New Thinking

How will we pay for the future of television?

Share this post:

Hint: The answer’s in the data.

As the fall TV season kicks into gear, it’s time to take stock of the video entertainment industry. Live television viewership is sliding, cable subscriptions are dropping, and TV advertising is stagnant. People are watching more video than ever before, but just not the way they used to. Half of US TV households now subscribe to SVOD services, like Netflix, Amazon, and Hulu, and viewership of original digital video content is on the rise, according to a BI Intelligence report.

As promised, we are in the midst of a stunning transformation of the way in which video is consumed. And that shift is having a profound impact on the business model that supports the creation and distribution of video content. What once was a simple, structured, scalable ad-based model is in total disarray.

In other words, we can see the future of video consumption in terms of consumption habits; it’s just not clear how we are going to pay for it.

Increasingly, experts believe that the answer to this unnerving question will be found in data analytics. Consider the situation from the perspective of TV and cable companies. Legacy companies are responding to changing viewer habits by leveraging new distribution channels like apps, Web sites, and social media to make their programming available however and wherever viewers want it. This past summer, NBC put together a unique partnership with Snapchat for the Olympics, launching a Snapchat channel with videos made and curated by BuzzFeed editors. And just last week, Twitter streamed its first live NFL game.

But distributing content in new ways is the easy part. Getting brands to pay for it is the real trick. Fortunately, with each digital distribution channel comes new and valuable data about its viewership, and the potential to monetize the content in more purposeful ways. But only if the old-line media companies understand the new rules of the game.

“It has to be data and technology driven, so that you can look for micro trends at a macro level and evolve messaging and delivery in near real time based off of those trends,” says Lance Neuhauser, CEO of 4C Insights, a data science company that provides ad and content analysis. Legacy players need to invest in infrastructure and organizational changes to adjust to this data-driven new world order. The old models and skill sets simply don’t apply to digital marketing.

As EY consultants explain in a recent report, to cultivate relationships with brands, “industry players will need to invest in the technologies that will enable them to analyze audience data, deliver deeper engagement with advertising, and prove incremental value to brands.”

But shifting from the traditional model of scale and viewership to fragmentation and targeted marketing is a massive — and risky — change, says Neuhauser. Traditional television players may not have the talent to oversee those changes. And even if they do, they need to be prepared for a reduced ad spend if the data reveals smaller or less-influential audiences.

On the flip side, brands can’t sit around and wait for the entertainment industry to sort itself out. They need to do some investing of their own. Shifting away from established models of buying ads in scale from networks and cable companies is a risk, but one with potentially big rewards. In particular, brands should focus on creating multiple touch points and analyzing the resulting data to hone their marketing strategy.

“The companies that do this well will have a serious data advantage over those that don’t,” says Neuhauser. “Because if you’re learning from customers what they want, what they need, and how they want to be spoken to and in what format, you’ll be able to better align your brand messaging.”

Award-winning writer and author of To Catch a Cat

More New Thinking stories

Instant Checkout: Transforming Customer Experience with Shell

Self-checkouts are supposed to save us time, but crumpled barcodes in unpredictable packaging locations requiring individual scanning, and the dreaded ‘unexpected item in the bagging area’ warning message can quickly turn a trip to the shop into an extreme test of one’s patience. The longer and more arduous the process to check out, the more […]

Continue reading

More than just text-to-speech: Trint cracks open audio content for search

Trint CEO and co-founder Jeff Kofman worked with a team of developers to build the cloud-based transcription platform because, as he says, “I’ve lived the problem.” As a 30-year broadcast journalist and war correspondent (ABC, CBS, CBC), Kofman estimates that he’s manually transcribed thousands of hours of interviews. “I understood that there are a lot […]

Continue reading

Interview with Manos Xanthogeorgis, Head of International Digital Marketing

Manos Xanthogeorgis, Head of International Digital Marketing at Sony Music Entertainment, talks with IBM Global Leader, Strategy & Design at IBM iX, Robert Schwartz about the marketing challenges (and perks) of the international music industry, including surprise album drops, social media disasters, and countries still hooked on CDs. Manos Xanthogeorgis 00:00 Intro 00:27 Manos’s role […]

Continue reading