The music industry in Europe has had a traumatic time, losing more than 31% of its revenue in the past five years to piracy. Given the increasing digitalization of content in the music, video, gaming, and newspaper industries, our recently published Forrester Research Online Paid Content Forecast, 2012 To 2017 (EU-7) maps content’s evolution from an audience, payer, and revenue perspective for each of these categories and for each of seven European countries. Here are some high-level results for the four categories:
Video.Video is the fastest-growing digital content category; we forecast that more than 90% of the online population will regularly watch online video by 2017. Online video audience penetrations will rise significantly as video on demand, pay per view, and catchup TV become mainstream. And with pay-TV penetrations in the EU-7 nations considerably lower than in the US, there’s more scope for paid online video to grow.
Last Sunday my washing machine broke down. And for a family with young children, a washing machine is right up there with shelter and food in Maslow's hierarchy of needs.
As the shops are closed on Sundays in the Netherlands, I turned to the Internet to look for a new one. And because I wasn't very satisfied with my old brand, I was looking for another with similar features but (hopefully) better quality. Within minutes I was completely lost in washing cycles, special programs, and all the other fancy features washing machines have nowadays. I clicked picture after picture, trying to enlarge to see the controls, with little success. But I was saved by video. I came across a site that shows a video of each of the products they sell — how they work, what they do, the control panel, explaining what the fancy features mean, and so on. This information, together with the price, helped me decide which washing machine to buy (at that site, of course).
While the bulk of the enterprise IT market grumbles about the maturity and security of cloud computing services, it looks like the media & entertainment segment is just doing it. At the annual conference for the National Association of Broadcasters (NAB) in Las Vegas, myriad technology vendors are showing off their solutions that are transforming the way video content gets to us and behind the scenes there appears to be a lot of cloud computing making this happen. And there is a strong fit between these two industries because their business and economic models are evolving in complementary ways.
Sure, we all know that video streaming to your phone, tablet and TV is the new normal, but how this is accomplished is changing under the covers and cloud computing brings the economic model that maps better to the business of media and entertainment. You see, while broadcasting is a steady state business, the production process and eventual popularity of any particular video segment or show isn't. The workflow behind the scenes is evolving rapidly — or more appropriately devolving.
As the world’s largest advertiser, any move by Procter & Gamble (P&G) is closely watched. So much attention has been paid to its recent announcement that it will cut $10 billion from its marketing budget over the next five years. In an interview last week with The Wall Street Journal, P&G’s Global Chief Marketing Officer Marc Pritchard elaborated on the company’s intent to lean more heavily on digital media at the expense of higher-ticket TV advertising as part of its cost-savings strategy. The Wall Street Journal interview is part of a PR push from P&G around its digital ambitions, highlighted in a Signal event in Cincinnati last week that focused on brand building in a digital world. The event brought in digital players and experts from Facebook and Google to Buddy Media and Flipboard as well as Forrester’s own eBusiness experts Sucharita Mulpuru and Andy Hoar. So why is P&G making this digital shift, and what does it mean?
The public event and announcements are, as the event name suggests, a signal — a welcome signal to Wall Street that P&G will be faster and more efficient (the company’s stock rose 3% with the budget-cutting news). It's a return shot across the bow to competitors such as Unilever and L’Oreal, which are both making high-profile advances in their digital ambitions, and a signal to P&G employees around the world that their leaders are serious about digital and that they need to accelerate change in the slow-moving P&G ship.
I love video as a communication media. The combination of sound and moving pictures so much more engaging and more memorable than text.
We wrote in our research last year about how we're starting to see video being used more and more by eBusiness teams as an efficient and effective way to educate customers about products, encourage sales and deliver customer service.
With the Academy Awards coming up, we thought it would be both fun and helpful to highlight some of the best examples we've seen of online video in retail financial services in the past year. With the help of the rest of team, I've drawn up a list of our favourites in five categories:
NBC recently announced that it would be streaming its coverage of the 2012 NFL Super Bowl online. NBC has streamed big events before (2010 Olympics, Sunday Night Football), but the big difference here is that it is selling video ads that will run exclusively on the online stream independently of the TV broadcast. This is a huge step for NBC as an ad seller since it is recognizing its untapped online audience and attempting to monetize it. Although the Super Bowl streams (restricted to the US only) are expected to greatly pale in comparison to linear TV viewership, Forrester expects the streaming audience of the Super Bowl to grow dramatically in years to come.
2011 has seen some major change in advertising. Although TV is still king, there’s no denying that online video, across a wide variety of devices, is experiencing strong growth. TV advertisers must now contend with smartphones, computers, and tablets as alternative sources of premium video content for engaging viewers with targeted ads.
As media fragmentation increases, marketers will need to rethink their strategies and start to look at online video and TV as two sides of the same coin. In our latest report, “Why Marketers Must Integrate TV And Video Strategies” (subscription required), we make the case that marketers will merge their online video and TV advertising teams to more efficiently reach their audience across whatever screen they happen to be watching. Next month, our VP Practice Leader, David Cooperstein, will be speaking at the ANA TV & Everything Video Forum in New York about how marketers’ attitudes and strategies are shifting in the face of this new media convergence.
Videos are definitely one of the strongest forms of media in our society nowadays, and there are 48 hours of video uploaded on YouTube per minute: from consumers sharing their creative expressions to companies uploading how-to videos about their products and brands.
These videos help many people in their purchasing process. My colleague recently had to shop for a car, and it’s been interesting to hear about her car shopping journey and how online videos helped her make the ultimate decision. She was interested in one specific car — the 2012 Ford Focus with the Sync with MyFord Touch comes as standard package. The challenge she, and Ford for that matter, encountered was that the majority of car salespeople aren’t that tech-savvy. While they are familiar with the horsepower and the smart-key entry feature, they really struggle to explain how to turn the car into a Wi-Fi hub or how the Sync system can read incoming text messages.
Trying to learn about every available optional feature, my colleague had to turn to the Internet for help. She was able to find demo videos on the Ford Focus website, on YouTube, as well as on her cable TV widgets. These online videos, produced by Ford, auto review sites, as well as tech-savvy online peers, really helped her understand how the optional features of this new product will enhance her ultimate driving experience. Forrester’s Technographics® data shows that videos created by other people are the most watched online type of video:
That’s amazing. How can I get a piece of that pie?
Call it what you will -- V-Tail, vCommerce, or just plain online video -- we are seeing some pretty bold claims around the use of video in eCommerce. Claims from platform vendors, press, and even some case studies and success stories from large retailers who are seeing some significant successes when they integrate video content into the online shopping experience.
But there’s the key. Integrate. Of course it isn’t as simple as sticking a few videos on your existing dot-com site and hey presto, conversion rates skyrocket. Video needs to support the sales process in a way that makes sense to your customers, that supports your brand values, and that enhances the shopping experience.
There are a growing number of ways to source video content, and an increasing number of players in the market who will all tell you that they have the answer. From user-generated content to automatically generated video. From content delivery networks to social media. There are a bewildering number of options out there.
Video absolutely can deliver firm benefits :
It can increase page views by driving traffic to your site.
It can enhance the time people spend lingering on your site, giving you more opportunity to market to them.
Netflix announced its Q3 2010 earnings a few weeks back and the numbers were every bit as positive as people have expected. The company added nearly 2 million subscribers in the quarter, almost four times as many subs as they added the same quarter last year. Yeah, four times as many. While Comcast and Time Warner announced net subscriber losses. At the same time, the cost for Netflix to acquire a customer has fallen 26% in the past year. Funny how when you digitize the customer relationship and the product at the same time, all your costs go down.
The number I always wait for from Netflix is the percent of subscribers that used Netflix Watch Instantly in the quarter. It rose to 66% this quarter, up from 64% last quarter. And remember, this was while adding 2 million new subscribers, which means that new subscribers are adopting Watch Instantly at a rapid rate instead of waiting to get used to Netflix; in fact, they're probably joining Netflix just to watch instantly. This is, of course, why Netflix will likely offer a digital-only plan that subscribers can pay for if they don't even want to pretend to put DVDs in their queue.
Why is this important today? Because it was just now that I finally dug through the summary financial results to find this gem of a quote, something that was briefly reported when Netflix announced it results, but was not fully understood in most of the reports I read. I want to resurface it because this is a big deal:
If Hulu were a dramatic figure, it would occupy a classic character role: the ingenue. The fair and unassuming ingenue naively enters a perilous circumstance with the best of intentions and soon finds that ruin awaits at every turn. The story typically plays out in one of two ways: Either the ingenue is sullied and descends to the level of the forces that surround her (think Grease), or a dashing hero enters to redeem the ingenue, removing the burdens her exposure to the world has caused (think just about everything else). These paths are both open to Hulu, and many observers are actively rooting for one or the other outcome.
There's a third, if rare, outcome: The ingenue evolves to become the hero, using guileless sincerity to overcome the evils of the world (think Pollyanna, a Hayley Mills classic). Nobody believes in Pollyannas anymore. Certainly not in the business world. But to succeed in its plans to build a paying customer base, Hulu has no other choice to but play the ingenue all the way to this third end.