Thanks to advances in mobile, video and wireless technologies, consumers now enjoy an abundance of options. What will this mean to your bottom line at the end of 2018, and beyond?
Deloitte believes it has some answers worth noting, thanks to its just-released 2018 Media and Entertainment Industry Outlook.
Streaming is huge. But, Deloitte notes, this has helped spawn “several other important developments.” These developments could greatly impact your company’s day-to-day activities.
Here’s a topline statistic from the Deloitte report that’s worth noting: Nearly half of U.S. households had subscribed to a streaming service as of 2016, with millennials subscribing to an average of four streaming services.
Overall, 60% of U.S. consumers (and 82% of millennials) stream TV shows at least monthly.
Kevin Westcott, Vice Chairman and U.S. media and entertainment leader for Deloitte Consulting, notes that this trend is directly responsible for the emergence of vMVPDs — virtual multichannel video programming distributors.
These are the “skinny bundle” players including DirecTV Now, Sling TV and YouTube TV, and they currently hold about 20% of the overall U.S. subscriber market.
Another continuing trend is “cord-shaving.” In Q3 2017, 1 million U.S. viewers canceled their multichannel subscription television services, opting instead for some combination of broadband Internet and IPTV, digital video recorders, digital terrestrial television broadcasts, or free-to-air satellite television.
“These viewers clearly represent an enormous opportunity for media companies nimble enough to meet their needs,” Westcott says.
In response to these trends, media companies are increasingly going direct-to-consumer with their own digital streaming services.
For example, Disney recently acquired a tech firm that will help it launch its own streaming services, ending its distribution agreement with Netflix.
But, this also presents opportunities for broadcast TV stations to ensure that their unique and original content is accessible via an App, and through its website.
Radio broadcasting companies also have an opportunity in this space by developing audio and video podcasts or other content that is uniquely branded and available through digital and social outlets.
Says Westcott, “Consumers have an almost insatiable appetite for high-quality content, and a primary reason they subscribe to a platform is to access content they can’t get anywhere else.“
Therefore, if your radio station’s morning show is red-hot with advertisers, bonus features online present a new opportunity for revenue while giving your station an important video presence in a platform avidly consumed by your core listeners and “superfans.”
This could put broadcast radio and TV companies in a good position.
How so? “One challenge,” says Westcott, “is that consumers may be reluctant to pay for exclusive content on top of their other paid subscription services. Consumers may find multiple subscription services both costly and inconvenient, and scale back. For this reason, we may see some form of re-aggregation over the next year or two as limits on consumer spending potentially hinder the growth of some content platforms.”
Meanwhile, broadcast media can take advantage of digital opportunities by capitalizing on another key growth opportunity for media companies in 2018: targeted advertising.
Also known as “addressable advertising,” the voluntary rollout of ATSC 3.0 and the Next Gen broadcast TV standard will bring to Channel 7 what YouTube and Facebook have been sharing with CMOs for several years.
“Success will likely depend heavily upon gaining more insights into customers’ demographics and viewing behaviors,” Westcott says. “We are seeing pockets of innovation regarding data analytics and personalization in the media and entertainment space. The next step is to augment this customer information with social media data.”
What else does Westcott have to offer? Content is still king.
“Today’s highly fractured media-distribution channels have often made it increasingly
difficult for media companies to promote specific pieces of content—and for consumers to find them,” he says. “As a result, the area of content discovery can be more critical than ever to gain a competitive advantage. Success may lie in developing an intimate understanding of the consumers media companies are trying to reach. This includes tapping social media, which, for example, has become the No. 1 way people learn about new TV shows.”
