Thoughts

TWO VIDEO TRENDS YOU CAN’T IGNORE

September 28th, 2017   |   Scott Dahlgren

There are two impactful video trends I have been watching over the past few years and, in my opinion, both have recently reached a tipping point.

First, Netflix now has more paying U.S. subscribers (51 million) than the Top 6 cable companies combined (49 million). That could be because Netflix is only $9/month, but there are other reasons for their rapid growth beyond being a less expensive option for high-quality TV and movies.

For one, Netflix is no longer simply a streaming service. For many, Netflix has become their “television.” In 2016, Netflix invested $5 billion in original programming which accounted for roughly 25% of all their content. Last month, we heard they’ll spend over $16 billion in the next few years.

But clearly the biggest reason for the rise of Netflix and other streamers is that they aren’t following the “established rules” traditional TV has set. Instead they are giving consumers control by offering on-demand content. The result has been a change in our behavior.

Consumers have become binge-watchers who don’t want to wait a week to see the next episode. As you probably know, Netflix provides a menu for an entire season, all at once. Not only for past season re-runs, but even their original programming. So, I can watch the entire first season of Netflix’s Stranger Things when I’m home with the flu. My daughter can catch up with her friends by watching three seasons of Blacklist in a week.

The downside to all this binging for providers, however, is that the experience is fleeting. We watch and move on. There is no loyalty built anticipating a show from week to week. No lasting connection. The creators of Amazon Prime Video’s The Tick realized this and decided to release only the first six episodes with the following six to come at a later date.

It will be interesting to see how streaming services try to find the right formula for both distributing their content and giving viewers what they want. It feels to me like it’s somewhere between total binging and one show at a time. Three show pods would satisfy consumer cravings and still build longer-term audiences for a franchise. It could have an impact on story arcs and co-branding opportunities.

The second big video trend is the plummet in time spent watching traditional TV. The number of weekly hours adults 18-24 watch has dropped 41% over the past 5 years, or by almost 12 hours per week. For the first time ever, weekly hours spent watching traditional TV dropped double digits year over year (Q1 2016 to Q1 2017) for this same age group.

I’ve seen it first hand with my own kids. Netflix easily accounts for 90% of all video viewing by my daughter and it doesn’t accept advertising, which makes it difficult for Ulta and Forever 21 to reach her within video content. As for my son, the only video content he watches on a regular basis is YouTube – at least PacSun can reach him there through pre-roll video ads.

These two trends provide insights into the future of video advertising, how consumer behavior is changing, and where content creation is headed.

Entertainment is ultimately about what consumers want, not what advertisers want. There will continue to be new ways to monetize desirable content and entrepreneurs will continue to find them. And because video still has the largest impact on branding, marketers need to understand where, when and how to most effectively reach and engage with these customers.

I’m curious to know how your video-viewing habits have changed over the past 5 years. Please comment.

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