In a new report sponsored by Google, a number of TV industry executives provide their own insights into how the world of TV is changing and in no small part due to technology. From the answers and insights given, Google came to the conclusion there are four main TV-related trends developing at present and defined these as “cord cutting,” “skinny bundles,” “over-the-top (OTT) original content” and the “personalization of ads and content.” As an extension of this, the report also picks up on how these TV execs, and the industry at large is responding to these new trends, including modifying revenue models to better take advantage of the new ways in which people consume content, closing the technology gap to provide the type of user experience consumers expect, and achieving organizational alignment where the company's internal strategies and monetization methods are in line with the forward direction of TV and not still too focused on linear solutions.
The main takeaway -- from Google’s perspective -- is that although the industry feels it is already making enough progress in the technology and infrastructure areas, there’s still some work that needs to be done on the ad front to get ahead of the curve. It would seem it is this last point -- better understanding and implementing of ad revenue strategies -- that is the true nature and purpose of the report.
Background: TV consumption is indeed changing and this has become increasingly evident over the last couple of years by the sheer volume of those consumers that have concluded their relationship with traditional cable companies and ‘cut the cord.’ This has led to many of those same companies looking at new ways, and introducing new services as a means to recoup consumers they had previously lost (or anticipated losing) through their traditional products and services. Resulting in a landscape where many companies have now adopted a two-pronged approach where they offer streaming-based versions of their services to early adopters of the technology while maintaining the status quo with those customers that have yet to make the transition. All while being of the understanding those status quo customers will need to eventually be transitioned over to the newer consumption format. It is this ‘eventually’ aspect that the new report by Google heavily leans towards and discusses from the broadcaster and marketeer perspective.
Although “The convergence of TV and digital: How broadcasters are building for success” report was conducted on behalf of Google, the data was actually collected by the market research company, Illuminas who interviewed twenty TV executives broken down to include ten broadcast executives (five broadcasters, three sports broadcasters and two OTT/pure play digital providers), and ten senior TV media buyers (eight TV buyers and two CTV and premium video buyers). Each interview lasted one-hour and the bulk of the main takeaways from the report were formed based on a mixture of qualitative and quantitative measures. The latter of which largely comprised of exposing interviewees to a Likert-type scale where they were expected to pick between “1” and “5” values to represent their opinion on how well the industry is prepared for certain developments. For example, “how prepared the industry is to support the convergence of TV and digital” and “in what ways is the industry least prepared for the future?
Impact: A lot of the information in this report is old hat for those who are already invested in the newer TV consumption landscape and so Google does not seem to have been, or intended to actually look at the forward direction of the industry from the consumer perspective, but was more interested in driving home the importance of ads to marketeers and content providers who may still be unaware of this. To the point where the report is not really designed to be read by the average consumer as it has a habit of bundling “trends” that have emerged naturally with those that are being artificially introduced by the industry, to the industry, in response to the more organic ones.
For example, it’s no secret that cord-cutting and skinny bundles are now trending topics in TV land. However, they are topics that are for the most part driven by consumer demand. As it is the general consumer movement away from traditional TV hardware and services in favor of on-demand, access-anywhere and low-cost options that have created the foundation for cord-cutting and skinny bundles in the first place, let alone the actual and active adoption of cord-cutting and skinny services by consumers. In comparison, the OTT original content and personalization of ads both represent market reactions to the real consumer trends. Take the ‘personalization of ads and content’ for instance, as this is something the provider and broadcaster side is trying desperately to implement to account for lost revenue - resulting in a forced trend. The same could be said for OTT original content, which with the exception of Netflix and Amazon, is another example of how companies are trying desperately hard to distinguish their product/service from the competition within an increasingly defragmented service market. In other words, this is not necessarily a report the consumer needs to be too concerned with reading in full as its findings seem to tally too conveniently with the issues Google and its “partners” are mostly concerned with - better utilizing data collection to serve more ads. From Google’s perspective specifically, helping broadcasters to utilize its own ad-related services and technologies to achieve this.
Interestingly, Google used a double-blind research approach in this report where it was unaware of who the participants were, and likewise the participants were unaware of Google’s involvement. It remains to be seen why Google used this approach unless it expected the viewpoints/opinions of the interviewees to be liable to change if they knew Google was involved. Which highlights the importance of not necessarily taken the information presented in the report on face value. That and the fact that the report in itself repeatedly highlights how the business side of the industry -- including the interviewees themselves -- are behind the curve when it comes to the switch away from cable. Which in turn arguably highlights how they are probably not the best people to ask about the trends or the way in which the market is developing and evolving in general.