Entertainment is Entertainment, Regardless of the Channel

Content Insider #625 – It Is What It Is

By Miles Weston

            “You folks… sure are depressing.” –
Woody Guthrie, “Bound for Glory,” United Artists, 1976

A
few years ago, my wife and I were walking down a street in Zihuantanejo
(Mexico) when a VW bug stopped in the middle of the street. A gentleman jumped
out of the car and ran over to us, hollering in delight.

It
was a waiter from one of our favorite restaurants; and having just arrived, we
hadn’t been to see him…yet.

He
insisted we come over to the car and meet the family (all six of them),
including their 6-month-old.

That
evening over dinner, we congratulated him on having another child and commented
that the Bug could barely hold everyone. 

“Well,
the TV broke awhile back and before we could get a new one…,” he responded with
a huge grin.

That,
my friend, is why the industrial world is facing a declining population!

Worldwide
we have:

7.7B
people 1.2B
households (World Bank)759.8M
connected TVs (Statista)46
percent of world population with internet connection (World Bank)552.7M
Digital TV households (Statista)2.9B
smartphones (Statista)N
(infinite number) of streaming services24
hrs. in a day

A
few things we all agree on are:

People
want to watch stuff – movies, episodic series, how tos, short/long from
content.  You know stuff!Folks
like to be entertained on screens – huge screens, big ones, medium-sized, handheld
unitsDifferent
age groups experience their content in different ways and familiarity has become
the normVideo
creators want to create content and be paid for their work/effortsPeople
like/prefer free content but in a pinch, most will pay for itNo
one likes ads. (Actually, they don’t like bad ads, 10 of the same ad in hour,
ads that they’re not interested in.)

Platforms – Pay-TV isn’t dead, but it is changing to meet the
needs of local, regional and global viewers. 
At the same time, OTT services are entering the fray as rapidly as
possible to take advantage of the new monetization opportunities. 

According
to Digital TV Research, pay-TV subscribers will surpass 1.1B by 2023 and that
many providers are encouraging IPTV conversion because it is more profitable.

Global multichannel surpassed 50
percent last year and should increase to 61.2 percent over the next five years.  That resulted in $230-plus billion in service
revenues last year and is expected to grow to $245.5B by 2023.  

GfK
MRI notes that viewers who maintain their TV bundles do it because:

They’re
used to itIt’s
convenient, everything in one placePredictableSee
no reason to change, learn new things

For
the 90M Americans subscribing to cable packages, TV is still viewed as channels
with predictable, assigned numbers that are on at scheduled times with
commercial breaks.

However,
mobile apps and digital distribution have opened the door for a new type of
viewing convenience that the younger crowd took to immediately – VOD.

Age Matters – The different age groups have a different
view/understanding of what TV (actually simply entertainment) means to them and
how/when/where they watch it.  Even the
content distributed is different. 

Globally,
about 26 percent of the world is under 15 years of age and some 9 percent is over
64 years of age.  Regardless of the
country, they all watch their entertainment in different ways.

As
a result, and based on fallible logic:

Kids
always have their smartphones with them and on.Voice
traffic has become almost non-existent on the wireless services, while data consumption
has increased to the point it is 70 percent of wireless traffic.Folks
generally sign up for the convenience of smartphone streaming – anywhere, any
time.People
are obviously using their handheld devices, and this will increase in the near
future when 5G becomes “widely, instantly” available (hint – 2025).Voice
recognition, search is growing rapidly; so regardless of the device, people
will be able to “tune to” the specific channel/show they want with just a few
words.

Even
Netflix, the leading streaming content service, seems to bear this out because
in many of their 190 service countries, people sign up with their smartphone.

Reality Sets In – While people sign up to watch their content (Netflix)
on any device, anywhere; they still fall into that old, familiar habit of plopping
on the couch to get the most from their entertainment with their large TV. 

And
of course, Reid and crew don’t care because they are just interested in increasing
their subscribers and staying the big dog in the streaming market.

Netflix
will continue to lead in SVoD in both subscriber numbers (outside of China) but
will make up only 194 million SVoD customers out of 743 million (26 percent)
globally by 2023.

While
AT&T rushes to build out it’s 5G E (4G LTE) and 5G services, they are
counting on their acquisition of WarnerMedia to deliver 29.6M SVoD homes by
2023 and contribute to the corporate bottom-line with “modest” investment in
new content. 

Of
course, they are far from alone in the new gold rush as free (ad-supported) and
subscription, transaction (events) vie to carve out their profitable niche.

Today’s
478M SVoD subscribers will grow to 743M by 2023, with China having the most
SVoD subscribers by 2023. However, North America will still drive the largest
dollar volume.

Streaming Rising – Consumers have shown they like and are willing to pay
for new, fresh, different content they can stream to their screens rather than
the appointment-based ad-supported content. 

According
to Rethink, SVoD is increasing and in terms of hours viewed per day, it will soon
draw level with broadcast TV globally by 2023.

Of
course, there are “a few” people interested in making their mark here including
6Play, Acorn TV, Alibaba, Altice, Apple, Amazon, América Móvil, AT&T,
Awesomeness TV, BritBox, Blim, Baidu, Canal+, CBS, Cinemax, Claro TV, Crackle,
dTV, DirecTV, Discovery, Disney, ESPN+, Eurosport, FilmoTV, Fox, France
Télévisions, FuboTV, HBO, Hooq, HotStar, Hulu, Iliad’s Free, iQiyi, Kabel
Deutschland, KBS, Liberty Global, M6, Magine, Maxdome, MBC, MLB TV, Molotov,
MoviStar Play, MTV Play, NBA, NHL, Nickelodeon Play, NTT, Oksusu, Orange Cinema
Services, Paramount, PCCW, Philo, PlayStation Vue, Pluto TV, Pooq, PopcornFlix,
ProSiebenSat1, Rakuten TV, Reliance Jio, RMC Sport, Roku, RTL, Salto, SBS,
SFR-Numericable and oh heck, if we missed you…sorry!

Yes,
we did miss a few folks and it was on purpose because they don’t fit into the
conventional (old style) service provider or content production/distribution
categories … the social media everything to everyone services.

You
know:

YouTube
– 1.3B users with 300 hrs. of video uploaded every minuteFacebook
Watch – 2.32B Facebook usersAlibaba
– 636M usersTencent
– 889 usersLinkedIn
– 437M membersTwitter
– 336M usersTumblr,
Instagram, Baidu, Sina Wiebo, Vkontakte, Reddits, Taringa, Renren, Zing, Xanga,
Mixi, others

Not
really competitors?

Wrong!

Let’s Be Social – It’s easy to downplay the growth and impact of social
media video content by “professional services,” even though they make very good
use of the ad-supported streaming to announce and reinforce their programs,
films, specials.  The problem is those
10s of millions of kid viewers grow up and buy things. 

They
seduce eyes away from other content sources so content owners are beginning to
search for where eyeballs are at, not where they think they should be … watching
them!

Sports
venues have already been signing major contracts with them to go where the
young viewers are used to looking and the results have been impressive.

The
ugly truth is folks don’t think much about the shape or size of the
content.  Yes, bigger is better but … they’re
only there for the content.

Different Views – People around the globe and in a full range of ages
have different viewing habits they are comfortable with; and those viewing
habits change, depending on what they are watching and when they are watching
it.  More importantly, viewing changes … constantly. 

Now
for the analysts who only see TV as a conventional roster of shows followed by
a hodge-podge of dumb, dumber videos, it would appear as though the super competitors
(deep pockets) will take over the world and account for all of the incremental
growth. 

But
they overlook the opportunities that fly beneath the radar of the standard fare
– docs, mystery, comedy, reality, games, etc. – that were squeezed out of the
old TV bundle or never had a snowball’s chance of being considered. 

You
know religious, quiz, shopping, music, adult, public affairs, government,
education and others.

At
the same time, there are channels that appeal to expat citizens or
residents. 

ExPat Opportunities – Because people move fairly easily around the globe for
a variety of reasons (new opportunities, job moves, education) they still enjoy
a touch of home; and new OTT opportunities make it possible for niche area
content providers to develop a loyal and committed audience to keep them in
touch with their home country entertainment, news. 

For
example, in the US, a strong percentage of citizens are from someplace else (most
of us are but that’s a different subject) – Haiti, Mexico, Japan, South Korea,
China, India, Australia, Belgium, Russia, Ireland, you name the country/nationality,
it’s represented. 

People
may live and prosper in the US, but no one really wants to forget his/her
roots.

Niche
channels – both here and abroad – can be very successful and can develop a
loyal subscriber base by offering high-quality, distinctive OTT content to
viewers direct from their homeland in their native language to keep them in
touch, regardless of the distance. 

Rethink
researchers were more wrong than right when they said SVOD would swamp
traditional TV. 

VOD
across the board will cause its slow demise and we believe advertising will
play an important part because done right, people will rush to the content service
that offers “free” content. 

The
difference is that it won’t be the old-fashioned free breaks we escaped from
watching the ad – again – to the bathroom or kitchen.

And
we can thank technological advances and marketers who weren’t interested in reaching
100M suspects with each ad but really wanted 100,000 interested prospects. 

Now
that content delivery is to a specific IP address, the content delivery service
knows a helluva’ lot about the viewer. 

You
know, the same data online folks admit to collecting – name, gender, email
address, phone number, birthday and location as well as information they
collect but don’t brag about – relationship status, line of work, education,
race/ethnicity, IP addresses, search history, websites visited, photos/videos/music
uploaded, devices used, okay…stuff.

Welcome Shift – It is estimated that $17.6B will be spent in online
advertising this year and the normal “conclusion” is that it is sucking major
dollars from pay-tv options.  Perhaps that’s
slightly true, but the smart marketers are learning that quality is more
valuable than quantity as focused advertising shifts to “free” TV streaming
opportunities and audiences grow. 

To
stop you from screaming and running into a deep, dark cave, let’s say right now
that Netflix, Hulu, HBO, Disney, Warner and most of the other SVOD services don’t
need (or really want) that much information to develop, deliver content that
will keep you subscribing and, in many instances, wasting the weekend to binge
something new.

One
of the reasons Netflix is so successful is that it curates content, in any
language, that would appeal to the nearly 2,000 ‘taste communities’ it
identified during its global rollout.

Taste
communities are groups of subscribers around the world who are fans of certain
types of content, regardless of where they live.

AI
(augmented intelligence) and machine learning will enable channels and
marketers to personalize the content for the “free content” recipient.

The
intelligence and virtually instant customization of ads mean vegetarians don’t
get hamburger ads, Jag owners don’t receive a Chevy whatever ad, guys don’t get
ads for feminine hygiene products.

Instead,
the viewer gets ads with their content that’s tailored to him/her … ads that
focus on a specific experience, theme, fan community, interest/preference area.

Sky’s
AdSmart platform has already made advances in this area by serving addressable households
(those within a defined or targeted audience) different ads during the same TV
programming with targeted viewers’ demographics, location, shopping habits and behavioral
attributes.

Suddenly,
it’s not TV it’s simply your entertainment, news and the information you want–when
you want it, on the screen you want it on.

Yep,
you’ll be able to finally follow Woody Guthrie’s advice, “Take those ideas, and, uh… and find yourself some place where, uh…
where nobody, uh… nobody will bother you, and just put those things down…”

Just
don’t think too hard on how you got to glory.