The Next Video Streaming Revolution... and how Personalized Video could be Part of it.
Reading: 5 mins
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Intro
The announcement that Netflix is exploring the idea of bringing in a tiered subscription model with adverts has sent seismic tremors through the video streaming industry with other platforms such as Disney+ also planning to do the same. As marketers scramble to digest the news and figure out what it means for the future of SVOD, it's clear that it is going to change things in a big way.
Here we look at what this means for new, innovative marketing opportunities and how video personalization could fit into this transformed landscape.
Innovate and Adapt or Die
Do you remember Blockbuster?
The former video rental giant has become a forgotten footnote of history after the Great Video War at the turn of the millennium. While Blockbuster decided to stick with rental stores, Netflix saw the future and decided it was going to be streamed. The lesson here was clear: companies, especially tech media companies, need to be innovative and adaptable or else they will die.
Over the next 2 decades, Netflix became the dominant force in SVOD services, investing billions of dollars into content and creating it's own cultural verb 'Netflix and chill' - always a sure sign that a brand has succeeded. But is Netflix too big to fail? Definitely not. There were already plenty of murmurs that Netflix's business model was unsustainable and the major studios and other platforms are quickly catching up. Hulu, Disney, Paramount HBO Max and many other players are competing now along with YouTube and Tik Tok. The market is much more crowded than it used to be 10 years ago.
So perhaps the news of Netflix's business model pivot is not so surprising after all, and indeed many experts were already predicting it. It seems almost certain that they will eventually bring adverts in, and this moment provides a unique opportunity for marketers and advertisers to explore new ways of communicating, potentially creating an entirely new way of how TV and digital advertising works.
What makes this situation so unique is the sheer amount of first party data that Netflix possesses about its viewers and what they are going to do with it. There is an opportunity to be seized here.
It's Time to Change Traditional TV Advertising
TV advertising has effectively changed very little in the last 80 years since it was introduced. Ads usually try to sell a product and stick to a 30-second format which is blasted out to everyone, meaning that a significant percentage of viewers are not interested. It's a wasteful model and has helped create the impression that ads are an annoying hindrance to the viewing experience. To counter this there has been a rise in ads promoting brand awareness, but it is still not ideal.
The digital age has created a massive upheaval in viewing practices and with it has come the necessity to radically rethink the way that marketing interacts with the viewer.
Photo by Anastasia Shuraeva: https://www.pexels.com/photo/a-couple-lying-in-bed-4406685/
The Living Room Study
A recent survey by RTL AdConnect and smartclip has thrown up a fascinating insight into the state of European TV viewer expectations in the post-Covid world.
Among the key findings were:
55% of Europeans have purchased a Smart TV in the last two years and 31% say they watch more content than when the pandemic began.
63% of UK viewers watch more content on TV than any other device.
79% of Europeans now have directly connected TVs.
Connected viewing is now an expectation rather than an alternative
People expect more personalisation in advertising
The picture that emerges is that despite the increase in personal screens, the TV screen remains the focal point of the family viewing experience – creating an important space for relaxation and shared viewing experiences.
Around half of viewers are annoyed by ads on VOD, social media and linear TV. But relevant and creative ads are seen in a positive light as it is of value to them. 71% want personalisation and 67% of viewers expect product recommendations that are relevant.
What it Means for the Future
As with on-line e-commerce, today's TV viewers now expect a different kind of experience with more cross-screen interaction and personalization.
Commercials are an inevitable part of a successful business model. But instead of being seen as an annoyance, they should be designed to enrich and enhance the viewing experience, so that they become part of the content rather than a distraction.
So if and when Netflix bring in advertising, it should meet this challenge and address these new expectations. The good news is that the technology now exists to make it a reality.
Netflix is obviously already aware of the trend. On the 'research' page of their website they state:
“Personalization is one of the pillars of Netflix because it allows each member to have a different view of our content that adapts to their interests and can help expand their interests over time. It enables us to not have just one Netflix product but hundreds of millions of products: one for each member profile.”
Photo by Glenn Carstens-Peters on Unsplash
Streaming platforms have invaluable up-to-date first-person data for all their subscribers. They know what you watch, what your tastes are, and what your viewing habits are. This data collection doesn't feel intrusive however as it is used to improve your own personal viewing experience. It is this data that is used to create recommendations and also to influence what kind of programming they want to finance and produce in the future. So it makes sense that the more accurate and relevant the data is, the better the viewing experience.
All VOD platforms have a unique advantage with viewer data in that they can collect it in real time – so it's relevant and up to date. This means streaming services have more control in deciding where and when their ads are shown and which audiences those advertisements are targeting. E.g. If a customer watches predominantly children's programmes or documentaries etc, advertising can be more relevant.
What's more, if a platform asked viewers for more data to further improve their viewing experience (i.e. zero party data), it is highly likely they would oblige. If people know that by giving data they will get something of value in return, then they are more willing to engage.
The first steps in this technological frontier are already being explored. Netflix's interactive experiment with the Bandersnatch episode of Black Mirror and Bear Gryll's You vs Wild hint at a future where data exchange is a key part of the experience.
Photo by Yadu Krishnan K S on Unsplash
The Possibilities for Personalized Video
Imagine a not-too distant future. Now imagine a personalized video message, streamed into your living room at the end of your favourite Netflix programme, that told you about other similar shows you might be interested in, or how to buy a product that featured in the series, or a vacation to where the series was filmed, or even a special personalized message with exclusive news about the show. This could all be possible in the new generation of personalized marketing and personalized video would fit in perfectly.
This is marketing that makes a personal connection to the viewer, creating a sense of exclusivity and customer awareness with content that is targeted and relevant. The viewer becomes part of the experience rather than a passive and reluctant observer.
The technology to make this happen is developing rapidly. Other technologies to enhance the UX are also being developed such as frequency capping (overly repetitive commercials are a key pet peeve for viewers) and ad sequencing so that longer narratives and more immersive experiences can be created. Amazon Prime and Peacock also recently announced they are developing virtual product placement within tv shows or scenes.
Motionlab is extremely excited about these new technological and behavioural developments and it's something we are pro-actively exploring ourselves. SVOD is a format that sits comfortably alongside e-commerce, FSI and utilities as an area that can help the customer benefit from the unique qualities of personalized video and create a better service. Delivering direct messages using a moving image format within a moving image ecosystem makes perfect sense.
In the highly successful and award winning campaign for HBO Europe, Motionlab created the personalized elements that used zero party data to create customized videos for viewers based on their viewing habits. It was an excellent example of how viewers appreciate providing data if they get something in return – in this case a sense of brand appreciation and a smile.
Photo by Christiano Sinisterra: https://www.pexels.com/
Conclusion
Streaming services and connected TVs have established themselves as one of the key channels for home entertainment in a multi-billion-dollar global industry. Netflix has revolutionized the video streaming industry and pioneered it for the last 20 years, but it seems to be at a watershed moment right now.
Change feels inevitable, and the technology is there to incorporate a radical new way of thinking about the relationship between adverts and viewers. The trend towards personalization shows the way forward, where customers are incorporated into the ecosystem experience rather than being perceived as merely a target. If Netflix doesn't read the writing on the wall, then other streaming networks are likely to step up and take on the challenge.
The possibilities are immense, but these are exciting times.
Danny Holman, Motionlab