Once famed for being king, content may have lost its place as the most important way to winning the customers heart. Does it still matter? Of course, there is no question that it does. Having compelling content is critical, but the reality is that there is now so much first-rate content available to consumers, they are drowning in it so there is the need for a new route to win the battle for the viewer.
Digital disruptors are attacking and gaining market share by rewriting the rules, creating a diverse ecosystem, where digital video is a key asset to attract consumers, but is part of a broader omnichannel strategy. In addition, they are moving further up the value chain by not only distributing content, but by becoming content producers.
Traditional video providers struggle to emulate these disruptive characteristics as they are not compatible with their core legacy business, operating models or capital investment strategies. To stand up against the disruptors and succeed, they must reinvent themselves and embrace a new platform-based model, which can react quickly to the market and using an ecosystem approach, means they can leverage others, ultimately driving scale and providing end-users with highly-personalised content and services to drive new revenues anywhere, via any-channel, and on any device.
The time to act is now
Network companies, programmers and operators should reassess their capabilities now to add the skills and functionality to compete at speed, supporting core growth, while building foundations for future business models. They can choose how to grow: operate an ecosystem, or vertically integrate, trading in multiple digital ecosystems, not just video.
Regardless of the market segment where each company chooses to play, there are two fundamental changes that should drive the transformation agenda to succeed in the years ahead:
1/ First, there is a need for a new platform thinking where DATA and REACH are as important as direct revenues
For most businesses, acquiring a customer, building a network, and developing or sourcing content can be costly. On top of that, today’s increasingly demanding consumer now expects personalised experiences. Once content is well differentiated, businesses must turn their focus to creating integrated and engaging video experiences.
Data is the key driver of the video value chain, supporting the transformation of operating models based on analytics and automation, towards a service-driven ecosystem that meet today’s customer demands for highly personalised services.
Digital disruptors spend an incredible amount of time and effort looking at individual elements of the customer experience, including aspects such as video start-up time, tuning the duration of an advertising clip by matter of seconds per device, country, or segment. Their primary objective is having the most compelling user experience even before realizing the most appropriate monetization strategy for the specific product.
Many legacy video businesses struggle to keep up in this area but there are clear ways to succeed and win the battle for data and reach:
- Take advantage of control points that impact and enhance customer relationships, such as handsets, routers, retail footprint, customer care, billing, set-top-boxes and content subscriptions.
- Establish a cross-product data economy. For example, insight into household makeup derived from content consumption can drive opportunities elsewhere… if you know that a household has children who are soon to be teenagers, you can use that information to target mobile phone contracts. Or how a user’s usage of mapping could drive opportunities for ticket sales or taxis, for instance.
- Attract users by bundling lower-cost products and services and be open to cannibalization. Have the courage to compete against your own products: for example, skinnier products or bundles at lower price points or even offer content and services free to build the consumer identity and increase reach vs ARPU initially.
2, Second, establish a modern platform architecture and way of working to provide the agility that, when bundled with data, can maximise product engagement
Broadcasters, programmers and operators must leverage their data to predict and drive user engagement even before thinking at the monetization strategy, with a fail fast approach.
Product managers should be enabled to easily formulate hypotheses, define actions and experiment for segments of users before scaling-up for other segments across the user base.
There are some specific enablers that can contribute to establish such an environment:
- The capability to deal with engagement data vs transactional data only.
- The flexibility in collecting data around customer engagement from various products. Video is the main channel of an omnichannel strategy, but can produce data for other channels. In the same vein, take advantage of using data generated from other channels.
- Employing a predictable and rigorous methodology to measure earn vs burn for each R&D dollar spent, with direct involvement and accountability of development teams regarding the value of what they produce, and a clear measurement of the cost of poor quality.
- A lightweight architecture with multiple microservices providing isolation, parallelism and scalability and an environment where each microservice’s value is measured accordingly, with the data that it produces.
- Orchestration of internal and external innovation to create audience engagement. Video businesses should make their ecosystems easy to access by creating open API environments, whilst having parameters in place to ensure consistency and quality. They should accept that the value of having an omni-channel ecosystem outweighs complete control of every user experience. Combined, these elements result in rapid platform connection, new features built on top of APIs, increased reach, and expanded platform adoption.
- A thin client architecture where the user experience can be configured server-side and leverage the data as APIs to personalise the experience.
So, has content lost its crown? Absolutely not. But it is critical to understand that a data-driven strategy is an important component of the end-to-end landscape of the new platform-based digital video ecosystem, and not an isolated one. Pushing hard to monetize content without a super engaged customer base is simply useless and dangerous. After all, content is expensive, so it is critical to leverage that expensive asset to its full extent.
Without the insights data can bring, video businesses simply cannot understand their customers and won’t be able to personalise and monetize content. And if they can’t make money from the content, their future certainly doesn’t look bright.