Viewers Are Calling the Shots — Can Legacy TV Keep Up?

"Realistically, most TV networks will need to continue pursuing multichannel distribution strategies to attain the most reach. But that doesn’t mean they can afford to sit back and let their content delivery partners dictate the consumer discovery and viewing experience." —Doug Campbell, Chief Strategy Officer, Telaria

The numbers should have TV execs worried: online advertisers are expected to outspend TV advertisers by $40 billion by the end of the year. 

TV companies that have long enjoyed a comfortable seat at the advertising table have suddenly found themselves pitted against digital natives like Google, Netflix and Amazon, which have built direct-to-consumer brands and business models that people love. 

Even mega-mergers on the horizon like Comcast’s proposal for Sky that extend infrastructure do not address the fundamental consumer shift. While TV still commands nearly $70 billion in annual advertising revenues, this will steadily erode as audiences continue to migrate to OTT options.

Traditional TV programmers, however, can turn their narrative from one of survival to one of strength. They have incredibly strong content assets, which they could couple with direct consumer connections to win. The key to doing so must stem from a deep understanding of their audiences and how to reach them.

“Watching TV” Has Taken on New Meaning

Scheduled viewing of linear content and content that is not available on demand does not fit a modern consumer’s lifestyle. Live sports and hit shows are notable exceptions. That notwithstanding, to provide both relevant content where and when consumers want it, traditional TV firms should build or buy technology that allows them to control content delivery and branding over a large number of fragmented devices. Importantly they must also provide an explanation to consumers on how and when to use their content.

It may sound silly that people have to relearn how to watch ABC, CBS, or NBC but just ask any millenial how they use Netflix versus traditional linear TV and the gap quickly becomes clear. Telaria conducted a multi-country study and found that 60 percent of viewers equate “watching TV” with streaming. The on-demand nature of digital video led to the rise of binge watching and tech companies encouraged this with features like auto-play, creating a seamless experience. Consumers are now also used to watching their favorite shows whenever they want — Sunday nights may no longer hold their weight for prime-time viewing.

In addition to facing device fragmentation and brand dilution, many traditional programmers have shortsightedly seeded their valuable content within technology companies that own the relationship with the consumer. Wisely they are now clawing back their assets to establish their own direct-to-consumer connections. 

Disney recently announced they will remove some of their programming from Netflix in preparation for the imminent launch of their own streaming service. As great content producers develop the technology pipes they need to serve their own content, directly to consumers, we can expect to see them turn away from third party relationships.

Realistically, most TV networks will need to continue pursuing multichannel distribution strategies to attain the most reach. But that doesn’t mean they can afford to sit back and let their content delivery partners dictate the consumer discovery and viewing experience.

A good example of this is HBO Now - though it only makes up 10 percent of HBO’s total subscribers, the network fully understands that their platform is an extension of their content and must reflect the premium experience for which they are known. Creating a platform in line with audience preferences can help with content discovery and brand affinity is easier said than done and a crucial component of that winning strategy is data.

Ceding Control of Consumer Data Means Certain Death

The use-case for audience data in the premium video environment is hard to overstate. Data enhances all of the things we’ve discussed already like programming, content discovery and, of course, advertising. 

There is simply no comparison between the highly individualized data that walled gardens such as Google and Facebook have on consumers at a global level and the sparse breadcrumbs of data that legacy TV companies have on their viewers. Tech companies have the potential to target audiences based on their emotions meanwhile progress on addressable TV based on simple demographics have been painstakingly slow due to fragmented audience data.

While there is certainly a line in the sand between what data is appropriate for companies to harness to improve their services and what is overstepping personal privacy, there is no question that TV companies need better data capturing capabilities to stand a chance against their digital peers. This brings us back full circle to the importance of a direct-to-consumer relationship so that media companies can play on a somewhat level field with technology companies who have had data baked into their platforms since their inception.

It’s not too late! Three clear, but not necessarily simple, steps will put any content provider, including but not limited to the traditional TV programmers, on the path to success in the digital world. Programmers with great content should leverage technology to provide content directly to consumers. They need to very clearly explain their new digital brand promise based on modern consumer habits. Critically, they must develop a deep data expertise to understand and improve both content and experience.

Over the next few months and years we will see massive upheaval in the TV industry as traditional melds with digital, and companies realize they must innovate to stay relevant. Long-established media companies will transact a multitude of mergers and acquisitions to gain audience share but, ultimately, it will come down to how quickly and effectively these companies can pivot to serve audience viewing behaviors for today and tomorrow.

Doug Campbell is chief strategy officer for Telaria, a leading independent data-driven software platform built to monetize and manage premium video inventory.