Networks, cable companies and tech companies are currently in a policy knife fight in Washington. Consumer advocates and tech companies offering over-the-top services are asking for more freedom to insert their own ads, repackage content, change layouts and tweak lineups. Cable companies and the studios are crying out for more protective regulation.
But all this haggling over regulations is looking backward to save yesterday. Notice how all of this debate tends to ignore the most critical player at the table - the American viewer?
Today, video content is in abundance, comes in many forms and has dozens of outlets. The television set is increasingly being seen as just another screen, and is losing its association with premium content. Viewers are no longer chained to their living room tuned in to a particular channel at a given time. Instead, they watch what they want, when they want, where they want.
Television doesn’t have a distribution problem - it has a relevancy problem. Younger viewers in particular are flocking to Netflix, YouTube, Twitch and other streaming services in droves. To catch up, media organizations need to build relationships with customers on their terms. And perhaps more importantly, on their data.
Let’s take a look at how the three business sectors in play - the content owners (networks and studios), the delivery guys (traditional cable) and the disruptors (everyone from OTT to tech giants such as Google and Apple) - are responding to the changing consumer.
Content owners continue to focus on copyright protection and content monetization. The industry survives on a model where a few hits subsidize the majority of loss-making programming. What the networks and studios want is assured and predictable revenue. And their kneejerk reaction has been to safeguard their precious content at any cost. But new players such as Netflix and HBO have managed to stir things up and expand the conversation.
Cable companies who were rudely woken from a complacent slumber are keen on stemming subscriber decline and reversing the trend. They also have to make good on existing hefty contracts with content owners. Most are taking a simplistic view - retain control over content and delivery by ensuring audiences use only their set-top boxes, add an app or two for an OTT experience - problem solved. Really?
Silicon Valley’s disruptors, true to their nature, are questioning the fundamentals of the current media business. OTT players are questioning the dominant One Story Fits All studio model and creating quality, niche content catering to the demands of select audiences. Other tech companies, such as Apple, are questioning the current delivery system - "Why does a channel even exist?" asks CEO, Tim Cook.
But viewing the issue with a purely content or delivery lens misses the point. All the noise about a-la-carte bundles, original programming, multi-device support, new interfaces, not enough apps to too many apps, etc. have practical solutions. But, if your audience isn’t engaged and invested in your service, how long will your business stay relevant?
What many of the cable companies and studios have missed with all their new interfaces, apps and OTT jargon, is that the future isn’t about video but about building a data-centric service. It’s really about listening to your audience and translating data into meaningful customer relationships. The stronger the relationship, the more data you gather. And the more data you gather, the better are the chances of maximizing the lifetime financial value of the relationship with your subscribers.
Undoubtedly, tech companies such as Google and Apple have an edge here. Being digital natives, they know the value and potential of data. However, they don’t necessarily understand content nor have the creation systems in place. Not yet. A similar trend can be seen in the automobile industry where these new data-centric players not only pose a significant threat to traditional carmakers but are in fact, grabbing the steering wheel.
If networks and cable companies want to retain some control over the television remote, they must embrace usage and transactional customer data. It’s time to move on from focus groups and shift to live data from real consumers. Today’s customers have different expectations – they want personal, memorable, and unique experiences delivered anytime, anywhere and on every screen. It’s time for the networks to listen.