Future TV companies need to straddle traditional broadcast, OTT worlds to win

By Jim O'Neill on Jun 04 2014 at 9:00 AM

One quarter of Millennials – what is generally thought of as the most attractive segment of the consumer market -- are unreachable through traditional TV, a study says, with some 28% of pay-TV subscribers saying that in the next six months they’re “likely” to either cut or shave their current service.

To succeed in reaching them, said Eric Berger, EVP of digital networks at Sony Pictures Television (SPT), “TV companies of the future needed to marry the arts and sciences.”

Speaking at the BroadbandTVcon Conference in Santa Clara, Calif., Berger said that to capture an increasingly divided audience it’s critical that TV companies adopt a strategy that includes aggressive TV Everywhere and over-the-top components, technologies already being adopted by those at-risk Millennials, and combine them with data-driven programming decisions.

Citing a study from Sony, Berger said the number of cord cutters and cord nevers – particularly Millennials -- are growing and likely to continue to expand, but that they’re frequent users of OTT and TVE.

“Our study showed that 51% of those cord cutters said they would replace cable with smart TVs, consoles of connected devices,” he said, suggesting connected and mobile devices were the new MVPDs.

“The TV landscape is changing,” he said. “And the device era has brought a great deal of potential for consumer choice (but) from a consumer’s point of view it’s unbelievably confusing.”

It can also be tough for TV companies trying to measure audience engagement.

Berger, who also is the GM of SPT’s multi-platform video entertainment network, Crackle, said he believes the digital and TV industries are blending. He pointed to a projection that suggested video ad spend, for example, by 2017 would be a blended TV and digital market worth $83 billion.

“We believe that in the next three years it’s very likely that video will be video” to brands, Berger said, whether its on TV or delivered on a digital channel. And, he said, it will be critical for TV companies to be able to “aggregate, measure and monetize audiences at scale.” SPT just announced a deal with Rentrak to provide measurement information from its national, local and newly released national syndication TV services

Pointing again to the Sony study, Berger said streaming is now the second most popular way to watch content at home, outstripping DVD and DVR.

Where once streaming was primarily delivered to computers, Berger said the study showed streaming to a TV is now the No. 1 device of choice in U.S. households by a significant margin, 54% vs. 44% to computers. Tablets (19%) and mobile phones (15%) also are a part of the mix, even in home, he said.

Berger said it will be key for TV companies to have “feet in both worlds,” allowing them to continue traditional delivery to part of their audience and to deliver to an audience that chooses TV Everywhere and OTT.

“If you want to reach 100% of market, you have to do both,” Berger said. “You need to marry that TV Everywhere with over the top services.”

Berger also posited that “programmatic entertainment” was an important component for the industry’s future, saying TV companies needed to look toward data-driven entertainment, ala Netflix.

That, he said, leads to more efficient yields on content acquisition.

“The programmatic schedulers in this world are akin to portfolio managers looking at real times data to make decisions,” he said.

SPT, Crackle and its other networks also have worked diligently at establishing their brands in the TVE, OTT and pay-TV world.

Berger said Millennials and other young viewers often don’t know the difference between cable networks, broadcasters or digital networks.

“To viewers, they’re just icons that represent brand experiences,” Berger said. To change that, he said, “we like to create TV that strikes a chord – whether you have a cord or not.”

Follow me on Twitter @JimONeillMedia

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