TVN’S FRONT OFFICE BY MARY COLLINS

Collins | It’s A Changing World For Video Content

Streaming is fundamentally changing consumer expectations around how they access TV and video content. And those changing expectations are, in turn, changing how consumers calculate the value of their subscription services.

The first YouTube video was uploaded just over 14 years ago. As you let that sink in, consider that it was only 12 years ago that Netflix began streaming video content.

Despite streaming being a relatively recent advance for video content, it’s had a profound impact on Gen Z.  These young people, born between 1997 to 2012 according to the Pew Research Group, have barely known a world without streaming video.

More importantly, the oldest members of the group are beginning to step out on their own, taking jobs and finding places to live. In one of the many pieces of new research about the group’s habits, Vision Critical comments: “Gen Z is an increasingly important group of consumers who will help to shape the future.” One of the key take-aways from their research was that this “post-internet generation” doesn’t simply consume entertainment — they help create and shape it.

Included in the July/August issue of MFM’s member magazine, The Financial Manager (TFM), is a piece by Stephanie Wong of Horowitz Research, entitled “Staying Ahead of the Curve.” In it, she explores the reasons content providers must evolve to engage with these young influencers.

Gen Z Is Different

Wong observes that younger consumers are fundamentally different in how they grew up with content. She says the notion that these young viewers will “return” to cable when they get older or start their families, is a fallacy. Instead, she believes that Gen Z will take the lead on new ways of consuming media.

BRAND CONNECTIONS

In addition to the youngest members of this generation having never known a TV ecosystem without streaming video, their racial and ethnic makeup is markedly different from the TV generations before them. Horowitz’s analysis of the U.S. Census Bureau’s 2017 American Community Survey (ACS) one-year estimates indicates that “half of Americans under 18 are multicultural.”

Horowitz Research has a long history of tracking viewership behaviors. Wong says that in 2013, when streaming was still relatively new, Asians were the heaviest users with 61% of survey respondents saying they streamed some of their content. The next heaviest users were Hispanics and African Americans, reporting 51% and 48%, respectively. At that time, only 39% of white (non-Hispanic) respondents, which Wong says skewed older, reported they streamed any content.

Horowitz’s State of Viewing & Streaming 2019 report finds that, despite a shrinking of the gap, multicultural viewers are still leaders in streaming: 78% of Asians stream, followed by 72% of African Americans, 68% of Hispanics and 63% of white, non-Hispanics.

Wong’s conclusion is “streaming is fundamentally changing consumer expectations around how they access TV and video content.” Further, “those changing expectations are, in turn, changing the way consumers calculate the value of their subscription services.”

Horowitz queried TV viewers about how important various content and features were at the time they made subscription decisions for the firm’s State of Pay TV, OTT & VOD 2019 survey. Overall, the report found that Hispanic, African American and Asian viewers “are more likely to consider features associated with streaming as important in their subscription decisions.”

Content Expectations

As you might expect, these shifts in viewing behaviors are coupled with expectations for content. Young and multicultural viewers want to see themselves — and their world — reflected in the content they consume. Wong points to the unexpectedly strong domestic box office results for Black Panther and Crazy Rich Asians as notable success stories.

Yet, she also reports that “nearly half (49%) of blacks and a third of Hispanics (36%) and Asians (34%) say that they often feel personally offended by the way that people of their race are portrayed in TV shows and movies.” Content providers need to adapt. It’s not just the so-called “minorities” who want programming that reflects the world in which they live. It’s also true for white, non-Hispanics — 41% of white respondents in the 18-34 age bracket reported feeling offended by the way that Latinos, African Americans, Asians and other diverse/minority groups are portrayed in movies and on TV. That percentage drops to 20% for white respondents aged 35-plus.

The good news is that more viewing options should mean more opportunity for content creators from all backgrounds. Wong sees room for “engaging, authentic content” and that viewers are “increasingly sensitive to negative stereotypes.”

Consider one such example, the Ava DuVernay-directed Netflix series When They See Us, which premiered at the end of May and seems to prove Wong’s findings. The series takes on the true story of five young men from Harlem who were falsely accused of the horrific attack on a woman in Central Park in 1989. Netflix reports that more than 23 million accounts have already tuned in to the series.

Changing Landscape

Cable TV arrived late in Chicago and its suburbs. When it did, I remember my mother asking who would pay for TV when you could get it for free. The answer, as Wong reminds us, was “most people” (including my mother). Cable offered a unique value proposition and “subscribers lined up.”

Now, streaming video competition is about to intensify. Among the newest entrants noted in Wong’s article are Apple TV’s streaming service and Disney Plus, along with offerings from WarnerMedia and NBC. Advancements in broadcast and cellular technology are also improving video delivery outside the traditional television ecosystem. Wong offers more details in a sidebar to her TFM piece entitled “Technology’s Latest Twists.”

As viewers become increasingly reliant on streaming, traditional television needs to reevaluate its value proposition. Wong says millennials and those in Gen Z typically use a number of different services to access video content, among them: Netflix, YouTube, Hulu, Instagram, Snapchat, HBO Go, Sling TV, ABC, WWE, ESPN+.

Services and technologies continue to improve. Wong says, “accessing different video sources is as easy — or, in some cases, easier — than navigating a set-top-box menu.” In addition, “widespread app support for streaming boxes and sticks, smart TVs and gaming consoles” means “the majority of services can be accessed in one central location.”

With the explosion of options, there appears to be an opening for “a managed experience.” Wong recommends that media companies reframe the conversation to the one that originally made cable successful: the “ability to bring a wealth of content into one, streamlined, aggregated system.”

Of course, the question is, as she asks in her last sentence, “who can get there first?”

A digital copy of the July/August issue of TFM, which includes the complete article along with the technology sidebar, will be available on the MFM website in the coming week.

The evolution in content consumption is also one of the topics we plan to explore during Media Outlook 2020 in New York on Sept. 12. Media Outlook is a signature MFM educational event intended to provide media finance professionals a look at the trends that will affect their businesses in the coming year and beyond. The Media Outlook 2020 page of the MFM website is regularly updated as new speakers are confirmed.

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary, the media industry’s credit association. She can be reached at [email protected] and via the association’s LinkedInTwitter or Facebook sites.


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