Special Report: Television & Internet Video Convergence Strategies

Television Internet Video Convergence

Move over big networks and cable channels, there is a new television station in town and you don’t need cable, satellite or over-the-air television airwaves to get it. You just need a high-speed Internet connection. Led by Netflix and YouTube, an army of new television content producers are hitting the IP (Internet Protocol) airwaves. And make no mistake, these new young guns and their carry your television in your pocket strategy is a game changer.

Five Ways IP TV Changes Consumer Behavior

  1. Binge Viewing — When Netflix released its first forray into original content, House of Cards, it released the entire 13 episode series on the first day. Netflix’s strategy was based on viewer data from it’s Streaming Service. That data showed that consumers where “catching up” on television series they had missed often watching multiple episodes in a single viewing session. Anyone that has ever used Netflix to catch up on a series can attest, this is one of the best uses of the service. And as someone that watched the House of Cards series, often while traveling, I can absolutely confirm I usually consumed multiple episodes in a single sitting. A recent Harris Interactive poll found of those who have watched TV on their own schedule, 62% watched multiple episodes of a TV show in succession, with 78% of 18-29 year olds doing so and 73% of 30-39 year olds reporting binge viewing activity.
  2. On-Demand Viewing — with an IP based delivery, anytime-anywhere viewing truly becomes a reality. With Netflix, HBOGO, YouTube, and mobile apps like PBS and MLB’s At Bat, consumers can view content on a Television, Computer, Tablet and Smartphone — in some cases stopping a program on one platform and then picking up right where they left off on another. IP based channels have finally freed the content from the living room and turned the web into the fifth network. That same February 2013 Harris Poll found that nearly 8 out of 10 viewers had consumed television content on their own schedule. Of those, 40% did so via web streaming applications vs 41% that did so through cable or satellite on-demand viewing options.
  3. Long-Form Viewing on the Small Screen — consumers are becoming increasingly comfortable watching long-form content on laptops, tablets and smartphones. A March 2013 report from OOYALA, revealed mobile video viewers spent 57% of their time watching premium broadcast content between 30-60 minutes in March. And 47% of all broadcast tablet video viewed was a half hour to an hour long. To be fair, this certainly could be driven in part by the annual March Madness College Championship Basketball tourney and the March Madness app that allows viewing of every game via a phone or tablet, but even if that is driving the overall numbers, it simply reinforces that consumers are willing to watch video on small screens.
  4. Consumers Enjoying Ad-Free Viewership — with some notable exceptions (the March Madness app for instance) the on-demand viewing model is ad free. Even the MLB’s app, which pauses the game while television commercials are playing, is ad free for the viewer. Because these viewers are trading inexpensive monthly fees or small per-use rental fees for content, they are able to enjoy this ad free environment.
  5. Channel Surfing Decreases — channel surfing is the by-product of poor content choice. Thus as the viewer moves upwards one channel at a time there is the opportunity for unplanned discovery. However, in an on-demand world, channel surfing becomes web surfing… it is a non-linear activity driven by keyword not channel number. As such, we predict that natural surfing discovery will decrease and place a greater premium on content search optimization.

IP Invades Radio Listenership

Making this entire issue even more interesting is the similar changes we see in radio listenership. According to a recent Arbitron/Edison Research Study, weekly Online Radio Audience reaches an estimated 86 million adults 12+ nationally. The same report indicates online radio listeners report listening for an average of 11 hours 56 minutes per week, up by more than two hours over last year’s listening levels (9 hours 46 minutes in 2012), and nearly double that reported in 2008 (6 hours 13 minutes).

“In the smartphone, the majority of Americans now have powerful computers in their pockets, which has irrevocably altered not only out-of-home listening behavior, but out-of-home purchase behavior as well,” added Tom Webster, Vice President of Strategy and Marketing, Edison Research. Tom’s comments echo what we believe we see in this brave new IP based delivery world — anytime, anyplace on-demand consumption will become the rule versus the exception.

Marketing In An IP Based Content Delivery World

The biggest question being debated in conference rooms and board rooms around the world is — what does this mean for advertising? How do television driven advertisers continue to market in an ad-free, IP delivery world? That is the question we’ve been mulling over for some time now and here are our recommendations and predictions.

The Content Will Become The Ad

Computer, tablet and smartphone IP based viewing opens up unique advertising opportunities. By embedding links to products used by on-screen talent or actors, advertisers can create a direct call to action in the video itself. In the case of YouTube based video, anyone can embed a link in a YouTube video without needing any special software or knowledge. So instead of the GAP needing to run a television commercial, they would instead outfit the cast of a television show and then embed clickable links over all of the clothing scenes and make sure viewers understand the links (invisible) are there  for the clicking.

And as TV’s continue their evolution into large format computers for the living room, I’ve got to think this same functionality is just around the corner. Thus, for product based advertisers, issues like fast forwarding through commercials becomes a non-issue. Likewise, as the need for interruptive advertising declines, television content producers can opt to shorten show length or change the nature of interruptive commercials entirely. Either way, the new digital product placement functionality creates enormous opportunity for advertisers and content producers.

Content Not Channel Becomes The Organizing Philosophy

We’ve grown up in a channel based approach to content. We think in terms of TV vs Radio vs Newspaper vs Website, etc. ESPN used to be a cable channel. Likewise the Wall St. Journal was a newspaper. But in an IP based world, ESPN can be a TV channel, radio station, website or newspaper — it doesn’t matter which channel I choose for delivery — ESPN is sports. So in the not so distant future, I will turn to ESPN for ALL of my sports news, including local sports like high school and maybe even little league. And I may choose to watch, listen or read that content because ESPN will push all of that content in each of those channels.

This is all made possible by stunning advances in the miniaturization of technology combined with ever increasing pricing pressures that are pushing down the prices of all kinds of technology. In the near future, local companies could sponsor the high school football or baseball games broadcast on ESPN. In fact, the technology is available today — all you need is a good Internet feed, a wifi station, a simple video switcher and a few cameras outfitted with Teradek Cubes or just go down and dirty with a Livestream account, a good camera and a Livestream Broadcaster (4G live streaming encoder) which would have you up and live streaming for under $1,000.

With this ability to create and share content so inexpensively, news and entertainment brands liberate themselves from the traditional channel/producer based model they’ve been functioning under since their inception. Just as ESPN can become all things sports, BRAVO could become all things Reality TV or NOLADeals could become THE single source of all information about anything New Orleans related, from food and nightlife reviews, to hotel and event ticket purchases. The ability to create a channel around a specific, niche content is absolutely doable with today’s technology. The future of video content is decidedly digital and marketers need to understand and leverage this incredibly powerful opportunity.

Technology Democratizes Video Content

Television advertising has traditionally been the place for advertisers with larger budgets. Given the cost and in some cases audience impression waste, TV was just out of reach for many local and regional marketers. But with this new ability to create a video based channel with inexpensive, off the shelf technology, anyone or any company can break into TV. The only limitation is creativity and audience building skills. And while many brands will build the content, we predict that few will understand or have the patience to build the audience. In fact, this audience or community building skill will become increasingly important and valuable in an IP content delivery world. We foresee brands looking to find relevant people that already have developed an online audience. Once identified, the brands will then look to create joint partnerships with these community builders to organize them around appropriate niche content.

Onscreen Talent & Reporters Take On More Important Roles

One of the unique differences between blogs and news media sites is that when a person subscribes to a blog, they are subscribing to the blogger (for single author sites). On the other hand, when a person subscribes to a newspaper, magazine or network they are subscribing to that parent organization. This has always been one of the major power positions of bloggers — they held greater sway over their readers/followers because of this more personal relationships with the end consumer. However, in an IP based world, where content can be channeled in increasingly smaller verticals, mainstream media has an opportunity to fight back.

In fact, De Nieuwe Pers a Dutch news start-up let’s you do both. Users pay €4.49 a month for access to all content on its app or website. But they can also subscribe to individual reporters, for €1.79 a month. So in a brave new world where individual talent and reporters can create their own channel, one has to step back and reassess the role of newspaper, magazines, and broadcast networks to serve as brand proxies for content quality. Traditionally, viewers would assume that a television show on Fox, ABC, NBC or CBS would enjoy slightly higher production and quality values than something airing on public access TV. Yet, with YouTube emerging as the digital equivalent of public access TV, we can clearly see where personalities and reporters are turning that model on its head.

Here is Kandee Johnson, a make-up artist that is blowing up YouTube. Kandie’s channel has over 1.2 MM (that’s million) subscribers and as of April 22, 2013, the channel has 194,216,869 views. If you go view her videos, you very quickly see that they don’t have that “made at home with my handheld camcorder” look to them. Great lighting, solid audio and the overall production values are as good as anything you’ll find on TV today. And a quick audit of her recent videos indicates she’s averaging about 200,000 views per episode — which isn’t anything to sneeze at when you consider that’s guaranteed impression vs pure “impression” or GRP which is the opportunity for impression. So in a world where a make-up artist with no big network backing can rack up a million plus followers and a couple of hundred thousand views a show, do we really need the installed network or media conglomerate infrastructure? And as a marketer, do you still need to pay for access to that installed audience or should you make the investment to create your own?

What Should Marketers Do To Leverage an IP Based Content World?

We think that the continued evolution to anytime, anywhere IP based content delivery is creating a post-media world. In this new, digitally centric world, committed companies can begin to carve out niche audiences and feed those audiences an ongoing stream of high quality brand journalism. The model has been repeatedly demonstrated in video, audio and text by barnstorming bloggers. And while very few, if any, big brands can claim victory in the brand journalism world, we believe that is due to execution not opportunity.

Smart marketers will begin to fail small by underwriting small content experiments. By using off the shelf technology and outsourcing key production execution to more knowledgable parties, forward thinking brands can gain an all important first mover advantage in this brave new world. We believe that this will be key to winning the content arms race that is just beginning. Because on-deman viewing decreases the need for channel surfing, happy consumers will have little desire or need to explore their content options provided their current resource continues to delivery entertaining, informative, high-quality programming. Thus, first mover advantage could be the single most important element in the successful transition from brand advertiser to brand media.

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