Broadcasters and distributors need to put data at the heart of their businesses or risk being left behind, argue EY's Jean-Benoit Berty, Rahul Gautam and Chris Gianutsos
The TV industry is facing the greatest paradox in its long history. The quality of its craft and the demand for its product have never been higher. At the same time, its future commercial viability is very uncertain.
Digital has fundamentally and irrevocably altered television’s business model. Not only are viewers watching more content than ever on digital devices, they’re doing so across a wider range of platforms and in many different ways.
They’re consuming what they want, when they want and how they want, and expect the industry to be able to keep up and adapt to their habits as quickly as these change. The onus is clearly on the TV industry to deliver on consumer expectations.
Consider that a study conducted by the Commercial Broadcasters Association, the UK industry body for digital, cable and satellite broadcasters, concluded that investment in UK content production aimed at their audiences increased nearly 50% between 2009 and 2014.
The major global over-the-top (OTT) players are expected to spend more than $7bn on content in 2016, up more than 50% in just a single year.
Many think that this tide of money flooding into TV production from these new players has driven a new golden age of television, particularly for high-quality, scripted shows.
Unfortunately for broadcasters, the pace of innovation in business models is not keeping up with the pace of investment in content.
Jeff Zucker famously worried that media companies were “trading analogue dollars for digital pennies”. These have now become dimes and quarters, but they still pale in comparison with the revenues generated by the legacy broadcast business.
This is true even as consumption moves away from the legacy model, particularly among younger viewers. In spite of the challenges, however, we believe there is a path to a profitable digital future, which includes building a more intimate relationship with customers, content and markets.
We see data analytics as a rare opportunity to create a true, sustainable, competitive advantage in an increasingly complex industry.
Few industries have as tenuous a relationship with data analytics as television does in the UK, however. In all but the most progressive TV companies with a linear heritage, data analytics is confined to “special projects” or research, rather than being embraced as an integral component of decision-making across the business.
There appears to be a concern that data analytics represents a threat to the creative culture that develops compelling content.
One challenge is that legacy revenues are built on a system of measurement that struggles to fully understand modern consumption on the TV screen. This begins to fall apart when trying to include viewing on mobiles, tablets and other platforms.
Solving this problem calls for a new set of skills and capabilities, which requires significant investment, and not all this will pay off.
This dynamic robs data analytics of the attention and investment needed to build a sustainable capability that is available to support decision-makers.
Promoting data analytics from the fringes of a company’s activities to an integral part of the business starts with creating a common and clear understanding of the decisions that data analytics can enhance.
There appears to be a concern that data analytics represents a threat to the creative culture that develops compelling content
We believe there are five fundamental business decisions that highlight the power of data analytics in TV.
How can multi-platform content distribution create a more direct and intimate relationship with viewers? The undeniable, immediate benefit of investing in digital platforms is the opportunity to build one-to-one relationships with viewers?
While the promise of substantially higher advertising revenue may not yet have been fulfilled, there is a significant benefit to precisely targeting content and offers.
Over time, the accumulation of this data will introduce the concept of customer-relationship management to a sector that has never had the opportunity to establish and build genuine one-to-one customer relationships.
How do we deliver a consistent customer experience when viewers may choose to consume the same content through multiple channels?
Building a common understanding of who is watching which pieces of content online and on TV is not easy. It requires tagging content in a detailed and consistent way and tracking online viewer behaviour. The most sophisticated companies are using social media and data patterns to create viewer profiles that bridge linear and digital viewership.
This insight can inform the design of a more relevant, cross-platform customer experience that increases engagement and loyalty.
How can social media be leveraged to drive reach and engagement when launching a new show?
A recent study by EY of the launch of a new programme analysed the relationship between social-media activity and Barb ratings.
The study demonstrated that social-media campaigns prior to launch can clearly contribute to expanding the audience for the programme. However, social-media activity weeks into a series does not consistently increase ratings.
Early marketing on social media drives reach and builds an audience, while sustained social marketing appears to be effective mainly in building engagement.
Marketers should, therefore, integrate social-media data with performance data and tailor social-media campaigns to focus either on reach or engagement as shows progress through a series.
How can we monetise content in new markets?
Developing a deeper, more reliable understanding of who is watching what content on which platforms can fundamentally alter decisions about how and where to distribute content.
Some forward-thinking international distributors are building market models to perform what-if scenario analyses. These reveal which markets are best suited for particular genres and programmes and the most lucrative distribution options.
The role of data analytics in TV is not to replace the very human art of storytelling or to subvert the strategic role of commissioning
How do we know which content to invest in?
The opportunity – and the competition – to acquire compelling content have never been greater.
New, niche, OTT platforms are providing an outlet for international content that would never have been seen outside local markets five years ago.
Developing a deeper understanding of viewer preferences, engaging with audiences more strategically and having a view on the myriad commercial models available to monetise content can lead to a portfolio of content that aligns with strategic, financial and brand objectives.
Transforming data analytics into an integral business capability is hard, but attainable, work. The core components are straightforward:
- Align your management team around a vision for data analytics that is acceptable to the culture but still looks ahead;
- Set aside the funding needed to up-skill teams and develop new technologies that will become your desktop tools of the future; and
- Define and execute a plan to organise and manage your data.
Evaluating which category of data (content, audience and/or market) can generate the greatest short-term benefits is an effective way of aligning investments in data analytics with strategic priorities.
Content owners looking to sell their shows in new markets may get the greatest benefit from focusing on market data to understand where they can get the most return for their product. Traditional, linear broadcasters, meanwhile, may be more interested in building a deeper understanding of their audience.
The role of data analytics in TV is not to replace the very human art of storytelling or to subvert the strategic role of commissioning; rather, it should serve to complement them and help drive creative risk-taking.
Effectively focused, data analytics should build more intimate relationships with customers, content and markets that can make the path to a sustainable business model shorter and more certain.
The greatest challenge broadcasters in the UK face is embracing the role of data analytics and rallying the support and commitment to build what can be a sustainable competitive advantage.
Jean-Benoit Berty is based in London and leads EY’s Technology, Media and Telecommunications practice in the UK. Rahul Gautam is based in London and leads EY’s Media & Entertainment Advisory practice in the UK. Chris Gianutsos is based in EY’s New York office and focuses on digital strategy in the media and entertainment industries. The views reflected in this article are those of the authors and do not necessarily reflect the views of the global EY organisation or its member firms.
EY is a major patron of the RTS.