This is the final installment in a series looking at the industry trends that came out of IBC. Part 1 looked at how over-the-top services have been embraced by virtually all players in the industry and the growing dominance of offering software as a service. Part 2 examined how the user interface and user experience is changing, and how augmented reality and virtual reality will impact the space.
There are few video industry conferences where “monetization” and “business models” don’t occupy the lion’s share of panels and presentations. At a time of vast disruption in the ecosystem, it’s become a rare event that isn’t headlines by one or both topics. IBC was no exception, with multiple presentations and discussions about the business of video every day of the show available daily. The bottom line: Advertising is sharing the spotlight with subscriptions… and the winner is…
MEDIA REVENUE MODELS CONTINUE TO TRANSITION
The 2016 Rio Olympics were eye opening for Comcast and NBC. The audience it expected failed to show up. At least the traditional audience it expected.
But the network said the 30% shortfall in eyeballs it experienced during the Summer Games on television was almost completely offset by the 50 million viewers who streamed 3.4 billion minutes of action — and ads — on the Internet. The bulk of viewers, it said, were under the age of 35.
The fragmented audience 100-200 cable channels had created has been further fragmented by online video options that are a magnitude — at least — larger.
Welcome to the new reality — and complicated mathematics — of new TV.
“It used to be all advertising,” said Andrew Neil, a publisher and broadcaster from the United Kingdom. “The new model is the diversification of revenues.”
Where revenue models once made up a simple pie of advertising dollars, pay-TV subscription fees, public funding (in the case of public broadcasting) and retransmission and carriage fees, operators, broadcasters and content owners now face a more complex recipe, one that includes multiple content licensing fees. For operators who stream content, monetization options also include ad-based and subscription-based versions, as well as transactional rentals and electronic sell through.
Increasingly, traditional and streaming providers are testing the waters on SVOD, AVOD and TVOD in a hybrid scenario that sometimes leverages content release windowing and subscription perks designed to reduce churn and create additional revenue streams.
“It’s become most important to have multiple revenue streams,” said Susanna Dinnage, EVP & MD of Discovery Networks U.K. & Ireland. “In terms of advertising, it’s fast becoming more personalized. Programmatic is the future moving forward. More personalization will lead to more conversion.”
ANALYTICS, MEASUREMENT AND DISCOVERY
At the core of the video industry is data.
“The nirvana for the TV industry is knowing who’s watching, what they do next,” said Tom Toumazis, Chairman of TVbeat/NED TheLADbible Group. “On a digital platform, they know it… what we’ll see in the future is a rapid change in the way advertisers and agencies demand to know more about what consumers do after they see an ad.”
Added Phillip Luff, MD Scripps Network UK & EMEA: “We can never have enough data. It’s all about understanding your audience and monetizing that.”
Luff pointed out that HGTV works with brands like Wayfair to integrate product into programming, a not-so-subtle reinforcement for the retailer.
Analytics also can drive engagement with content, if it’s personalized effectively, delivering more relevant content recommendations, making search and discovery easier to use and more productive.
“Discovery of content has to be as compelling to do as content is to watch,” said Michael Hawkey, SVP & GM for TiVo’s discovery business group. “It’s consumer driven. B2B4C. It is about the consumer. If you don’t listen to the consumer first… regardless of age or device they watch on” you won’t succeed. “You need to pay attention to what they want. How they use it, take the feedback you get.”
This three-part series can be downloaded as a single document here.
JIM O’NEILL is Principal Analyst at Ooyala and Editor of Videomind.