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Navigating the Changing Video Landscape

6.3.19 | Kevin Stoll

One of the greatest challenges we face in the world of integrated media is adapting messaging strategies to the rapidly changing media landscape. This change is perhaps nowhere more evident today than with video consumption: since the dawn of TV, never have consumers had as many options in terms of what to watch, nor how to watch it. Combine that with an explosion of premium original content, and suddenly over 180 million US viewers are on pace to consume record amounts of streaming video this year.

 Consider Netflix: from 2016 to 2020, the company is expected to nearly triple its expenditures on content, and is currently projected to hit $15 billion in content spending in 2019. Without the support of advertising revenue, that is the price Netflix must pay to protect their paying subscriber-base from current and future competitors making similarly big moves:

·         Primary ad-supported competitor Hulu added twice as many US subscribers as Netflix in Q1 of 2019, and now boasts over 55 million US users

·         Hulu, Amazon Prime, and live TV streaming services Sling TV and Playstation Vue have invested heavily into live sports with deals including the NFL and NBA

·         AT&T, Disney, Apple, Viacom and Discovery have all announced their own standalone video services to launch in the near future

 Despite these increased competitive pressures, Netflix CEO Reed Hastings has been quoted saying “sleep” is a bigger challenge to Netflix than any one rival platform, and he may be on to something. The amount of time consumers have to watch video content in a day becomes a limiting factor, and as a result most consumers are expected to settle on 2-4 platforms to regularly watch. That doesn’t make it any easier on advertisers to navigate the video landscape: with consumers turning to an increasing amount of streaming platforms available on TV, mobile and other connected devices, how can an advertiser expect to build and sustain an audience in this fragmented space?

 The good news is some of the barriers are starting to soften as an increasing number of viewers watch ad-supported video through different digital and Over-The-Top (OTT) platforms (OTT refers to apps and websites that provide streaming video content over the internet and bypass traditional TV distribution channels, such as: Netflix, YouTube, Hulu, Amazon Prime, Crackle), to the point now where 73% of adults who watch streaming OTT video say they watch ad-supported formats. A survey from the Interactive Advertising Bureau also suggests these viewers are highly-receptive to ads within this landscape and appreciate advertising making the platforms more accessible: 59% said they don’t mind seeing ads as long as they can view content when they want, and 56% said they don’t mind watching ads if it means they’re paying less for a subscription. Finally, consumption by generation is broadening, where previously Millennials and Gen Z were the primary early adopters and it was difficult for advertisers to achieve scale against older audiences. Today, as many as 60% of 45-64 year-olds regularly binge-watch streaming content, compared to 73% of A35-44, or 75% of A25-34.

US Adults are spending more time with digital video and OTT

US Adults are spending more time with digital video and OTT

Do these trends in video consumption mean advertisers should abandon their linear TV campaigns and shift budgets towards OTT and digital video? Not necessarily. Time spent with digital video continues to increase at the expense of linear TV, but linear TV still commands the majority of video consumption time. An OTT campaign can act as a strong extension of a linear TV campaign and help grow the overall reach of a video advertising effort while offering more granular targeting capabilities.

 The fact is no two campaigns are created equal. At Inline Media our goal is to build media strategies around client KPIs using the most effective tactics available. With a staff of media professionals keen on changes to linear TV, OTT and digital video, we are here to help determine where your brand best fits into the changing video landscape.

Links:

https://variety.com/2019/digital/news/netflix-content-spending-2019-15-billion-1203112090/

https://www.cnbc.com/2019/05/01/hulu-gained-twice-as-many-subscribers-as-netflix-in-us.html

https://digiday.com/media/netflix-is-massive-but-its-not-invulnerable/

https://www.iab.com/insights/ad-supported-video-ott/

Kevin Stoll