Research / Insights on current and emerging industry topics

FAST momentum drives the booming streaming market

September 12, 2023 Rande Price, Research VP – DCN

The streaming revolution is reshaping content consumption at a rapid speed. comScore’s State of Streaming 2023 reveals a 21% surge in the number of hours households watch connected TV (CTV). This increase translates to an additional 2 billion hours in 2023 compared to the previous year. Total hours viewed grew from 9.6 billion to 11.5 billion from May 2022 to May 2023.

Ad-supported services, which claim the largest part of the newfound viewing audience, are driving this growth. The data underscores the shift towards digital streaming as millions of households’ primary content consumption mode.

The overall growth in streaming consumption is quite impressive. However, the most game-changing statistic highlighted in the report is that 75% of the newly acquired streaming hours are from providers beyond the top six streaming apps. This elite group includes Netflix, YouTube, Prime Video, Hulu, HBO Max (now Max), and Disney+ is witnessing an interesting transformation. As the consumption of FAST (Free Ad-Supported Television) and targeted programming intensifies, these traditional giants face competition from rising stars in the streaming realm. FAST’s expanding influence is reshaping the streaming landscape.

Key trends in the streaming market

comScore’s report explores and confirms trends in the streaming landscape, adoption, growth trajectories, and the ever-evolving range of services.

Digital video acceleration: Digital video consumption is accelerating, with 81% of households with WiFi engaging in streaming content.

Ad-supported streaming growth: CTV households streaming ad-supported content now reach an impressive 83.7 million, a 17% increase from 2021 to 2023. Non-ad-supported services also showcase growth, reaching 81.1 million, reflecting a 9% increase.

Targeted programming triumph: Targeted programming on FAST platforms is surging. Hispanic households lead the charge by consuming nearly twice as many hours of FAST content, showcasing an impressive 81% YoY increase. Linear streaming providers also found their place in the digital realm, securing three top spots in the Top 10 video services based on hours viewed per household.

Cord-cutting dominance: The cord-cutting trend is reaching a new milestone, with 60% of CTV households now being cordless. This substantial leap from the 37% recorded in May 2019 underlines the growing shift away from traditional TV subscriptions.

Smart TVs reign: Smart TVs are firmly establishing themselves as the preferred device for CTV streaming, with a robust 23% increase in total households streaming content via these devices since May 2021. Gaming consoles are also seeing a notable 18% increase in usage for streaming purposes.

Real-time market impact at play

Further, comScore’s report provides context in understanding how the evolving TV streaming marketplace impacts the current television revenue model. The current Charter-Disney dispute centers on pressure to change the existing television distribution paradigm. Charter is declining to accept Disney’s requested fees for its channels, citing the fact that Disney primarily reserves its premium content for its streaming platforms. Charter wants complimentary access and distribution flexibility, which directly impacts Disney’s direct-to-consumer revenue strategy. This dispute underscores the rapidly shifting dynamics of the entertainment industry.

The State of Streaming showcases the ongoing revolution of streaming in the entertainment landscape. With consumption growth, the ascent of ad-supported services, and the proliferation of emerging players, the report provides valuable insights to help reshape content monetization strategies.

Diversity, Equity & Inclusion | Industry-Research

Inclusivity makes dollars and sense for the media

September 5, 2023 Theresa Cramer – Independent Journalist

If you want to understand the importance of DEI as it relates to the media business in 2023, there’s just one word you need to know: imperative. When you start leafing through the research, you’ll find “imperative” pops up a lot. Why? Because research universally reveals that a commitment to diversity, equity, and inclusion is of vital importance — crucial, even — to success in today’s media and entertainment environment.

The business case for DEI

The moral case for creating media that takes representation into consideration is clear. But for years, media companies have lagged at becoming more inclusive, sometimes even arguing that it just didn’t make good business sense (even when that obviously wasn’t true). Now, a trio of research reports further refutes that thinking.

Deloitte’s “Media Reimagined” study found that Black, Latinx, and LGBTQIA+ audiences represent a third of the $717 billion U.S. media and entertainment market. “Combined, these three audiences spend more than $250 billion annually and contribute an even higher percentage (52%) among U.S. adult Gen Z entertainment spend,” according to Deloitte.

And lest you think you can entice this audience with any old content, think again. Deloitte found:

71% of current media and entertainment spend among Black, Latinx, and LGBTQIA+ audiences is driven by feelings of inclusivity
54% of current media and entertainment spend tied to inclusivity can be traced to women-identifying audiences
13% increase of incremental and/or stabilized revenue potential across all audiences when they feel more included

Dollars and cents aside, inclusivity also leads to better content that all audiences can appreciate. “Our new research reveals that improving equity in the media and entertainment industry increases brand loyalty, drives growth, and results in fresh content that more closely aligns with consumer needs and expectations,” Deloitte summarizes.

Source: Amazon’s 2023 Higher Impact report

But it’s not just movies, television, and podcasts we need to think about moving forward. Inclusivity in ads matters, too. According to the 2023 Higher Impact report from Amazon Ads, 79% of consumers are more likely to purchase products or services from brands whose values align with their own — and increasingly, DEI is among those values.

Nearly half (45%) of consumers are willing to pay more for a product that reflects and promotes DEI, according to the Amazon report. And 46% of consumers say they go out of their way to choose brands that have corporate commitments to DEI. In other words, consumers are watching — and they reward corporate efforts (and authenticity) when it comes to diversity, equity, and inclusion.

The full picture

It’s one thing to put out a DEI statement, it’s another thing for media companies to hold themselves accountable and achieve diversity at all levels. Deloitte found that three in five respondents “do not feel empowered to prioritize equity in decision-making” while one in three “feel their leaders don’t understand what diversity and inclusion means.” Another quarter of people “say the lack of diversity at senior levels is an issue.”

And in the film industry, that lack of diversity leads to a dearth of diverse stories. Annenberg Foundation research finds that female directors tell stories with more female characters, more characters from underrepresented racial/ethnic groups, more women over age 40, and they hire more women working in other notable behind‐the‐scenes positions.

Unfortunately, The Annenberg Foundation’s latest report, The Inclusion List, produced in cooperation with The Adobe Foundation, finds that inclusion in Hollywood is lacking in diversity and shows few signs of improvement in recent years. With regards to the representation of women on screen, the report’s lead author Stacy L. Smith said, “What’s even more powerful about this list – and consistent with our previous work – is that films from women and women of color directors on the list earned the highest average Metacritic score. These women are excluded from the industry when we know that they are some of the top performers, telling some of the strongest and most compelling stories. This list celebrates women of color in an industry that doesn’t.”

Source: USC Annenberg’s “The Inclusion List” a new data-driven ranking that provides the titles of the 100 most inclusive theatrically-released films from 2019 to 2022. The list goes beyond movies to rank distributors and producers as well, holding the entertainment industry accountable.

“These trends suggest that any improvement for people from underrepresented racial/ethnic groups is limited,” according to Smith. “While it is encouraging to see changes for leading characters and for the Asian community, our data on invisibility suggests that there is still much more to be done to ensure that the diversity that exists in reality is portrayed on screen.”

The price of not paying attention to DEI

Those who continue to ignore the role DEI plays in media’s success, will be missing the boat — and significant revenue opportunities as well. The undisputed king of e-commerce knows this, and that’s why one of the ways that Amazon segments its advertising audience is “Allies of Diversity”, which it outlined in a sponsored post on Ad Week. The Allies of Diversity audience “aims to provide a solution to reach an array of consumers at scale that have demonstrated signals of allyship. Amazon infers allyship based on aggregated first-party shopping and streaming signals. The company says, “Inclusive advertising helps brands connect with a wide range of people, promotes innovation and ensures that ads can be enjoyed by a variety of audiences.”

Clearly, Amazon has recognized the revenue potential DEI offers its advertisers but we’ll have to wait to see if Hollywood has the same epiphany. Though, as movies like “Barbie” — which sport diverse casts and women at the helm behind the scenes — rock the box office, the fiscal case for inclusion will be easier to make. However, one may have said the same thing when “Waiting to Exhale” opened at number one back in 1995 or when, in 2018, “Black Panther” became the highest-grossing superhero movie. Will the underlying facts and numbers that all support an authentic commitment to DEI be enough to move the needle?

Industry-Research | Innovation

Research suggests business as usual with AI and the media

August 29, 2023 Theresa Cramer – Independent Journalist

You wouldn’t know it from the breathless coverage of new AI tools like ChatGPT, but the use of AI in the media is old news. While many media companies have been using AI-generated content for years, only the closest media watchers knew they might be reading news generated by a bot. A new report digs into the reality of how AI is — and has been — used by media companies, how AI’s limits necessarily constrain its use, and where new media models may be able to put this technology to profitable use.

News media and AI are old pals

A recent report “AI and the media. Now.” from Di5rupt and FIPP collects media leaders’ thoughts on how AI is impacting global publishers. In exploring media companies’ relationship with AI through the years, it’s clear that this symbiosis began earlier than even those in the know may have realized. According to the report, the earliest use of automated content “dates back to the early 1960s, when computer systems were first used to generate news articles.” More recently, news organizations have been using AI tools to churn out data-driven content — like sports recaps, stock price updates, or weather reports — often creating their own solutions to do so.

From the Associated Press to Axel Springer to China Daily, automated content has been on the editorial calendar for years. These tools have been used largely to free up human resources for reporting, analysis, and other in-depth work. Meanwhile, other types of AI tools make light work for people by doing the front work of transcribing interview recordings, analyzing data, looking for copyright infringements, or even helping with audience segmentation. But these uses all belie the continued limitations of AI, which are many.

The limits of AI for the media

While publicly available tools like ChatGPt may have put AI-generated content squarely in the limelight, the truth is not much has changed about AI’s capabilities or how media organizations are using it. As the report puts it, “Essentially think of ChatGPT as a search engine on steroids. You ask it a question and it skims the data that it has stored to construct a response for you.” So, the report cautions that any companies planning on replacing writers with machines, must first consider the limits of AI.

It cannot actually write breaking news (yet!) as it was only trained on data through 2021.
Not only can AI make mistakes, but it has no real way of fact-checking its sources.
It does not cite its sources — and is often found to be plagiarizing.
It has its own unconscious bias.
AI is only as good as the data it has access to, so it is often biased, wrong, or lacking important context.
Analysis is not AI’s strong suit, at least when it comes to ChatGPT and its ilk. The report says, “It presents what it sees as fact and leaves the reader to make their own mind up.” This is why it works well for basic, data-driven content creation and not much else.

Ironically, the algorithms rely on journalists to create new content — or maybe we should call it data — to train on, ultimately making AI dependent on humans, at least in its current state. In fact, The AP and ChatGPT’s parent company, OpenAI, struck a deal to let its large l anguage model use The AP’s content to train. These limitations mean AI will likely continue to be relegated to simple content creation tasks that allow humans to do more important work.

The potential for AI-driven news

ChatGPT’s limits aside, some startups have already launched AI-only news sites. Despite these sites being subject to the limitations above, the report thinks that the trend may be more than just a novelty.

John Barnes, Chief Digital Officer, William Reed Business Media, explains what these new media outlets could look like: ”Model around advertising and affiliate revenue and gobble up traffic by being quick and comprehensive, or find highly-targeted subscription and B2B channels where speed of information matters much more than grammatical flair or particularly special insight — results, events, and data-driven types of products.”

However, when one stops to consider the kind of content where speed matters more than insight, one will likely arrive at where AI and media first started their relationship: at financial, sports, and other data-driven news. As these sites proliferate, they will face the same challenges as other media organizations: differentiation. And when you don’t have original, investigative reporting — or even celebrity profiles — to set your publication apart, it all comes down to who can be the most accurate while maintaining speed.

Ultimately, AI may help the next Woodward and Bernstein dig through piles of data to find a story or transcribe the Watergate tapes, but it will never be able to meet Deep Throat in the parking garage.

Advertising | Industry-Research | Supporter Spotlight

Surprising revenue opportunities offered by automating Ad Ops

August 28, 2023 Michele Bavitz, Global Head of Account Management – Theorem

Ad operations (ad ops) involves a complex number of tasks relating to the execution of online advertising campaigns. With the global digital advertising market expected to hit $185.17B this year, the industry is increasingly competitive at a time of reduced consumer spending and economic uncertainty. This boom in digital advertising can be attributed to the ever-increasing consumer demand for online content and the rise of online shopping. With that in mind, companies using automation to streamline processes and supplement the work of ad ops teams could see an increase in revenue.

Automation has emerged as a tool nearly every industry is using, yet ad ops is still a notoriously manual process. From campaign management and reporting to trafficking and optimization, there are a plethora of procedures teams need to follow to ensure success. This manual process hinders productivity considerably and is prone to human error and inefficiencies – ultimately slowing order cycles and delaying revenue growth.

According to a recent study we conducted at Theorem, 69% of surveyed ad ops professionals cite that their company’s digital advertising processes need improvement. And another 79% reported that the tools or solutions they use to try to solve this challenge could be better.

As advertising is a key revenue model for publishers, streamers and media companies alike, this is a big problem. One that — if not quickly resolved — will lead to unnecessary financial burden that no company can afford.

So, what’s the secret? How can we simplify the ad ops process and find revenue in a place far too often ignored or overlooked?

The answer is automation.

Automation eliminates makegoods

Our survey revealed that the number one pain point for ad ops professionals is finding time to complete time-consuming tasks. End to end, the ad ops process consists of many error-prone tasks. Teams input data into spreadsheets, manually check and cross-check targeting, or pull data from multiple sources to manually create reporting.

This leads to companies experiencing high percentages of makegoods, which occur when an advertising campaign fails to deliver on a pre-agreed target number of metrics. Managing makegoods is operationally time consuming as workflows and reporting are adjusted—not to mention that the advertising campaign itself may underperform as a result.

With the stakes being so high, it’s time for businesses to jump on the automation bandwagon when it comes to ad ops. Makegoods have become so commonplace within the industry they are being written into contracts as an expectation. Automation has the power to revolutionize how organizations conduct business by addressing systemic challenges that increase profits while reducing human error. It can also centralize information and establish consistencies across processes that eliminate bottlenecks and minimize makegoods. By making makegoods obsolete and automating ad ops processes, revenue cycles accelerate. Processing a higher volume of work more efficiently allows ad-supported business models to see increased revenue faster.

Automation boosts strategic thinking and creativity

Ad ops teams realize that the benefits of automation extend beyond eliminating makegoods. Theorem found that three in five ad ops professionals agree that their team does not have enough time to be proactive.

Of those surveyed, 62% said automation can be used for generating reports, 59% said it could be used for completing repeatable tasks and 56% said it could be used for eliminating labor-intensive tasks. Ad ops professionals are able to be more proactive and focus on creativity and the strategic direction of the business with automation performing those tasks.

These professionals are well-versed in a multitude of platforms and are highly organized, detailed-oriented and analytical – making them incredibly valuable to their organizations. Implementing automation and using it as a professional development opportunity adds weight to a business’s career development pathways and can help boost morale and increase employee engagement.

It has long been recognized that a happy workforce is a more productive one. In fact, 90% of survey respondents said they were open to their roles evolving as a result of automation. Essentially, the majority of respondents see automation as a compliment to human efforts, not a replacement. This, coupled with the financial benefits that automation can bring would suggest that the implementation of such technology would have significant benefits to any business.

Ad ops professionals are pivotal to the overall success of an organization, and yet they are often overlooked and underappreciated. Current ad ops processes are archaic and laborious and do not provide the optimal setting for team success. By engaging with automation, businesses can revolutionize their advertising prowess while simultaneously improving the productivity of their workforce. And that is a winning combination that will boost bottom line success.

Industry-Research | Video

Streaming consumers like episodic content on big screens

August 22, 2023 Rande Price, Research VP – DCN

The streaming industry is experiencing rapid, continuous evolution including consumer behavior and preferences. NPAW’s, a global video analytics company, new report Video Streaming Industry Report H1 2023, tracks and analyzes video consumption, consumer behavior, and quality of experience. The research looks at streaming behavior in Asia, Europe, Latin American, North America, and the Pacific. The report shows that overall playtime for the streaming industry is growing steadily, with a 4% increase compared to the previous year. This offers a positive indicator of user engagement with platforms and their content.

Streaming playtime grows

Further, all regions except Asia report higher playtime per user and service. North America leads the way with a remarkable 41% year-over-year increase, followed by Latin America at 21%. These differences highlight the diverse streaming preferences that exist globally.

Examining the raw figures reveals the emergence of two distinct categories. Europe, North America, and the Pacific region constitute high-consumption zones, each averaging over 79 minutes of daily service usage per individual. In contrast, the second group, comprising Asia, Latin America, and the Middle East, experiences less usage, with a daily average of under 53 minutes. Notably, Asia records a mere 30 minutes.

Episodic content takes center stage

NPAW’s streaming data shows a clear preference for episodic content among users. Globally, episodes account for 60% of the total playtime, whereas movies capture 25%. This preference for episodic content remains consistent across regions, except in North America, where movies share a comparable share of playtime. Notably, the Middle East stands out as a region favoring episodic content, with movies and short content comprising less than 10% of the total playtime.

Smart TVs dominate the viewing landscape

The dominance of large screens, especially smart TVs, in VOD consumption, is expanding. In the first half of 2023, smart TVs contribute 51% of the total VOD playtime, highlighting viewers’ inclination towards the immersive experience provided by these bigger devices. This trend also plays a role in consolidating smaller-screen devices like smartphones, which are currently witnessing a decline in their share of playtime.

Parallel to VOD, larger screens continue to dominate linear TV consumption. TVs and set-top boxes collectively account for approximately 80% of the linear playtime, highlighting viewers’ preference for the traditional, in-home viewing experience.

Sports streaming takes off

One of the most remarkable trends in streaming is the rapid growth of sports streaming. Major sporting events in the first half of the year increased substantially in streaming adoption and engagement compared to the previous year. This surge in sports streaming highlights the changing nature of entertainment consumption as viewers increasingly turn to streaming platforms to catch their favorite sports action.

Streaming evolution

The streaming landscape continues to evolve in the first half of 2023. VOD consumption continues to grow, driven by user preference for episodic content and larger screens, particularly smart TVs. Improvements in visual and audio quality contribute to a more gratifying streaming journey across most geographical areas. Understanding user preferences and expectations remains pivotal in shaping the future of entertainment consumption. Be it indulging in episodic narratives via smart TVs or immersing in live sporting spectacles on expansive screens, streaming is a universal practice.

Advertising | Industry-Research | Video

Advertising popular with streamers and consumers

August 15, 2023 Rande Price, Research VP – DCN

It is becoming increasingly clear that advertising will play a significant role in the streaming ecosystem. As Disney CEO Bob Iger told investors in Disney’s quarterly earnings call, “The advertising marketplace for streaming is picking up.It’s more healthy than the advertising marketplace for linear television. We believe in the future of advertising on our streaming platforms, both Disney+ and Hulu.”

Industry giants are now seamlessly incorporating ad-supported tiers into their streaming options. This shift from the early days of subscription-based, ad free streaming underscores the industry-wide recognition that catering to budget-conscious consumers is integral to achieving sustainable subscriber growth.

New research from HUB, TV Advertising: Fact or Fiction, affirms that most television viewers actively embrace ad-supported offerings. Six out of ten viewers prefer ad-supported subscriptions, especially when presented with the prospect of a reduced monthly fee. Interestingly, those with reservations about advertising remain in the minority, underscoring the widespread acceptance of ads as an primary and tolerable factor of content consumption.

Shifting the paradigm

The transformation in consumer sentiment towards ad-supported subscriptions carries a dual impact. Firstly, it renders ad-supported tiers significantly more appealing to a broader spectrum of viewers, including those who haven’t subscribed previously. Secondly, it reinforces the notion that the quality and diversity of content have a significant influence over viewer preferences. This often outweighs the appeal of a completely ad-free experience. Within the streaming ecosystem, advertising now emerges as a central thread weaving together content variety, affordability, and viewer gratification.

The rising desire for customization

Furthermore, a growing trend in viewer preferences is the desire for enhanced control over subscription tiers. Nearly four out of 10 viewers express a strong inclination towards personalizing their subscription model. They’re searching for a flexible array of choices, ranging from a premium, ad-free encounter to a more budget-friendly alternative featuring strategically placed advertisements. The attraction in customization preferences empowers streaming providers to cater to a broader spectrum of consumer segments.

Entrants that intrigue

Notable platforms like Max, Disney+, and Netflix, which recently embraced ad-supported tiers, are meeting positivity from their audiences. This dispels concerns about potentially hurting your brand in a previously ad-free service due to the introduction of advertisements. Twenty-seven percent of viewers switched tiers. Among them, 60% switched from with ad to no ad tiers, and 46% switched from no ads to with ad tiers.

Enhancing engagement through thoughtful execution

Ensuring a satisfactory viewing experience for consumers creates an environment ripe for advertisers to thrive. When viewers encounter an appropriate amount of advertising content, their engagement levels increase. This principle extends not only to the overall number of ads but also to the duration of ad breaks. Contrary to the notion that advertising detracts from the streaming experience, it possesses the potential to elevate it, capturing viewers’ undivided attention when executed thoughtfully.

The valuable component of ad-supported subscriptions

As viewing sources diversify, ad-supported subscriptions assume a key role within the streaming landscape. Subscribers want the autonomy to mold their subscription expenditure as well as the degree of advertising they’re willing to embrace. In response, streaming platforms offer a dual strategy, presenting ad-supported and ad-free tiers. This shift harmonizes content diversity, affordability, and engagement, shaping the streaming ecosystem.

Featured Post | Industry-Research | Revenue

Change, lots of it: Enders Analysis on saving local news in the UK

August 10, 2023 Chris M. Sutcliffe – Independent Media Reporter

For the news media industry, the rise of artificial intelligence for is a double-edged sword. While some publishers are using it to churn out news stories regardless of how their audiences receive them, local news titles are considering how it can provide them with a major point of differentiation. For many, that will also be a lifeline.

A report into the state of local news in the UK from Enders Analysis and the News Media Association pulls no punches. It is clear about the extent to which local news publishers did not benefit from advertising spend moving from print to digital. It’s also candid about the likelihood of titles foregoing print entirely in the near future.

However, the report goes well beyond rehashing the impact of technology on the news media business. While it clearly sets the stakes for the industry, the report, “Signs of local life: a new phase for local media” also focuses on opportunities and collaborative strategies for local publishers as we move forward.

The authors note that “publishers have done very little to transition habitual paying print readers—or the next generation—into habitual paying digital audiences”. It also points out that local media have lost the war on digital classifieds and have no realistic path back to reclaiming that revenue.

That is exacerbated by other challenges facing print media. From higher production costs to the “effective monopoly” of the two major distributors, the ability to print and disseminate dailies and weeklies is becoming strained. The report states it expects the number of titles that go digital-only in the next decade will be greater than the previous 10 years.

As a result of that—and the absolute dominance of tech giants in digital advertising—the report states that appetite for external investment is limited: “No one in the industry would deny all this decline has driven investment sentiment away from the sector, and consequently depressed the value of local and regional media.”

Green shoots

But rather than being solely self-flagellation, the report highlights some of the irreplicable strengths of the UK local news industry. Owen Meredith, chief executive of the NMA explains that, “while clearly everything isn’t rosy, there are some positive signs of life. There is innovation there; DC Thomson [for example] is really good at building a membership model and subscription model that genuinely works in local news.”

As the report makes plain, the greatest strength of the local news industry is the direct relationship it has with its audience, and the trust that flows from its original journalism. It states: “At one time all of these distinctions were obvious because they were visible in the physical world: print was plainly different from other content and consumption. Online, these distinctions evaporate.”

So, the report argues that the local media industry needs to “shout these distinctions from the rooftops” particularly in the emerging era of generative AI-created content. Local news has provenance and personality. The report makes the argument that it will be difficult if not impossible for AI-generated content to take its place. In an age where the amount of noise online is to grow exponentially, local news media can provide the signal.

Meredith says local publishers like Newsquest are already set-up to take advantage of that trend: “We’ve got these huge scale audiences… there’s been a perception that a lot of that was driven by non-core local news.

“Actually, there is more data coming to light now… that you really do have deep engagement, multiple pageviews, reasonable penetration and good scroll-through. People are actually coming to local news sites for the local news product.”

That is in line with the recommendation by the report that local publishers move from pursuing digital advertising based solely on scale: “Too much revenue today is reliant on low-yield programmatic advertising” which has diminishing returns—particularly for the newspapers.

Show me the money

In order to survive to take advantage of that strength, however, local news organizations need time and investment, particularly around tech. Meredith says: Tech is a big-ticket item for a lot of smaller publishers. You can’t therefore do everything you might want to do at once. But I think you can do phased-based tech and there’s a lot of off the shelf solutions, frankly, that provide publishers with answers without massively excessive investment required.”

Given the long-term forecasts for ad spend and a lack of philanthropic support in the UK, the report suggests a number of alternative sources of funding.

In line with earlier recommendations from the Cairncross Review, the Enders report points out that direct government funding is basically impossible for any independent press that seeks to hold the government to account. Instead, it suggests alternatives that include more government advertising (already the largest single source of local advertising revenue across its many departments) with the local press.

Meredith concurs with this assessment, stating: “We think a genuine commercial exchange on advertising is fundamentally different to subsidy. We firmly believe that there is a long-term sustainable future for local news in a commercial way.

“We’ve been talking about the digital markets bill for ages. It’s not a silver bullet, but it will certainly help. There’s lots of elements but you [can] combine that commercial vitality without government subsidy or intervention, as well as the Competition and Markets Authority getting out of the way and allowing market consolidation to happen”.

Meredith is also keen to point out that the BBC has a key role to play in the future of the local press. It is a wholly unique organisation by any media standards, and Meredith argues that if it were proposed today its free-to-access nature means it would be immediately shot down by competition authorities. He advocates for a resetting of the relationship between the local press and the BBC, both through the BBC Local Democracy Reporting Service and other means.

Ultimately, the conclusion of the Enders Analysis report is that local news in the UK needs to make itself attractive to investment from outside the industry. That will be like ripping off a sticking plaster, as it has been resistant to change for years – for a variety of reasons. Executives at the major publishing houses have been accused of riding the slow decline of tested revenue sources in service of their payouts, for example.

True change in order to attract investment will require, as both Meredith and the Enders report advocate, collaboration and collective agreements in order to reach sustainability.

Advertising | Industry-Research | Video

For SVOD success, launch with ads from the start

August 8, 2023 Rande Price, Research VP – DCN

In the ever-changing landscape of streaming services, media companies constantly explore new strategies to attract and maintain subscribers. One notable approach is the success of the ad-support SVOD tier. In fact, new research from Ampere shows that streaming services launching with an ad-supported tier from the start have a higher proportion of subscribers than those that added it later.

Ampere’s data reveals that SVOD services like Hulu and Peacock, which were early adopters of ad-supported tiers, boast an impressive 90% of ad-supported viewers. On the other hand, latecomers like Netflix, Disney+, and HBO Max struggle to gain significant traction with their ad-supported options. These late starters capture only a small share of their subscriber base. For instance, as of June 2023, approximately 2% of Netflix and Disney+ US subscribers are on the ad-supported tier. Even HBO Max, which launched an ad tier in March 2021, had only 5% of its subscribers on its ad-supported plan before transitioning to Max in April.

Drivers of success

Ultimately, an ad-supported tier’s success depends on several factors, including the service’s pricing strategy, content library, and targeted audience. Launching with an ad-supported option from the start appears to be more effective in building a substantial base of viewers. Late adopters may find attracting a significant share of their subscribers to the ad-supported tier challenging. This is especially true if the service has a strong legacy of being ad-free.

Ad-free service is still appealing

Despite the apparent appeal of ad-supported viewing, most new subscribers across the top seven SVOD services still prefer ad-free plans. According to Antenna data, between January and May 2023, three out of five new subscribers opted for ad-free viewing. Even services that recently introduced ad-supported tiers, such as Peacock, saw a considerable percentage (69%) of new subscribers choosing ad-free options.

However, there are potential changes on the horizon. Netflix has made a strategic decision to remove its Basic plan, which previously served as a mid-range option between the ad-supported and standard ad-free plans. With the elimination of the Basic plan, the price gap between ad-supported and ad-free viewing has increased significantly from $3 to $8.50 monthly. This move might lead more new subscribers to opt for ad-supported viewing due to the cost difference.

Additionally, Netflix’s crackdown on password sharing during June and July 2023 could have also impacted its subscriber base. Free viewers who were previously enjoying content outside of the subscriber’s home are now more likely to sign up for their accounts. For these price-conscious users, the cheaper ad-supported tier could become an appealing option.

However, the trend of traditionally ad-free services attracting more ad-free subscribers might continue to prevail. Peacock’s decision to close the free ad-supported tier to new users. However, they still allow existing subscribers of the free ad-supported to continue using it. This suggests that companies are recognizing the importance of retaining ad-free subscribers.

Industry-Research

This survey can enhance people’s ability to detect misinformation

August 1, 2023 Rande Price, Research VP – DCN

In today’s fast-paced digital age, there is an overwhelming amount of information, making it increasingly challenging to differentiate fact from fiction. Researchers recently developed a two-minute survey, Misinformation Susceptibility Test (MIST), to assess an individual’s ability to distinguish between real and fake news. By delving into the nuances of misinformation susceptibility within social psychology, particularly concerning social media, academics may be able to devise more potent intervention strategies. MIST offers a pivotal starting point for researchers to gain a profound comprehension of the underlying principles of social media products and their algorithms’ impact on the vulnerability to misinformation.

The MIST survey is comprised of 20 headlines, and participants must identify the fake headlines among them. The tool measures individuals’ ability to detect deceiving elements, such as manipulative language, in just two minutes. Interestingly, the research shows that younger Americans under 45 performed worse than older adults in distinguishing between real and fake news. Younger adults are more likely to suspect misinformation where there is none. They also tend to mistrust news headlines overall, possibly influenced by their higher online media consumption.

Further, mainstream news consumers, particularly those of AP news, perform better at distinguishing between real and fake headlines, with an average of 16 correct identifications. The study reveals that those who get their news from social media, especially Snapchat, could improve in distinguishing between real and fake headlines, as approximately 53% of Snapchat news consumers correctly identified just 10 or fewer headlines.

Enhancing news veracity acumen

MIST serves as an educational tool that provides individuals with an understanding of their susceptibility to misinformation and offers valuable insights into improving detection. The test’s feedback highlights specific areas where participants may be prone to errors in judgment. This empowers individuals to be more critical of the information they encounter and encourages them to adopt evidence-based approaches when evaluating news content.

The researchers plan to conduct further research on the correlation between “actively open-minded thinking” and resilience to misinformation. Specifically, they aim to explore methods of ranking content to enhance open-minded thinking.

Combating disinformation

In an era where misinformation can have profound societal consequences, MIST is a potent weapon against disinformation. By arming individuals with the tools to identify and combat fake news, tools like MIST can help create a more informed and discerning population. This, in turn, can lead to a decline in the viral spread of misinformation, ultimately contributing to a healthier information ecosystem.

MIST has significant implications for educational institutions and media literacy programs. By integrating this test into curricula, it can be used by educators to help students develop the necessary skills to critically navigate content online . Teaching students how to assess the credibility of sources, cross-check information, and challenge their biases will foster a generation better equipped to confront misinformation and make informed decisions.

MIST could significantly advance the ongoing battle against the widespread issue of misinformation. Embracing it as part of a strong academic approach could play a vital role in transforming media literacy education programs. The psychometric validation of the test ensures that it offers dependable and precise insights into an individual’s susceptibility to believing and disseminating fake news. Tools like the MIST in literacy programs empower individuals to learn more about discerning information and contribute to a more informed society. Ongoing efforts to refine and improve MIST, alongside other tools, and strategies, are vital in effectively addressing the challenges posed by the constant flow of deceptive information

Industry-Research | Research

Digital benefits entice new news subscribers

July 25, 2023 Rande Price, Research VP – DCN

Advertising messaging is an important trigger in increasing people’s willingness to pay for online subscriptions. New academic research, Effects of Advertising Messages on Willingness to Pay for Online News, from Bartosz Wilczek, Ina Schulte-Uentrop, and Neil Thurman, evaluates effective advertising strategies for online subscriptions. The study focuses on four types of advertising appeals: digital-specific, social, normative, and price transparency. The findings indicate that digital-specific features appeal. Aspects like personalization, online-first delivery, and online-only offers significantly impact participants’ willingness to pay. This suggests that emphasizing the unique digital advantages of online news can increase sign ups and subscription interest.

Messaging impact

This research sets out to address two crucial questions. First, it seeks to uncover the most potent individual advertising message (digital-specific, social, normative, or price transparency appeal) to drive people’s willingness to pay for online news.

The study also looks to understand which combination of advertising messages among digital-specific, social, normative, and price transparency messaging ultimately boosts people’s willingness to pay for online news.

Messaging appeal

The different respondent testing shows that digital messaging is the most potent. Social messaging that emphasizes community membership and offline and online events also positively influences participants’ willingness to pay. This finding suggests that fostering a sense of belonging and engagement within a community can enhance subscription intentions.

Normative messaging, which focuses on the importance of supporting independent, inclusive, and watchdog journalism, has a moderate positive impact on willingness to pay.

Interestingly, the price transparency appeals, which provide information on the news industry’s critical financial situation, do not significantly impact willingness to pay. This suggests that while consumers may value transparency, it may not be a primary motivating factor for subscribing to online news.

Combining messages

The research reveals that combining advertising messages can increase people’s willingness to pay for online news. Combining the normative appeal with the price transparency appeal is the most convincing. In comparison, other combinations of advertising messages do not yield significant effects on people’s willingness to pay for online news.

What’s surprising is that neither the normative nor the price transparency appeal is sufficiently convincing on its own. However, combined, they effectively increase audiences’ willingness to pay for online news. Moreover, the findings suggest that adding a digital-specific or social appeal to a subscription pitch that includes both a normative and a price transparency appeal is ineffective. One explanation could be that the more appeals a subscription pitch contains, the longer and more complex it becomes—which might decrease its effectiveness. This suggests that the efficacy of a subscription pitch depends less on the quantity and more on the quality of arguments and how well they work together.

Digital news publishers can leverage these insights to tailor their advertising strategies and enhance subscription uptake. By highlighting the unique features of online news, fostering a sense of community, and emphasizing the societal importance of independent journalism, publishers can increase consumers’ willingness to pay for online news subscriptions. However, it is important to note that normative and price transparency appeals may have a limited impact on subscription intentions on their own, suggesting the need for a multi-faceted approach to advertising online news subscriptions.

Industry-Research | Video

What consumers value in streaming services

July 18, 2023 Rande Price, Research VP – DCN

The streaming television landscape is increasingly competitive. Experimenting with the formula for success, many streaming services are introducing ad-supported tiers, while others are raising subscription fees and consolidating corporate offerings. Therefore, understanding consumer preferences regarding payment methods, perceived value, and preferred providers is crucial to meet audiences’ changing needs in an evolving environment.

Hub Research’s new report, Monetization of Video, delves into the evolving dynamics of the TV business from a consumer perspective. The study shows that nearly half (43%) of respondents reached their set limit of seven different TV services and said no more. Another 35% of respondents actively set a limit of seven TV subscriptions but have yet to reach that maximum number. Limiting the number of TV subscriptions indicates (seven appears to be the magic number) that consumers are becoming more selective about the services they choose, seeking quality over quantity.

Usage and subscription

The report also shows that 44% of respondents spend more time on TV than a year ago, indicating a growing investment in the medium. Approximately 40% of Tubi or Pluto users rated these free platforms as the highest value, suggesting their investment in FAST content and user experience is paying off.

Furthermore, the research highlights that value perception among consumers is similar between ad-free and ad-supported versions of platforms. This suggests that consumers are willing to accept advertising if it allows them to access content at a reduced cost or for free. Providers should consider offering ad-supported and ad-free options to cater to a broader range of consumer preferences.

The study also finds that a significant portion of viewers (42%) sign up for a new platform but cancel shortly after. This trend is particularly prevalent among Gen Z viewers and those with children. Moreover, the research indicates that the more paid TV subscriptions a consumer has, the more likely they are to subscribe to a new service and cancel it soon after.

Assessing consumer perspective

Importantly, the HUB analysis provides insights into the consumer perspective on the streaming market and factors that influence their perception of value. The research looks at the complexity of the television landscape. It identifies how friction points, FAST channels, and economic factors affect consumer decisions and value perceptions.

Friction points and erosion of perks: Traditionally taken-for-granted perks, such as password sharing and content exclusivity, are starting to erode, leading to a higher level of friction among consumers.
Rise of FASTs: Competition in the subscription video-on-demand (SVOD) space is intensifying with the emergence of Free Ad-Supported TV (FAST) services. Media companies and TV manufacturers are entering this arena, further diversifying the TV landscape.
Economic factors: Consumer concerns about inflation and the economy’s state are additional variables shaping TV consumption choices.

Hub’s research offers insight into consumers’ evolving preferences and dynamics within the streaming industry. As the landscape becomes increasingly complex, understanding consumer payment preferences, value perceptions, and the optimization of content monetization is crucial for content services. By adapting to these changing preferences and offering compelling features, services can improve consumer satisfaction and grow revenue in this evolving industry.

Industry-Research

Convincing young audiences of the value of news

July 5, 2023 Rande Price, Research VP – DCN

Understanding the habits and motivations of non-subscribers is just as crucial as studying subscribers’ behaviors when building a successful subscription-based news product. A Norwegian study, The Burden of Subscribing: How Young People Experience Digital News Subscriptions, delves into the motivations and experiences of young adults, ages 26-30, who read news online but do not pay for it.

The study takes a qualitative approach and sheds light on three key motivations for not subscribing: content exclusivity, time constraints, and unappealing payment models. Further, the study identifies additional factors contributing to people’s reluctance to subscribe to news. These factors relate to socio-demographic variables, the perceived value of news, notions of free news, payment models, and different content.

Newsgathering habits for non-subscribers

Participants access digital news but employ various strategies to gather information from non-subscription news sources. These strategies include searching for alternative coverage, borrowing login credentials, or relying on friends and family. Young adults don’t inherently oppose the idea of paying for online news. However, they express concerns about being charged for certain types of content, particularly information of significant importance and general interest. They believe such content should be free to serve the public interest.

Attracting young adults

Surprisingly, the style, format, or journalists did not influence young adults’ decision to pay for news. Instead, participants primarily focused on the content itself. They questioned whether the same information is free elsewhere, indicating a perception of a zero-reference price. Young adults were less concerned about a news provider’s unique perspective or comprehensive coverage and more focused on the availability of similar information from alternative sources. This finding highlights the need for news organizations to offer unique content not found elsewhere.

Another dimension that emerged from the analysis is how young adults perceive subscriptions in relation to time. Some participants expressed a sense of commitment to reading more thoroughly if they were to pay for a news service. However, a common trend across the sample was the perception that subscriptions were time-consuming, creating a potential barrier to their adoption.

Multiple subscription options

Interestingly, many young adults viewed subscriptions as an addition to their existing news consumption habits rather than a complete replacement. While this presents an opportunity for news organizations to attract paying subscribers, it also poses a challenge. Some participants described the experience of keeping up with multiple subscriptions as a draining chore, leading to feelings of information overload. This finding underscores the importance of considering the user experience and ensuring that subscriptions offer tangible benefits without becoming burdensome.

When considering the price of digital subscriptions, participants viewed it within the context of their overall news consumption habits. Young adults feel the value they derive from various news sources and weigh the cost of subscriptions against alternative options.

Payment options

Participants also express the need for novel subscription models to cater to their diverse media appetites. Young adults preferred micropayments and the ability to access individual articles rather than committing to full subscriptions. This approach resonated with their desire to personalize their news consumption experience. Others called for a “Spotify model” where they could select and choose content from different providers through a joint subscription.

Value proposition

This study highlights the importance of understanding non-subscriber habits and preferences to design subscription models that align with their needs. News organizations can create compelling value propositions for young adults by offering flexible payment options and exploring joint subscriptions and personalized news portfolios. By considering the overall media repertoires of young adults, news organizations can build stronger relationships and attract a loyal subscriber base.