Hope as a Strategy in the Media Industry

With the proliferation of streaming options, and more slated to crash an increasingly-saturated market by the end of 2020, media executives unilaterally believe that their content libraries give them enough fuel to achieve lofty paid subscriber ambitions. Wall Street uses “paid subscribers” as a blanket metric. However, what percentage of them engage directly, and not through a vMPVD (an acronym for Virtual Multichannel Video Programming Distributor, for those not familiar) like Apple TV+, Hulu, or Amazon Channels?

AdWeek recently published “Streamers Are Using Extended Free Trials in an Effort to Hook Housebound Viewers,” where a few media executives explain that expanding the length of trials builds awareness and that some will inherently discover and watch content, leading to retention.

Marc DeBevoise, Chief Digital Officer for ViacomCBS, states, “We will have better conversion and retention, even if we’re going from one week to one month… We garner more users if they get to see what’s in the service first. Getting people into the service is key because once they get into it, they get to see how much is there.”

What the article, as well as media outlets like ViacomCBS, and to be fair, virtually all others’ miss is that building relationships with subscribers on their platforms is truly the only way to control what happens “once they get into it.”

Michael Engleman, Showtime’s CMO, doubles-down on Mr. DeBevoise’s statement, and seemingly hangs his brand’s success directly on personalizing content recommendations, “In success, we’ll build relationships and customers over the long haul… From a marketing perspective, the key is understanding taste… The more precise we are in delivering the right message about the right show to the right person, the more success we’ll have.”

Billions is back, although I subscribe to Showtime on Hulu. Mr. Engleman’s team can reach me because I opted in when I subscribed (I churned in 2018), and personalize content recommendations, although nothing is measurable since they don’t know who I am anymore.

Media organizations brought 532 new scripted programs to life in 2019, and, even with that number slowing drastically in 2020, it would still take you more than half of your 6,205 waking hours this year to consume all of it.

On the one hand, subscription fatigue is real, and consumers remain hesitant to sign-up for yet another service, unless, of course, they are extracting value unique to a particular platform.

Consumers can watch the same content on multiple services.

Beyond sharing a percentage of the subscription fee (revenue leakage), or a portion of the CPM for those monetizing via ads, to a vMVPD, streaming providers are unable to establish any kind of meaningful dialogue with consumers. They can, however, offer an incentive for a vMVPD like Hulu to promote a big bet show on their behalf. Or, they compete to win-back the same lapsed subscriber to control the relationship on their platforms.

As walled gardens, vMVPDs provide insights into consumption (outside of perhaps general demographic info like gender or age group) as a standard, yet would never share an email address or anything identifiable like a deviceID, with “partners.” Which must be why media organizations feel the single option they have is to bet the house on leading with content. These are just the obvious disadvantages.

There is a bigger battle at stake.

Without delivering content directly to audiences on platforms streaming companies own, they struggle to understand who the consumers are, inform the product roadmap, deliver compelling digital experiences, or even communicate directly with people — at least without reaching them across paid media outlets.

Follow the incentive.

HBO and Hulu are competing for the same set of subscribers.

Product teams at vMVPDs like Hulu, Apple TV+, and Amazon Channels are chasing metrics associated with driving engagement with the original content they produce, which, I am sure, they also perceive as a core differentiator (although not the only one). Sophisticated teams of seasoned people at Apple and Amazon, for example, investigate consumer behavior and build experiences around what actually drives retention. Since they do not possess the same level of constraints as those whose core business is producing content, they iterate on digital products and align teams to drive behaviors indicative of retention and engagement. Now, Apple, Hulu, and Amazon likely share some of those barriers because they also aim to establish themselves as a destination for original programming. So internally, they might be coping with prioritizing output with competing incentives as well.

Relying on distribution outlets without offering an incentive to consumers, whether that’s in the form of a compelling experience (see Apple TV+’s immersive, captive app experiences), a reduced fee for subscribing directly, or simply adding value to people in the form of contextual, helpful multichannel messaging, is an entirely untapped lever.

Product and Marketing alignment is essential for building subscriber loyalty.

Content is what every streaming provider uses to entice customers, which is painful for me to endure since I subscribe to 22 services myself. (I tallied this number after onboarding on Watchworthy, which is an incredible, and free, service that lets you curate a watchlist across all the content you can access.)

I would never watch any of these shows, yet organizational structures and misaligned metrics limit these companies' potential to build for growth.

Understanding what behaviors indicate retention, coupled with aligning teams to drive innovation by offering empathy and value for people consistently, as opposed to telling them what’s new, are keys to differentiating any service in the eyes of consumers. Since DTC is a novel concept for traditional media outlets, it’s understandable that they continue to obsess over what programming, on which they spend billions of dollars annually, is generating the most engagement. To them, this era must feel like they’ve hit gold in merely being able to get reasonably periodic feedback on what content people are consuming.

Meanwhile, Jaws is circling in the murky waters.

What media organizations fail to see coming are the tech “partners” they rely so heavily on to distribute content are their greatest threat to long-term DTC stability. Make no mistake that tech giants have a profound competitive advantage. According to a recent WSJ article, a court accuses Amazon of using data to inform the development of its private-label merchandise. At any moment, Amazon can take a steeper loss on its “Amazon Basics” diapers and completely obliterate any loyalty Huggies or Pampers generated over several decades.

Tech companies use data to inform studio bets, such as investing within a particular genre. Assuming they have not already, what’s stopping them from promoting their programming to people in the precise second they show intent on watching something similar from a distribution partner? (Have you experienced what it’s like to explore content on HBO, Showtime, or Starz on Hulu?!)

Big Tech established DTC brand equity years before the Streaming Wars were a twinkle in Reed Hastings’ eye. Media brands are going to sink their ships into Jaws’ deadly grasp unless they grab the life raft, which, currently, is enticing consumers to subscribe to content on platforms they own.

— Rory Kane

Contact: www.audienceperspective.com

Originally published at https://www.linkedin.com.

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Rory Kane

Rory Kane

My company helps brands deliver value for their customers, which drives sustainable growth. www.audienceperspective.com