Netflix’ recent announcement about surpassing one billion hours of streamed content in June inspired a host of good articles about the future of content delivery, discovery, aggregation and creation. In TechCrunch, Ryan Lawler built on an interesting theory by YouTube’s Hunter Walker. Walker believes that of the five hours of TV viewed by an individual on average each day, hours four to five are vulnerable to being converted to digital because they are filler, just-flipping-through-the-channels watching – as opposed to dedicated and interested hours one to three. Furthermore, Lawler believes that cable companies’ sluggish rollout of “TV Everywhere” packaging will give Netflix, YouTube, and others an opportunity to surge.
The presumption that this is a turf war or zero-sum game, while entirely plausible, inspired me to put together a list of some of the other crucial factors that will inform the future of TV and video: What viewers will be watching, and why.
Discovery – It’s More Than Just User Interface
Most agree that discovery is critical. Often we look to recommendation algorithms, like those used by Netflix and Amazon, or visual tiling and motion sensors like Xbox and Kinect, or Google’s cross-tool data set. But the primary driver of content today isn’t the literal discovery of what to watch. Instead, it’s how to be relevant in your circle of friends or at your office, and its corollary: that it’s no fun to be the only one watching a series or movie.
Thus content discovery is often determined by pop culture and media –be it a TV critic’s review of this year’s new pilots, or a spoof on “Saturday Night Live.” It’s not determined just by what people are watching, but what they’re talking about. This is what makes cable and broadcast networks (though I’ll argue in a moment that the broadcasters may fade due to lack of brand meaning) so potent. They create their own relevance.
Appointment Viewing – Not Just for Sports or Reality TV
We all love to talk about content -- but that doesn’t include discussing “Moby Dick” with our parents because they read it in high school 30 years ago. Relevance has a deadline. Despite time-shifted viewing, most of the digital and personal conversation about a show happens during its first live viewing. So while appointment viewing may include +3 or +7, if you aren’t caught up almost immediately, then you aren’t in the conversation. Movies are similar, especially blockbusters. While films have created a different type of appointment viewing -- consider it a +21 days, give or take -- the same idea persists.
In the past, most online video hasn’t been scheduled and distributed like appointment TV. So it will be interesting to see how Netflix and Hulu handle that as they begin to market their serialized, original online content. And on the flip side, it’ll be interesting to see how TV networks continue to handle the increasing delays in viewership. For instance, NBC’s “Smash” wasn’t renewed based on its Monday night viewership, but because of how many people would watch it in the following week.
Cable Networks Are More Important than MSOs and Broadcast Networks
NBC, ABC, CBS and, to a slightly lesser extent, FOX, have limited brand value as content providers. But cable network brands like Discovery, AMC, History, USA, Military, HGTV, ESPN, ABC Family and Bravo actually stand for, and deliver, a set of specific content that is appealing to consumers. In a way, NBC is like a daily newspaper delivering a tiny bit of everything, and Bravo is like Maxim.
The cable networks are brands with value in the traditional business sense, and therefore command a certain amount of consideration in the discovery spectrum. And what’s more, cable network branding can be extended outside TV and into digital; just think about how popular Bravo’s social media channels are. By contrast, while broadcast networks offer self-serving discovery, they do so via their sheer volume of viewers as opposed to fan dedication based on verticals of content. Because broadcast networks don’t focus on specific kinds of content, their brands have little meaning to next generation content consumers.
A Zero-Sum Game? Not Really
We know that digital video viewing and TV consumption are both rising -- although digital video at a much faster rate. Yet there still remains an assumption that digital video needs to cannibalize TV content in the “premium” space. That’s simply not the case. In fact, it is far more likely, at least for the short run, that digital is cannibalizing across other verticals of information such as parenting, self-help, do-it-yourself project guides, encyclopedias, music, and printed content as it complements the consumption of “TV” content. Directionally, there is no slowdown in traditional TV consumption and the content itself is arguably the strongest it has ever been.
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