Quo vadimus?

What really decides consumers to buy or not to buy, is the content of your advertising, not its form

-- David Ogilvy

It is interesting to think about how this industry will evolve. The two criteria I use to think through this are the two I mentioned just earlier:

  • Directness of the conduit and
  • Individual preference data.

Here's a quick graphic illustrating that with the caveat that it is not comprehensive and I'm using a few key players to illustrate the strategy.

Content strategy 2x2

Netflix, Amazon and Google are obviously in the top right hand quadrant as they all have the conduit as well as the detailed data on users.

Cable companies

The challenge facing the cable companies (Comcast, Verizon and AT&T) is that they have the conduit but limited access to user preferences. The latter is not because they couldn't get that data but rather they didn't. Which means they're starting from scratch now. However, given that they still have that conduit in place, they can catch up quickly if they so choose. They realize this now and hence are making moves in that direction (the most public of those strategies has been AT&T's recent announcements surrounding its DirectTV service) and surely more data gathering as part of their services. They are however still limited by the fact that the conduit advantage they have here in the US does not extend to the rest of the world. Add to that the fact that they still do not have a coherent strategy around content creation and strategists at those organizations have a challenge on their hands.

So what they likely to do?

  • Buy content organizations: More purchases like Comcast's purchase of Universal but more focused on content integration rather than a balance sheet / investment orientation.
  • Start their own content arms: This is possible but unlikely as they are just not setup for it
  • Focus on distribution but global: Continue to be the distribution / conduit but do so globally. This is delaying addressing the problem for a later time but has its own advantages. So expect them to buy locally focused distribution in other parts of the world.
  • Offer specific channels with content sourced from Netflix, Amazon and others: Why not? If you can't beat them, join them or at least partner with them. Amazon and Netflix might not want to do so but similar to the backlog model that started Netflix off, maybe we can expect to see Season 1 of House of Cards on Comcast. They both could benefit from it - Netflix by opening up an additional revenue stream and a source of potential subscribers and the cable companies double dipping into the conduits they have in place.

Broadcast channels

CBS, NBC and HBO (as a proxy for traditional TV channels) have a bit more of an uphill battle here. They do not have the direct conduit and by the nature of their business model i.e. linear TV, the brand associated with content belongs to the shows or in other words, more people prefer the show over the channel that it ran on. They realized this of course which is what led to partnerships with the likes of Hulu and more recently, taking the lead from HBO, the launch of their own channels available through Roku, Amazon Prime and direct at an additional subscription price. This seems to be an attempt to copy the paywall approach taken somewhat successfully by news organizations but it seems doomed because of the reasons I mentioned earlier - content they broadcast have their own brand, they have no conduit to the consumers nor do they have any data about their users.

So what they likely to do?

  • Use Netflix, Amazon and others as content channels in addition to traditional TV: A CBS branded show on Netflix? Again, why not up-end the traditional model and see how it works. Not to mention the ability for CBS and others to reset consumer expectations around paying for content generated/paid for by traditionally "free" channels.
  • Begin branding their own content - This has to happen.

Facebook and Google (and maybe Snapchat)

Excepting Google, the one other company which has the conduit as well as detailed preference data is Facebook and its sheer scale dwarfs the others. Snapchat is a smaller player snapping at their heels but it seems to have a better handle on future consumer trends.

Facebook know a lot about individual preferences and has invested a lot of time and effort in creating that direct conduit to people's homes.

So what they likely to do?

I would posit that we should expect to see Facebook Video (or some better branded version thereof) soon. Similarly from Snapchat. Essentially, expect these two things from these players:

  • Facebook Video (and a similar variant from Snapchat)
  • A new form of content tailored to their consumer profiles.

This tailored form of content is likely to be:

  • Short (5-15 min) bursts
  • Well produced
  • Mobile focused
  • Strong but personalized story lines
  • Binge-able i.e. 10 episodes of 10-15 mins each all released in one go similar to Netflix.

Given that Google has both the conduit and preference data, its move into paid programming aka YouTube Red, was to be expected. What is unclear is how that translates to traditional TV. Cord cutting is a thing for sure but we all need to understand that cord-cutters are not the majority. That has to be factor for organizations such as Google where the US is just one market.

If Facebook and Google take the long view, then this is an opportunity for them to redefine what TV is. I would argue they should focus on that especially in non-US markets.

So in summary, we live in interesting times. The challenges faced by news organizations are now increasingly pertinent to other media companies. The same companies that disrupted newspaper companies are now in a position to disrupt TV and movies as well. I've laid out some possibilities but who know what the future will bring.