Every year, Deloitte releases their Digital Democracy Survey, a multi-generational view of consumer trends in technology, media, and telecom. The survey examines emerging behaviors across generations, specifically millennials, who are setting new benchmarks for how much media content is consumed and paving the way for older generations to follow. Some of the key findings from the 2016 survey include:
- 70% of US consumers now binge watch an average of five episodes at a time, and almost one-third (31%) binge on a weekly basis.
- Nearly half (or 46%) of Americans now subscribe to streaming video services, with millennials aged 14-25 spending more time streaming video content than watching live television.
- Millennials aged 26-32 who currently pay for streaming video have an average of three subscriptions
- Millennials aged 14-25 value their streaming video subscriptions more than pay TV subscriptions
- The percentage of streaming subscribers who ranked the service among their top three most valued subscriptions has tripled in the last three years (61 percent today, up from 17 percent in 2012).
We spoke to Kevin Westcott, Head of Media at Deloitte Consulting on OTT video business strategies:
(OTT video or over-the-top video refers to content that is delivered over the internet and does not require a traditional broadcast or cable video infrastructure to distribute it)
Where are millennials viewing video content? And what are the implications for OTT video companies?
25 years ago technology was introduced to the household primarily by middle-aged men with a little bit of disposable income. What we now see is that the middle-aged men no longer have influence over the technology decisions in the household. It’s being driven by their children or their young children, young adults.
We’ve also seen that every single trend that starts typically in the teenagers and the 19 to 24 year olds grows upward. Media consumption over the last few years, where over-the-top may have been introduced early by the millennials is now being used by the Gen Xers and the baby boomers. The number of services subscribed to the household is larger in the younger generation, but growing in the older generations.
Millennials actually stream more than they watch live TV. They also are avid bingers of content and have changed the way that content is consumed. They’re spending a significant amount of time watching content on streaming services, and that’s where they’re getting all their content and information. Given that there’s almost no advertising on streaming services, how do you reach these consumers? How do you introduce them to products, services or new shows? That’s really the challenge.
What are some of the things that companies should be thinking about in terms of acquisition and retention?
Customer acquisition is extremely expensive in our business, so it’s really about how we use data. What I ask people is, “Tell me, what is your business problem?” If it’s churn, let’s figure out how we predict churn. If it’s customer acquisition, let’s figure out how we lower the cost of acquisition. If it’s increasing revenue per customer, let’s figure out what is it about that customer that I can learn through different channels that’ll help me sell them something additional. That’s what you should focus on when you think of your customer base.
You can identify someone who may churn six months before they churn. It’s a lot easier to try to retain that customer than to try to attract a new customer. How do you identify the potential to churn? Is it through their use of subscription? Is it through some activity on social? Are they moving? What else can I identify that gives me a trigger to do something to give them the next best offer to retain them? We hear some talk about down selling. While it sounds negative, if I can take someone who’s currently spending $79 a month and retain them at $59 a month, that’s a lot better customer than losing that customer altogether.
How do you nurture a customer? What’s the data you should be concerned with?
Usage data is very critical. If I think about full subscription services, where there aren’t transactions happening except for the monthly ones, I would actually look at the actual usage. But in general, gather all the data you possibly can to get a comprehensive view of your subscribers. For example, I can gather third party information about my sports subscribers and understand what else they’re interested in. I might find out that this sports subscriber, a mom or a dad, a dad who might be a sports fanatic, they also have two young children. Maybe I can target them with children’s content. That’s where getting to and understanding the customer is actually critical, because every one of our customers is not single dimensional. They may be sports fans on weekends, but we don’t know what they’re doing during the week. We don’t know what their family situation is unless we have all the data we can get about this and learn how to target them.
What’s your advice on monetization strategies for companies about to launch an OTT video service?
You’ve got to give something away for free and allow people to try the product. We’ve seen people who go up with 100% pay walls, and that’s very difficult. You might have been able to start that way maybe 6-7 years ago, but I think that you do have to give something away for free to get customers hooked these days. There’s too much content available through too many channels. If you make someone go through an authentication and registration right up front, you’re turning away customers.
Tell us a little about your new Marketmix for Media solution with Zuora and Adobe.
We came up with Marketmix for Media with Zuora and Adobe because we found our clients struggling with different aspects of OTT -evolution, multiple platforms, go to market, etc. We thought it would be good to bring together world-class technologies and show what a comprehensive solution can look like. The solution is up and running, and can be demoed. It looks at all the challenges of audience engagement, monetization, relationship management, and analytics. We put all of them together in a single solution just to show what can be done.
Check out MarketMix for Media for more information on how Deloitte, Zuora and Adobe can help you acquire, monetize and scale your OTT video business!