s a big month for streaming. The launch of Apple TV+ and Disney+ are finally upon us. So it’s a good time for an update on the state of the streaming wars.
In this strange new world, tech companies like Apple are investing in content, and media companies like Disney are investing in technology. So how does? all this effort stack up? A closer look at the content and ad spend of these new OTT major players provides some insight into the future of streaming.
Content spending among new OTT services
At launch, Disney+ unsurprisingly boasts a sizable catalog of Disney-owned content. The company has also announced that $2.5 billion will be allocated to producing more original content for the platform over the next 5 years.
Conversely, Apple has opted for a small but mighty catalog. At launch AppleTV+ was armed with considerable “star power” to entice subscribers. The platform will host entirely original content exclusively available to AppleTV+ subscribers. And pre-launch advertisements reveal some of the biggest names in acting and directing.
Although these two major players bring promising new content to the OTT lineup, they will have to continuously find ways to retain value in the eyes of consumers.
Monthly subscriptions to the top seven streaming platforms will collectively cost $61. Consumers will more realistically pick and choose the platforms they actually want to pay for. These leaves companies pitching both price point and content.
Clearly, these numbers indicate that Disney and Apple are attempting to join the royalty of OTT, made up of existing streamers like Netflix, Amazon, and Hulu, which all have their own originally produced hits. With the launch of HBO Max in 2020, AT&T’s WarnerMedia may join the club soon.
With content creation underway and platforms officially launched, OTT services can now shift focus to conveying value to win the favor of consumers, who have more options than ever before. And that is where marketing and advertising come in. What does advertising an OTT option in an already crowded space look like?
Apple and Disney spend big ahead of streaming launch
For now, let’s look at the two headline makers: AppleTV+ and Disney+.
Here at MediaRadar, we found that both platforms only started running ads in late August. AppleTV+ quickly overtook not only Disney+’s ad spend, but the entire streaming space. In the month of September, AppleTV+ was the top ad spender out of all streaming platforms. This includes established players like Netflix, Hulu, and Amazon Prime Video.
To date, Apple TV+ has outspent Disney+ five times over on paid media. What’s more, AppleTV+ has not slowed their efforts now that the platform has launched. Ten days into November, AppleTV+ is on pace to once again be the top ad buyer out of all the streaming platforms this month.
The two companies differ in strategy, as well. Disney has promoted its new streaming platform as a whole, using clips from owned content to pitch the breadth of the platform. While Apple has been promoting its original content in stand-alone spots. So far, it has focused ad spend around eight shows in particular.
AppleTV+ may be outspending Disney+ on paid media. However, that does not mean Disney’s marketing push has been insignificant in any way. In fact, Disney has been orchestrating a massive marketing push using all of their various channels.
This push includes everything from on-air endorsements from Tom Bergeron (host of “Dancing With the Stars” on the Disney owned ABC network), to billboard and bus ads around Disney’s theme parks, to QR codes on lanyards worn by Disney’s 7,000+ retail workers at various Disney store locations. In one of the more interesting moves, Disney posted a video on YouTube titled “Basically Everything Coming to Disney+”, using snippets of movies available on the platform. The video was over 3 hours long.
On top of this, Disney has rolled out packaged deal after packaged deal thanks to its extensive holdings and powerful partnerships. For example: Verizon announced a year of free Disney+ for both new and existing customers, and more impressively Disney announced a $12.99 bundle with Disney+, ESPN and Hulu (both of which are majority-owned and controlled by house mouse). Visa card holders who have a Disney branded credit card can even lock in a discounted price for 2 or 3 years. Apple, for its part, is including a year subscription to Apple TV+ with the purchase of any Apple product.
Apple is almost on the defensive in this new world, playing as a tech company against media giants like Disney. No one says the best movies come from Apple today. They have a real deficiency in terms of changing perception that they are a place where you should go to watch your content.
In a bid to make that case, Apple has spent $20 million advertising its two biggest shows ahead of the launch.
In contrast, Disney’s robust offerings, combined with constant messaging across Disney properties, may immediately drive Disney+ to the top. “Think of Disney like a giant pinball machine, with content and initiatives pinging between divisions in an effort to drive up the ultimate score,” Gene Del Vecchio, a marketing professor at USC, told The New York Times.
With all this activity from the new platforms, and platforms like HBO Max and Peacock yet to join the fray, the streaming wars are heating up. It will certainly be interesting to watch how these companies market themselves as they fight for subscribers who will have many providers to choose from.
In the amount
of time it takes the average TV viewer to contemplate subscribing to a new
streaming service, five new streaming services have appeared.
That last part’s not actually true. But given the way streaming services keep popping up, it’s likely closer to accurate than either we or our wallets would like to believe. That said, there’s only one such service looming on the immediate horizon that’s capturing the attention of viewers in virtually every age demographic. Slated to make its grand debut on November 12, everyone is watching out for Disney+.
The origins of Disney+ date back to August 2016, when The Walt Disney Company acquired a minority stake in BAMTech, a spin-off of MLB Advanced Media, the digital media arm of Major League Baseball. A year later, they upgraded to a controlling stake in BAMTech and on April 18, 2018, Disney subsidiary ESPN kicked off their streaming service (ESPN+).
Picture this
By that point, however, Disney had long since seen the potential in constructing their streaming offering. They began setting things in motion, having already swiped back the rights to the Marvel and Star Wars movies from Netflix and set a deal to acquire 21st Century Fox’s entertainment assets.
If you’re wondering what this means in terms of content available on the Disney+ service, just sit back and spend the next three hours and eighteen minutes (give or take a few seconds) watching this trailer. As its title helpfully explains, it offers a glimpse of “Basically Everything Coming to Disney+ on November 12.”
And we’re
back!
No, we don’t
think that you actually watched all three plus hours. However, we suspect you
couldn’t resist skipping around enough to see how much Disney, Marvel, National
Geographic, Pixar, Star Wars, and other programming Disney+ is bringing
to the table – and to your screen – when it bows next week.
Subscribe
now
Unsurprisingly, The Walt Disney Company is making it very easy to secure subscriptions to Disney+ as they prepare for rollout. They’re also providing ample incentives to give it a try, whether it’s the 7-day free trial membership, the streaming bundle of Disney+, ESPN+ and the ad-supported version of Hulu for $12.99 a month. There’s also the deal where Verizon is offering 12 free months of Disney+ to all new and existing 4G LTE and 5G unlimited wireless customers as well as to existing Fios Home Internet and 5G Home customers.
Yet the question remains: Given all
the other streaming services out there, will viewers really be champing at the
bit to add Disney+ to their “collection” come November 12?
Watch it
Here are five reasons why Disney+ looks
like a must-watch:
1. Disney+ is the new “Disney
Vault.”
In the past, whenever Disney has decided to reissue various films, they’ve done so in an ostensibly limited-edition fashion. They assure consumers that, at a certain point, they’ll stop production and the film will go “back into the Disney Vault” until such time as they decide to reissue it again. Disney+ is already being viewed as a virtual vault. However, viewers can access their favs whenever they want…for a nominal monthly fee, of course.
2. If you like Star Wars and Marvel movies, it’s now the only place you can stream them.
As we mentioned above, it wasn’t a good day for Netflix when they found out that they were going to be losing not only the Disney movies they’d had in their catalog but, indeed, the Star Wars and Marvel stuff, too. One need only look at the top box office blockbusters of the past decade to see how valuable those franchises are. And that’s not even contemplating the drawing power of the new original Star Wars and Marvel series that Disney+ is adding to their programming roster.
3. Those 21st
Century Fox entertainment properties? Yeah, that includes The Simpsons.
Yes, yes, Avatar is in the mix, too. And that’ll be a big deal as we get closer to the release of Avatar 2. But Simpsons fans are a devoted bunch. Remember that FXX’s earlier deal with the series resulted in some record-setting programming and a great deal of viewership. However, giving those fans the opportunity to secure access to more than 650 episodes of the series – and the movie, too! – in an ad-free environment is enough to make them shout, “Gimme, gimme, gimme!” and subscribe post-haste.
4. The “come for the
classics, stick around to see what’s next” rollout plan.
Disney+ certainly isn’t shirking on
offering interesting and high-profile new programming straight out of the gate.
This includes a Toy Story spin-off series (Forky Asks a
Question), a new Star Wars series (The
Mandalorian), and an extension of the High School Musical
franchise with a tongue-twisting title (High School
Musical: The Musical: The Series). However, Disney+ also has some deals
on the horizon that strengthen the appeal of its debut. They’re understandably
confident that no one will walk away from the service when they know they’re
going to be getting a Monsters Inc. sequel series (Monsters at Work),
a second Star Wars series that has Ewan Macgregor reprising his role as
Obi-Wan Kenobi, and no less than eight new Marvel series.
5. Even setting
aside the aforementioned sign-up deals, the standard monthly price is still a
steal.
Of course, the
definition of “a steal” is relative. That said, consider this: Disney+ is $6.99
a month, whereas Amazon Prime is $8.99 a month, Netflix is anywhere from $8.99-$15.99
depending on which plan you have, Hulu is $11.99 a month, and HBO Now is $14.99.
No matter how you slice it, Disney+ is a bargain.
We can’t
say that November 12, 2019 will be remembered as the day the sun set on Netflix
and rose with Disney+ as the new king of streaming. But it’s evident that there’s
a tussle on the horizon that’s going to put the battle between Simba and Scar
to shame. And, hey, the good news is that ringside seats only cost $6.99 a month!
About the author
Will Harris has a
longstanding history of doing long-form interviews with random pop culture
figures for the A.V. Club, Vulture, and a variety of other outlets, including
Variety. He’s currently working on a book with David Zucker, Jim Abrahams, and
Jerry Zucker. (And don’t call him Shirley.)
Digital video in 2019 looks like digital content at the dawn of the information superhighway when it started to be commercialized in formative ways. With booming audiences for streaming video, new OTT video services are gearing up to ‘party like it’s 1999’. While the industry has been overshadowed by Netflix for quite some time, a slew of new “Princes” is making their presence known, including Disney, WarnerMedia, and NBCUniversal.
The OTT service establishment today—spearheaded by Netflix along with Amazon, Hulu, and Apple—spend a staggering $20 Billion plus dollars annually on original content. At the same time, up and comers like Pluto TV are trying to replicate the success of traditional TV over the Internet. And, under the ownership of Viacom, they’ve started to stream premium original content in a channel lineup that now includes BET, Comedy Central, MTV, and Nick.
On the other hand, YouTube is attempting to crossover from being a user-generated network to a general entertainment content destination. And numerous video services have emerged that cater to more niche audiences or content segments. These range from Vimeo’s traction with small business organizations like yoga studios to offerings like Lifetime Movie Club for original drama fans and Britbox for domestic fans of British programming.
The point of saturation will inevitably arrive and the number and mix of AVOD and SVOD will eventually play out. If this concerns you, remember that cable boasts thousands of channels. The digital tuner on a TiVo can access over 1,300 of them. Nationwide, without duplication, there are tens of thousands of channels and over 500 premium scripted shows.
History is a
reliable predictor of the future. Looking back, linear TV grew five-fold in channels
and shows during the golden age between the 90s and early 2010s. Even so, total
viewing time increased by just 15% as monitored by TV measurement companies
like Nielsen. Ultimately, free time and content consumption are on an X-and-Y
axis.
The heaviest TV viewership comes from a core of the total TV
viewing population, which is comprised of those over 55 years old in age. However,
the median age of a viewers for newer and more tech savvy OTT platforms is just
over 30 years old. Clearly, the preferences and expectations of younger
audiences are going to shape plans for premium content offerings in the future.
Keep in mind that the proprietary premium content offerings
of services like this will be a clear differentiator. Consider the much hyped
Disney+ OTT service. In addition to boasting its deep well of animated and
family programing, Disney is also the owner of the Star Wars franchise, which
provides an intergalactic bridge to the post-millennial generation. And let’s not forget that WarnerMedia
will soon distribute the Star Wars of our time: Game of Thrones. That franchise
alone could provide the foundation for a significant OTT presence.
So, what will happen next in OTT as established and upcoming
services prepare to battle? Most likely, the future will not belong to a
handful of OTT services alone. Rather, we’ll see the proliferation of OTT
brands that cater to niches of interest and genres, as well as those providing
general TV style content offerings. These services will range widely in terms
of content and tactics and the growing OTT audience will allow them to propagate
on the Internet like TV channels did on cable.
It is less about who is going to take over OTT and more about who is going to take their audience for a great ride on the TV superhighway.
With new OTT video services popping up daily, there’s fierce competition in the marketplace. Cord-cutting continues in the U.S. with just over two-thirds of consumers (67%) reporting pay-TV subscriptions, down from 73% in 2017, and 77% in 2016. PwC’s new report, A new video world order, studies consumers’ relationship with video content to develop five new motivation-based consumer profiles. In this competitive market, it is critical for content services to maintain strong viewer relationships, which start with understanding.
Here are PwC’s five distinct
consumer profiles:
Indulgists
are consumers driven by consumption, be it video, technology, or just stuff.
The indulgists is always looking for the latest gadget, premium service, and
original content to purchase. They watch approximately 17 hours of content a week
and at least 35% spend $100 or more on video content a month. The average age of
indulgists is 37. Importantly, they are committed to their pay-TV relationship
and see themselves as subscribers five years from now.
Engagers
are totally immersed in the content they view. Their average age is 34 and they
consume approximately 12 hours of content a week. Seventeen percent of engagers
spend $100 or more on monthly video entertainment. This segment wants to engage
with video content and they like to post about the shows they are watch on
social media. They are also more likely to be gamers. Engagers look forward to
virtual reality intersecting with TV series for a personalized storyline experience.
Fanatics,
whose average age is 34, are willing to do anything to access content. They
consume about 16 hours of video content each week and 20% spend $100 or more on
video entertainment a month. This segment wants to access endless content,
especially all in one place. They’re likely to be cord-cutters who now
subscribe to multiple services. Fanatics can often be found binge watching.
Connoisseurs
tend to be more educated and are culturally focused when it comes to their
video content. Their average age is 39 and they spend about 10 hours a week
viewing video content. Eighteen% of connoisseurs spend $100 or more on video
content a month. While they like television, they prefer to read. This segment
is also more likely to be comprised of cord-trimmers than cutters.
Traditionalists
are overwhelmed by content choice and find comfort in watching live-TV. Their average
age is 40 and they consume approximately 15 hours of content a week. Thirty-two
percent of traditionalists spend $100 or more on video content a month. This
segment tends to be older and often has TV on in the background. It’s used for both
comfort and company. Traditionalists are more likely to use pay-TV to access
content compared to going online or accessing an apps.
PwC mentions two areas of focus to increase consumer
engagement: 1) better content recommendations and 2) a central access point for
content and payment. Consumers report that recommendation algorithms are often reactive
and recommend the same content over and over again. Thirty-six percent of
consumers also report that finding content on streaming platforms needs to be
easier. Further, consumers want to consolidate their content and payment into
one place (51 and 50%, respectively).
PwC emphasizes the importance of maximizing the user experience to develop a competitive advantage in a very crowded video marketplace. Providers should understand the audience’s motivation for content. It helps to drive engagement. Content is not a one size fits all experience and it’s essential to build a positive consumer encounter at each step in the process.
