Insights into the Changes Impacting the Digital Entertainment Industry

By Rebecca Bennett

(Presented at the Zinnov Roundtable Conference for “Personalization and Gamification in Entertainment Services – The New Face of Customer Centricity” in Los Angeles – July 30, 2015)

Current analytics is giving our industry insights, which are so profound, that they are impacting and changing content creation, its accessibility, as well as the way we are monetizing it. What does this mean for the future of digital entertainment and advertisers who market through it? There are four particular developments I would like to share and the direction they are driving this industry.

First, the development of new platforms, which have allowed viewers to watch content no matter where they are, has affected content format. Consequently, short-form video and photo stories have now taken their place alongside long-form video. Increasing numbers in viewership have resulted because of the market penetration of smaller screen platforms that best serve the shorter attention spans. For example, YouTube ‘shorts under 20 mins’ and photo stories in Instagram and Snap Chat are dominating the mobile world. YouTube provides shorter entertainment series and funny home videos that viewers can get their fix on in a world where free time is harder and harder to come by and attention spans are getting shorter. Instagram, Vine and other photo apps are allowing consumers to share personal photo stories as the new text message.

Want This Lollipop Facebook Stunt

Second, personalization of content has proven its impact and created an opportunity on personal devices for the future. In 2011, an interactive short horror film was released where Facebook users could approve the website to access their profile information. As a result, a viewer would sit back and watch, horrified, as they saw themselves being stalked in the film by a serial killer using their Facebook information. The video links with the Facebook Connect App to personalize the experience directly to the single viewer by actually putting their information and photos in the film. It’s no surprise that this phenomenon went viral with 400,000 views and 30,000 likes within 24 hours of its release. A week later, the film had been viewed 7 million times with 1.1 million “likes”.‪ [1] Today, 4 years later, it has over 15 million likes. [2] Although the film’s purpose was to create public awareness on the risk of sharing personal information across the Internet, the film also reveals an opportunity for content creators and advertisers; an opportunity to leverage this concept of using personal viewer information to connect them to a story or ad that otherwise may not emotionally affect a viewer. It is proven that when made personal, content will have a greater impact on a viewer. Greater impact equals greater sales. It won’t be long before you will be seeing ads personally addressed to you or more stories with you as a character.

Third, VOD (Video On Demand) is the fastest growing content consumption outlet. [3] While DVR penetration has slowed [4], consumption of recorded shows is not disappearing for now. Since it is in the network’s best interest to promote viewers to watch their content on demand rather than on DVR, but after live, so they can obtain their Nielsen ratings, VOD will become the dominating consumption outlet. In order to lure viewers away from their DVRs and for cable/OTT box (Over The Top) companies to remain competitive, they will have to continue offering even more content.

There are two sidecars to this. One, is that all content comes with a licensing cost. The more content offered, the greater price cable/OTT box service companies will charge to subscribers to offset those costs. Second, it takes a whole production team to create the kind of content worthy of VOD. If “more” is the future, then we are looking at an industry boomRising employment rates and increased funding to buff up film programs is not far off. But not just for studios, lower budget indie films are finding the VOD outlet a more feasible means to reach their audience. With current studio productions only able to spit out a handful of films and shows at a time due to sky high costs, distributors will be turning more to independent producers for content, especially if it costs them less which will make their subscriber costs more competitive. If studio’s want in on the game, they just may partner up more with these little independent production companies. With this increase in diversification of our content creation players, I predict we will see much greater creative output which no doubt will send us into a new renaissance for the arts.

Fourth, DAI (Dynamic Ad Insertion), the ability to replace outdated commercials from original broadcast on VOD with more timeless local commercials allows content distributors and networks to monetize otherwise stale inventory and allows smaller local companies a more affordable way to break into advertising in the digital streaming world in only their targeted market. Although still in its infancy, DAI is well on its way to taking over and being available for all ad inventory.

To sum up, analytics tells us short-form and photo stories are becoming more prevalent, allowing content providers and distributors another revenue stream by giving advertisers this additional means to reach consumers. Personalization and localization with the DAI of ads and personalization of creative content is the foreseeable direction of the future. It is an opportunity to drive the economy with its more personal impact. VOD is not only looking towards being the main means of content consumption, but is driving the creation of even more content and more players into the field. Even though the cost of content subscription services will likely increase, with the new, more affordable and localized ad inventory now available through VOD, it will result in more ad dollars, which will fuel the digital entertainment industry. With more dollars and more diversification of players in the game, the next renaissance is right around the corner.

SOURCES

[1] Take This Lollipop. Wikipedia. May 25, 2015. https://en.wikipedia.org/wiki/Take_This_Lollipop

[2] Take This Lollipop. http://www.takethislollipop.com

[3] McKinsey&Company. Global Media Report 2014. 2014.

[4] The Networks Are Eager to Get You On Demand and Off Your DVR. TVGuide.com. Michael Schneider. September 24, 2014.

http://www.tvguide.com/news/networks-vod-ratings-dvr-1087477/.

[5] FreeDigitalPhotos.net

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