Media Companies Flip The Digital Switch

For some time now, media companies have been under heightened pressure to cut costs while trying to keep up with new technology and evolving consumer choices. Newspapers felt it first, when readers were increasingly driven to online and mobile content that wasn’t easily supported by typical advertising rates.

Now, over a decade later, most well-known publications have adapted to the changing landscape by migrating content, ads and in some cases subscriptions to digital platforms.

Traditional television has been dominant for so long that focus on new models has not been warranted until recently. Initially, over-the-top (OTT) offerings like YouTube simply added more video content (primarily user-generated) to the market. But over time, long-form, high-quality content normally seen on TV became more prevalent and popular on these platforms. With larger audiences watching a similar content online, leading digital platforms have started competing directly with the TV networks.



Today, increased programming competition from digital-only competitors in with linear and video on demand (VOD) is forcing traditional broadcast companies to re-think strategies and adjust to modern viewing habits. For years, digital media companies that came to consumers via the technology first, content second model struggled to provide broadcast-quality content to a growing, built-in audience of younger, digital natives.

That is no longer the case — Netflix and Amazon are great examples of companies spearheading the trend of producing broadcast-quality programming on digital platforms. Broadcast and cable providers now realize the need to offer high quality programming on digital platforms, but bringing content from the broadcast format to digital is a complex and expensive undertaking.

The fact is, millennials are changing how video is watched and broadcasters need to find ways to move into the future of TV and video without reducing investments in programming. Creating cheaper content is not the answer—if anything, cost-cutting should be focused on freeing up more money to be invested in quality content consumers demand and seek out.

Content is, after all, the most significant differentiating factor for media companies, it drives audiences, which drives advertising and subscription/affiliate fees, and therefore should be the top priority for media companies. Technology and infrastructure operation, on the other hand, doesn’t have to be.

We want our content in real time, on the platform we choose, and we want it to be a high-quality, uninterrupted experience.

Forward-thinking media companies that recognize this shift have benefited immensely from  outsourcing tech ops to shared service partners.

Successful media companies must also be able to reach an increasing number of cord cutters who turn to digital platforms like Twitter, Facebook and Yahoo to watch games. To do so involves an entirely separate set of operations that could include streaming of their own digital offerings (if they have rights), streaming to authenticated OTT offerings, syndicating promos and highlights to digital media leaders, or streaming to digital-only rights holders.

The 2016 Rio Olympics, did not perform well in TV ratings compared to previous years, however it did do well online. Viewers who streamed the Olympics online increased significantly compared to previous years. According to NBCU, nearly 50 million viewers streamed 3.4 billion minutes across the Web and on mobile and connected devices, with more than half of streamers under the age of 35.

It’s not the delivery that makes you special, it’s your content. It’s far better to leave content delivery in the hands of experts whose sole focus is to deliver media anywhere in one seamless operation with broadcast-level quality. Invest in your differentiators.

Outsource the back-office and behind-the-scenes stuff to a shared service provider. Focus instead on making killer, high quality content that keeps you competitive and in demand as amazing as possible. Media companies should be asking themselves what they can do now to ensure they can afford the next blockbuster when it comes. You never know when the next “Game of Thrones” equivalent will land.

1 comment about " Media Companies Flip The Digital Switch ".
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  1. Ed Papazian from Media Dynamics Inc, November 4, 2016 at 9:49 a.m.

    In order to make a profit, the vast majority of TV's content---across all dayparts and counting cable----consists of reruns. Moreover, the trend towards more and more reality and talking head shows---because they are cheaper---is growing, not declining, again due to the profit motive. Of course, there is still room for newly made "quality" content, primarily because such shows feed into the extended TV distribution channel and make money for producers and their network "partners' not in their first run stage but later in syndication as reruns. Whether content produced for Netflix, Amazon, etc. will materially alter the current balance of power remains to be seen. More likely, the broadcast TV and cable programming establishment will move aggressively into OTT/SVOD and chrete a new distribution channel sequence where a "quality show" is seen first, by paying subscribers, then, by many more ad-supported viewers on "linear TV" and, finally, by endless reruns on local TV stations, cable channels and digital venues. In terms of profits, the First phase---OTT/SVOD---is probably a break-even deal for the producers---if they are lucky--- while a profit will accrue in the first "linear TV" runs---as, by this time, production costs will be fully or partially amortized. But the real profits will continue to be attained in syndication reruns.

    Regarding the recent Olympics, while digital may have added some viewers to the reach attained by "linear TV" isn't it true that, in terms of viewing tonnage---or time spent---that something like 95% of it came from "linear TV? If I'm correct in this regard, we shouldn't get overly excited by the impact of digital viewing---even for special events like the Olympics-----not yet, anyway.

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