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The future of home entertainment
Flashpoint 20: Growth in consumer choices and market fragmentation drive new opportunities
As new digital technologies, rising consumer expectations, and shifting cultural habits upend business models, many media companies find themselves struggling to adjust to the ongoing disruption. Tremendous growth in content, the increasing number of content players, and innovative offerings have all helped to keep the consumer in the driver's seat when it comes to decision-making. As consumers and the industry work to bring clarity to the future of home entertainment, a few trends are taking hold.
- Simplifying choices
- Radical transformation of insights
- Owning the customer
- Small format, big opportunity?
- Let’s talk
Even as the expectations of consumers continue to rise, many remain perplexed about their options for entertainment in the home or on the go. They might hear tremendous buzz about a new show, for example, but not know which network or over-the-top (OTT) streaming platform carries it. At the same time, many are trying to do their own math to determine which traditional and OTT services to subscribe to—the magic mix of offerings that will bring them a suitable line-up of content at the best value.
Many see the appeal of the new skinny bundles that OTT providers are launching—packaged offerings that stream a limited number of popular channels such as the major networks and leading cable channels. But many also remain anchored to traditional pay TV.
The market has become highly fragmented, with many different platforms, pricing models, and delivery models. Consumers ultimately still have a lot of questions about where to go, what to choose, and how to put together the best deal for themselves. This persistent confusion can present opportunities for businesses.
What can you expect? Possibly the emergence of new players that will bring together many sources of content while attempting to make viewing choices simple for viewers. Players that can aggregate or re-aggregate content to deliver variety yet simplicity could find themselves staring at a golden opportunity. In addition to spurring potential consolidation, today's highly fragmented market also could inspire direct-to-consumer breakouts or even embolden new players that could go head to head against entrenched powerhouses.
In Deloitte's latest Digital Democracy survey results, nearly half of US consumers reported they now subscribe to a streaming video service. And a majority of consumers value their streaming service subscriptions for watching commercial-free content whenever, wherever, and on their device of choice.1
Radical transformation of insights
Many of today's consumers might be confused about their digital entertainment possibilities, but some consumer aspects—such as viewing behaviors, interests, attitudes, and demographics—are very clear. There's an ocean of consumer-related data out there, and it's growing exponentially as consumers access fresh content, click on ads, use new device types and platforms, engage with brands via social media, and go about their daily digital lives.
Insights have always lain hidden among the data—just waiting to be discovered and acted on. But the vastness of today's data—both structured and unstructured—and the degree to which modern analytics applications can help you sort through it can change the game drastically. Today's data and tools can enable media and entertainment companies to segment audiences into the smallest groups imaginable—and then precisely deliver targeted content and advertisements to those groups.
When do viewers tend to watch a particular show? When do they switch devices—from a big screen to a small screen, for example? What interests do their choices indicate? What actions are they taking on social media as part of a broader experience around your content? Each action at each touchpoint represents data that holds value. The challenge lies in interpreting the data and making it actionable.
67 percent of consumers find mobile ads on their phones to be irrelevant. More than half of surveyed consumers say they would be willing to receive advertising on their smartphones based on location. Making ads more relevant—especially geographically relevant—and making the first few seconds of skippable ads more compelling could help advertisers get through to more consumers.2
Owning the customer
Big industry mergers in the works will likely tighten the bonds between the creators of content and the owners of delivery networks. Net neutrality issues aside, an organization that can operate at the intersection of content creation, content delivery, and the consumer experience stands to reap great rewards. Such an organization could have unprecedented "ownership" of the customer.
It could get deep, detailed insights into customers. It could advertise to them in a hyper-targeted manner. It could drive them to its own content or to partners' content—and sell ads or additional services around that content. It could control the overall consumer experience and track the relationship every step of the way—knowing who uses which device to access which content.
The consumer is still king and still exercises immense choice. But companies that can dominate in the sphere of creation, delivery, and experience can determine the choices laid before today's consumer kings and help influence the consumer's decisions. Consider the kind of direct-to-consumer moves a major studio could make, without going the way of a merger or acquisition. Breaking off an over-the-top venture, for example, could give it even greater ownership of the consumer and the consumer experience. But what would such a move mean for aggregators, existing direct-to-consumer players, and other content creators and studios? And would such a breakout inspire other studios to follow suit?
According to a survey by AdAge and Neustar, only around 23 percent of respondents said they believe they are currently using their data management platform to its fullest capacity.3
Small format, big opportunity?
As consumers continue to show a preference for binge-watching content and as more creators step up to meet the demand, the definition of binge-able content stands to change. Today's hyperconnected consumer can view content in many places beyond the home—on public transit, while waiting to pick up the kids after school, in a physician's waiting room, in a coffee shop while waiting to meet a friend. Traditional-length binge-able content doesn't necessarily align well with these windows of connected availability.
Shorter-form content—12-minute episodes, for example—could make it easier for a consumer to "snack" on content. They could effectively binge-watch a series during these brief daily "content snack" windows. For content creators, there's a legitimate opportunity to capitalize on the binge-watching trend and to fill in the cracks with short-form content that a viewer can consume throughout his or her day. Advertisers, meanwhile, can come along for the ride—with new shorter ads that are perhaps no longer than six seconds. Viewers already are watching 6-second video ads before hitting the "skip this ad" button. Why not get a full advertising message out in six seconds and link it to a short-form, binge-able piece of original content?
A recent Nielsen Home Entertainment report states half of Americans are now watching short-form content (e.g., clips from TV programs, news segments, user-generated content, music videos).4
As entertainment in the home continues to undergo an evolution and as the industry seeks to get ahead of challenges, your organization may face big decisions on technology enablement, market opportunities, and more. Staking out a leadership position will likely require more than a vision for what's possible. It also will require an ability to develop insight-driven strategies and to execute them effectively. We can help. If you want to know how you can unlock new value and gain an edge in today's rapidly changing environment, we should talk. Contact us to get the conversation started.
Vice chairman, US Media & Entertainment Leader
Principal, Deloitte Consulting LLP
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1 Deloitte, Digital Democracy Survey, Eleventh Edition, March 2017
2 Deloitte, Digital Democracy Survey, Eleventh Edition, March 2017
3 The Advertising Age-Neustar survey, Picking the right DMP: What marketers want, January 2016
4 The Nielsen Home Entertainment study, Video 3600, April 2017