Gen­er­a­tion #Hashtag: Har­ness­ing the Power of Fans

ArabAd - - CONTENTS CONTENTS - BY: LAU­RENT COLOMBANI AND DAVID SANDERSON

Lau­rent Colombani, Part­ner at Paris-based man­age­ment con­sult­ing firm, Bain & Com­pany and co-part­ner, David Sanderson who is based in Los An­ge­les wrote this re­port en­ti­tled “Gen­er­a­tion #Hashtag: Har­ness­ing the Power of Fans”, which is the cen­tral theme of next edi­tion of MIPTV 2016, the world’s most-es­tab­lished TV and dig­i­tal con­tent mar­ket. This re­port sets out five im­per­a­tives that must be fol­lowed to un­der­stand these mo­bile-cen­tric, al­ways-on con­sumers, for whom rec­om­men­da­tion by so­cial net­works is one of the key driv­ers of viewer choice. In the fol­low­ing, they ex­plore be­hav­iours of gen­er­a­tion #hashtag.

As more con­sumers turn to na­tive dig­i­tal video and be­come more will­ing to pay for it, me­dia com­pa­nies must adopt a na­tive-first mind-set rather than digi­tis­ing ex­ist­ing con­tent and busi­ness mod­els.

Con­sumers of all ages now favour con­tent de­signed and dis­trib­uted ex­clu­sively through dig­i­tal chan­nels. Mo­bile-cen­tric, these con­sumers are al­ways on, con­sume con­tent on the go, and trust so­cial net­works and rec­om­men­da­tion en­gines more than they do pro­fes­sional ad­vice or fam­ily mem­bers for con­tent choices. To­gether, they are trans­form­ing video en­ter­tain­ment. We call them Gen­er­a­tion #hashtag.

For video pro­duc­ers and dis­trib­u­tors, long-term suc­cess de­pends on un­der­stand­ing these con­sumers and mas­ter­ing the new mon­eti­sa­tion ecosys­tem along five im­per­a­tives:

THE NEXT GEN­ER­A­TION OF VIDEO CON­SUMERS

The rise of na­tive dig­i­tal video

Dig­i­tal is fast be­com­ing the dom­i­nant model of me­dia de­liv­ery. TV shows can be watched both live and on-de­mand on a va­ri­ety of screens. In the early days of the dig­i­tal tran­si­tion, how­ever, con­tent re­mained a lot like its ana­logue coun­ter­part: fa­mil­iar for­mats, fran­chises, and busi­ness mod­els re­mained preva­lent even on the new screens.

To­day, na­tive dig­i­tal video re­con­fig­ures the me­dia play­book for a fully dig­i­tal world. Un­bound by ana­logue legacy, new for­mats are chang­ing the rules of con­tent cre­ation, dis­tri­bu­tion and mon­eti­sa­tion. The long-form down­loads and pur­chas­ing mod­els, which were based on con­straints of phys­i­cal dis­tri­bu­tion, no longer ap­ply.

Three traits char­ac­terise na­tive dig­i­tal for­mats and set them apart from ear­lier dig­i­tal video: Mo­bil­ity forced the re­design of the user in­ter­face, ex­pe­ri­ence and con­tent it­self – from long- to short-form, some­times even 16:9 to ver­ti­cal Ubiq­ui­tous con­nec­tiv­ity means that con­sumers are “al­ways on,” able to con­sume and re­act to con­tent in the cloud, and that they are in so­cial con­tact at all times. In­di­vid­ual con­sump­tion and the rich data it gen­er­ates al­low new cu­ra­tion and mon­eti­sa­tion ap­proaches, both con­sumer- and ad­ver­tiser-pay.

Gen­er­a­tion #hashtag as­cend­ing

Na­tive dig­i­tal video is mo­bile­cen­tric – younger gen­er­a­tions in par­tic­u­lar have made smart­phones their new per­sonal TV, with al­most two thirds of 15 to 25 year olds watch­ing mul­ti­ple ses­sions daily.

While younger au­di­ences are spear­head­ing the move­ment, their el­ders are catch­ing up: reach­ing be­yond mil­len­ni­als al­ready, dig­i­tal na­tive video is be­com­ing per­va­sive.

We call Gen­er­a­tion #hashtag these con­sumers of all ages who now favour con­tent de­signed and dis­trib­uted ex­clu­sively through dig­i­tal (and in­creas­ingly mo­bile) chan­nels.

Me­dia con­sumers who pre­fer na­tive dig­i­tal video make up 20% of the au­di­ence across both de­vel­oped and emerg­ing mar­kets. De­spite their his­tor­i­cal lag in adopt­ing digi­tised me­dia – largely for lack of in­fra­struc­ture – emerg­ing mar­kets have al­ready caught up with the West. As next gen­er­a­tion net­works and mo­bile in par­tic­u­lar close the “broad­band gap”, con­sumers across mas­sive po­ten­tial mar­kets such as Brazil, Rus­sia, In­dia, China, and Africa are leapfrog­ging from phys­i­cal me­dia di­rectly to na­tive dig­i­tal con­tent and mo­bile con­sump­tion.

In some mar­kets where (le­gal) dis­tri­bu­tion of phys­i­cal me­dia and down­loads never took hold, na­tive dig­i­tal me­dia may even rep­re­sent the first le­git­i­mate plat­form for con­sumers to ac­cess fresh video con­tent. In China, a gen­er­a­tion of view­ers who have yet to ex­pe­ri­ence Net­flix em­braced web se­ries like Go Princess Go, which gen­er­ated 1.5 bil­lion views on Letv over 36 episodes of 25 min­utes each, cost­ing a frac­tion of reg­u­lar TV se­ries.

The power of fans

Gen­er­a­tion #hashtag lis­tens to so­cial net­works and rec­om­men­da­tion en­gines as much if not more than they do pro­fes­sional ad­vice or fam­ily mem­bers for con­tent choices. Younger con­sumers in par­tic­u­lar rely more on their so­cial net­works to select dig­i­tal con­tent: More than two-thirds of re­spon­dents aged 15 to 25 in de­vel­oped coun­tries said they choose en­ter­tain­ment con­tent based on so­cial rec­om­men­da­tions, com­pared with fewer than half of those older than 35.

Younger con­sumers also have a dif­fer­ent take on data pri­vacy: In de­vel­oped coun­tries, 57% of those 25 or younger would forego personalised rec­om­men­da­tions to en­sure their data re­mains pri­vate, com­pared with three­quar­ters of adults older than 35.

Gen­er­a­tion #hashtag lis­tens to so­cial net­works and rec­om­men­da­tion en­gines as much if not more than they do pro­fes­sional ad­vice or fam­ily mem­bers for con­tent choices. Younger con­sumers in par­tic­u­lar rely more on their so­cial net­works to select dig­i­tal con­tent: More than twothirds of re­spon­dents aged 15 to 25 in de­vel­oped coun­tries said they choose en­ter­tain­ment con­tent based on so­cial rec­om­men­da­tions, com­pared with fewer than half of those older than 35.

Younger con­sumers also have a dif­fer­ent take on data pri­vacy: In de­vel­oped coun­tries, 57% of those 25 or younger would forego personalised rec­om­men­da­tions to en­sure their data re­mains pri­vate, com­pared with three­quar­ters of adults older than 35.

Yet me­dia com­pa­nies should ex­er­cise cau­tion in how they store and use data. Our sur­vey found that fewer peo­ple are will­ing to share per­sonal in­for­ma­tion than they were a few years ago. More con­sumers are con­cerned

about the ways com­pa­nies gather and store in­for­ma­tion about them.

While such con­cerns have yet to trans­late into ac­tion, this could even­tu­ally lead to con­sumer push­back, or in­creased reg­u­la­tion, which would throt­tle both con­tent cre­ation and mon­eti­sa­tion. Even with gen­er­a­tion #hashtag, the key to sus­tain­able data cap­ture lies with both the value con­sumers get in re­turn from shar­ing their pre­cious in­for­ma­tion and the trust they have in the plat­forms stor­ing it.

A new mon­eti­sa­tion map for the in­dus­try

With new plat­forms come re­newed hopes for con­sumers who will pay, and here there is hope. While ad­ver­tis­er­sup­ported mod­els re­main preva­lent, con­sumers adopt the full spec­trum of dig­i­tal mon­eti­sa­tion mod­els—in­clud­ing sin­gle pur­chases, sub­scrip­tions and mi­cro­pay­ments. Our sur­vey also found that, con­trary to con­ven­tional wis­dom, younger cus­tomers are more will­ing to part with cash across a range of pay­ment mod­els de­spite their slim­mer wal­lets and ac­cess to il­le­gal al­ter­na­tives.

Mo­bile plat­forms are key to suc­cess here, given their built-in user bases with reg­is­tered pay­ment de­tails from Ap­ple, Ama­zon or Pay­pal. As these large, par­tially closed ecosys­tems take over from the more open ap­proaches

that pre­vailed in the desk­top web era, some of the fric­tion and fear around pay­ments is dis­ap­pear­ing. Our sur­vey clearly in­di­cates that mo­bile-equipped con­sumers are more likely to pay for dig­i­tal con­tent, which may partly ex­plain why younger co­horts, who are more prone to use their smart­phones to ex­pe­ri­ence me­dia con­tent, ap­pear more com­fort­able with con­sumer-pay mod­els.

For all their pos­i­tive mo­men­tum, na­tive mon­eti­sa­tion ap­proaches have a long way to go be­fore catch­ing up with rev­enue lev­els of older me­dia. Me­dia com­pa­nies will need to strike a del­i­cate bal­ance be­tween get­ting users to adopt na­tive mod­els and get­ting them to pay for them.

The bar is lower in de­vel­op­ing mar­kets: even the prospect of achiev­ing mod­est an­nual rev­enues per user (ARPUS) —be it though mi­cro trans­ac­tions, sub­scrip­tions or ad­ver­tis­ing—across vast, un­tapped mar­kets such as In­dia, China and (even­tu­ally) Africa rep­re­sents an im­por­tant op­por­tu­nity for the in­dus­try and should be a core com­po­nent of fu­ture growth strate­gies.

Tra­di­tional mod­els reached high ARPUS with user bases in the hun­dreds of thou­sands to tens of mil­lions. Na­tive video plat­forms such as Youtube and Daily­mo­tion have much lower ARPUS but hun­dreds of mil­lions of users.

Yet pure high-scale, low-value mod­els may not pre­vail for­ever. Early signs show that to reach full po­ten­tial, even the champions of scale are look­ing to in­tro­duce pre­mium ser­vices through proven recipes. Youtube, cham­pion of al­go­rith­mic cu­ra­tion, uses a hu­man edi­to­rial touch for its Youtube Kids app, tar­get­ing a highly at­trac­tive but very sen­si­tive de­mo­graphic. Reed Hast­ings an­nounced in July 2015 that Net­flix’s sub­scrip­tion price would in­crease over time to fund the pro­duc­tion of orig­i­nal con­tent—an an­nounce­ment re­ceived with a dou­ble-digit share price in­crease. Just as tra­di­tional play­ers need to em­brace na­tive mod­els, na­tive play­ers may also have to learn some of the old dogs’ tricks.

Suc­cess will re­quire more ar­rows in the mon­eti­sa­tion quiver. While tra­di­tional mod­els re­lied mostly on ei­ther con­sumer or ad­ver­tiser pay, dig­i­tal na­tive plat­forms have broad­ened and blurred the model, cre­at­ing a richer but more com­plex mon­eti­sa­tion map.

For ex­am­ple Video blog­gers mon­e­tise their fol­low­ers through prod­uct place­ment and en­dorse­ment, push­ing the

UK’S Ad­ver­tis­ing Stan­dards Au­thor­ity to in­tro­duce new rules on dis­clo­sure and trans­parency. Crowd­fund­ing has re­shaped in­de­pen­dent pro­duc­tion, even for well-known fig­ures such as film­maker Spike Lee and TV host Chris Hansen.

Data per­me­ates this new land­scape, with con­tent own­ers, ser­vice providers, pub­lish­ers, plat­forms, agen­cies and ad­ver­tis­ers seek­ing to con­cur­rently buy, sell and lever­age it.

A dig­i­tal video play­book Five im­per­a­tives

Mas­ter­ing the new mon­eti­sa­tion map for na­tive dig­i­tal video will re­quire a deep ca­pa­bil­i­ties up­grade, with an em­pha­sis on five im­per­a­tives:

build con­tent for the world in which we live rather than trans­lat­ing old recipes to new screens – em­brace new for­mats, both short- and long-form, tap into de­vel­op­ing mar­kets’ tremen­dous dig­i­tal po­ten­tial.

de­velop a bal­anced port­fo­lio of chan­nels to cut through the clut­ter, op­ti­mis­ing for reach and value – deal with global lead­ers, favour the growth of in­de­pen­dent plat­forms or build / ac­quire your own.

ad­ver­tis­ing: in­di­vid­ual tar­get­ing and ad­dress­abil­ity, so­cial en­gage­ment, mea­sur­a­bil­ity and re­turn on in­vest­ment – em­brace na­tive ad­ver­tis­ing for­mats, build an­a­lyt­ics ca­pa­bil­i­ties, part­ner with tech­nol­ogy and telecom play­ers to secure ac­cess to the deeper video and ad­ver­tis­ing tech­nol­ogy "stacks".

build in­sight into con­sumer be­hav­iour to dove­tail fast-evolv­ing trends and ad­dress ad­ver­tiser de­mands for pre­cise tar­get­ing and mea­sure­ment – cre­ate a di­rect re­la­tion­ship with con­sumers, bring enough value and earn the con­sumer

trust re­quired to cap­ture, store and use con­sumer in­for­ma­tion.

ac­cel­er­ate the ca­pa­bil­ity up­grade and cul­tural shift – man­age the del­i­cate bal­ance be­tween au­ton­omy and in­te­gra­tion when ac­quir­ing dig­i­tal busi­nesses, in or­der to both ac­quire their skills and cul­ture and aug­ment their growth.

The next gen­er­a­tion is around the cor­ner

Gen­er­a­tion #hashtag and the breadth of na­tive dig­i­tal mod­els it favours spawned from a wave of al­ways-on de­vices born in the last decade with the smart­phone boom. This is only the be­gin­ning.

New de­vices are al­ready emerg­ing that will bring their own dis­rup­tive user ex­pe­ri­ences and for­mats. Whether vir­tual re­al­ity rev­o­lu­tionises how peo­ple watch the lat­est block­buster or visit their next home re­mains to be seen. But as de­vices and use cases di­verge fur­ther away from legacy video for­mats, me­dia com­pa­nies must now more than ever adopt a na­tive-dig­i­tal-first mind-set rather than digi­tis­ing ex­ist­ing con­tent and busi­ness mod­els.

Note: De­vel­oped coun­tries in­clude France, Ger­many, Swe­den, UK and US; Emerg­ing coun­tries in­clude Rus­sia, Brazil, China, In­dia and South Africa

Source: Bain con­sumer sur­vey (n=7000)

Note: De­vel­oped coun­tries in­clude France, Ger­many, UK and US in 2013, France, Ger­many, UK, US and Swe­den in 2014 and 2015; Emerg­ing coun­tries in­clude Rus­sia, Brazil, China and In­dia in 2013, Rus­sia, Brazil, China, In­dia and South Africa in 2014 and 2015 ;

Source: Bain con­sumer sur­vey

Note: De­vel­oped coun­tries in­clude France, Ger­many, UK and US in 2013, France, Ger­many, UK, US and Swe­den in 2014 and 2015; Emerg­ing coun­tries in­clude Rus­sia, Brazil, China and In­dia in 2013, Rus­sia, Brazil, China, In­dia and South Africa in 2014 and 2015 ;

Source: Bain con­sumer sur­vey (n= 4,565)

Source: An­nual re­ports, press releases, Bain anal­y­sis

Note: De­vel­oped coun­tries in­clude France, Ger­many, Swe­den, UK and US.

Source: Bain con­sumer sur­vey (n=2,500)

Source: An­nual re­ports, press releases, Bain anal­y­sis

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