The Content Creation, Consumption Shift Continues
“Philanthropy isn’t tossing a bone to a hungry dog; it’s sharing when you are just as hungry.” – Necia, “Winter Sleep,” Adopt Films, 2014
The media and entertainment industry are doing great, good, bad or suck–depending on which segment(s) of the industry you’re in. Even then … it’s complicated.
We like to streamline the discussion to the entertainment segment.
You know, four categories … movies/cinema, TV (pay/streaming), gaming and social stuff.
According to analysts, the industry will do about $1.6T this year, up slightly from last year but probably due to global inflation and entertainment price increases rather than “real” growth.
Folks who forecast instead of create, say that by 2027 revenues will hit about $2T and that the global and industry economies will be about the same at three percent per anum.
That’s interesting but it doesn’t mean squat if your segment of the industry is healthy; and more specifically, if you have your solid projects lined up for as far out as you can see or you’re solid in your job.
Just remember, it’s a matter of perspective … it’s a recession when your neighbor is unemployed and it’s a depression when you’re unemployed. The industry has been destructing and constructing itself for about 10 years as Wall Street pushes and bosses try new business models with new technologies and avenues to win consumers who are presented with even more options.
Yesteryear’s entertainment leaders – theaters/TV – are trying to fit into the new ecosystem but the double whammy of the global pandemic and dual strikes in the Americas hurt … everyone.
The Americas account for 40 percent of the global entertainment production/consumption market.
Slipped – Theater attendance continues to be off from the 2019 peak for a multitude of reasons, including the volume of excellent content available to people at home from broadcasters and streamers.
While North American has historically been the leading global box office market, China and other Asian markets have become increasingly important to the theatrical industry in recent years.
Prior to the pandemic, theater ticket sales accounted for a large portion of the studio industry’s revenues and were the main source of income for movie theaters.
Today, studios have more distribution options.
The Americas production and box office numbers will rebound but at a slower pace with more selective production in the Americas and with smaller creative teams.
Expensive, glitzy superhero films have lost their luster with the younger audience so, major studios are shelving and putting projects on hold until and when (if) the ticket-buying public returns.
Theater operators will have to be more aggressive in reaching out to studios to schedule a broader range of local and international titles in addition to pursuing the latest increase of interest – beyond trophy popcorn boxes –from Gen Alpha/Z consumers … past and present concert films.
Produce/Consume – Increasingly, people in the Asia Pacific are turning to locally created movies/shows rather than relying on projects produced in the Americas.
The Asia Pacific region is experiencing the greatest growth in production and theater attendance with South Korean, Japanese, Bollywood and Chinawood (Hengdian World Studios) delivering more content and attracting more ticket sales.
The home/personal entertainment market reminds us of the demolition derbies our dad would take us to back in the day.
Source – reflightest
Everyone is determined to win.
The problem is people only have 24 hours in a day and we’ll be brutally honest … entertainment isn’t a top priority.
Despite that “fact,” nearly everyone in the home/personal entertainment industry is focused on getting a big piece of that time.
No one in the traditional TV arena took much notice of the red envelope folks in Los Gatos who decided they were going to bypass the post office and feed content directly to their customers.
OK., truth be told, they laughed their a**es off and so did the DVD rental folks around town.
Studios/broadcasters were even willing to help them speed their demise by licensing them their retired shows/movies.
New First Choice – Consumers are quickly turning away from large, overpriced payTV home entertainment options and moving to the more economic, more flexible streaming video choices.
While traditional TV viewing is declining, streaming content on TV, computers and mobile devices have risen to more than 3hrs 30min.
If your household is like many – okay ours – everyone is together but enjoying their version of personal entertainment.
With the advent of streaming, the long-lasting, highly profitable linear/pay TV model has suffered.
The day of all of your entertainment in one tidy (expensive) bundle is shrinking and projected to fall to about $15B annually by 2027, compared to last year’s $195B.
Consumers have come to realize that the limitless number of viewing choices is too expensive–especially when:
- You only watch 3-4 “channels” with any regularity
- There is now a mind-numbing number of premium streaming video services available
The traditional MVPDs (multichannel video programming distributors) – i.e., Comcast and Charter – are seeing their subscription base continue to shrink.
Subscriber desertion will become even more severe in coming years as sports migrate to OTT platforms that are willing to play the long game when it comes to growing their subscription bases.
The cost for Pay TV services doesn’t make economic sense–especially when their retransmission costs have increased 10X in the same number of years.
PayTV services will have to be more creative, more flexible if they are to survive/thrive in the rapidly changing market.
People still want/like local news and activities as well as reputable national/international news sources which television and telecommunications services can provide.
Live sports – especially local/regional – can be creatively added to their service offerings and video, music, gaming and e-commerce can add to the viability and desirability of the more economically priced linear service offering.
While consumers rejected the high – and constantly increasing – cost of the linear services, they do want a single point of entry for their personal/home entertainment rather than jumping from one app to another app to…
A solid course of action will be to develop collaborative relationships with FAST and AVOD services to streamline and simplify the relationship between the content service and consumer.
The flush days for cable and telecommunications services won’t return but the convenience and customer attention/support will be an offering that could be something that will appeal to a major segment of the households. However, the VOD (video on demand) services have taken a firm hold in the home/personal entertainment arena and they will only grow.
Changing Taste – People around the world like the idea of watching what they want, when they want and on the screen at hand. Ad-supported and completely free are becoming more popular options as long as ad slots/frequency are down from yesterday’s payTV solution.
Everyone (studios and broadcasters) have been reinventing, refocusing their attention to catch the subscription service leaders – Netflix, Amazon and the seldom considered YouTube.
Today, more than 200 services are focused on capturing a profitable number of this year’s projected 1.5B SVOD subscribers and the number is estimated to grow to about 1.7B by 2027.
To meet their goals, studios are reducing their theatrical windows or bypassing them all together and moving projects directly to their streaming inventories.
Broadcasters closely evaluate their content projects, often testing scripted shows on their day/time schedules and then moving the most promising/most successful shows to their SVOD service, replacing them with reality, game and unscripted shows that are more economic to produce/deliver.
But the growing home/personal streaming number of options and steady subscription fee increases have again forced consumers to evaluate their entertainment budget and their frequency of actually using each service.
To control their home/personal entertainment expenses, they run through the shows/films they want to see on a specific service, drop it and jump to the next service.
Good But – Each SVOD service may have entertainment quality that is worth $10-$15-plus a month; but as households add “just another” streaming service, they begin to make hard choices as to which they watch continually and those watched only occasionally. Churn is becoming a predictable part of today’s home entertainment business model.
We have a friend who refuses to have ads interrupting his shows/movies and is always looking over the hill for the next great entertainment deal.
He will watch all the shows/movies he’s interested in during the services trial period, drop them and skip to the next service.
He probably will return to the earlier service at some point and repeat the process over and over.
Possibly!
Fortunately, most streaming video services have cautiously and thoughtfully determined that they can offer their content service at a lower subscription cost.
All they have to do is add a few ads – 3-4 min/hr. – to the content and BAM! they make even more money satisfying both the marketer and the subscriber.
The marketer is able to put a well-tailored ad in front of the subscriber that is closely attuned to his interests/needs.
The viewer isn’t slammed with the same ambulance chasing attorney again and again (or personal hygiene product).
Data Counts – Streaming services like Netflix, Apple TV+ and Disney+ use subscriber and viewer data to help them create and distribute films/entertainment to their subscribers that will be shows/movies they want to watch. The data also helps them in keeping customers subscribing rather than switching services.
It’s all possible because streamers capture specific subscriber data that:
- Enables them to customize show/movie recommendations
- Helps content creators and the service develop, produce and deliver content you like
- Enables them to reach prospective customers with messages/products that are of interest to them
These services have become most appealing for home viewers with nearly 3B AVOD subscribers expected by the end of the year and the number will increase to nearly 3.5B by 2027.
FAST Freedom – Free, ad-supported streaming services are becoming economical ways for news, information and entertainment services to reach households locally, regionally and around the globe. They also enable marketers to more efficiently and economically reach specific target audiences.
While studios and broadcasters have been enamored by the Wall Street’s excitement around the potential of subscription video services (specifically Netflix), we have a strong suspicion that the big winner regionally and globally will be the free-free stuff … FAST.
FAST is becoming the home for linear stations/channels with the added benefit of content/shows being always on and again with fewer ad interruptions. In addition, services like Pluto, Tubi, Freely and others are also attracting specific genre channels – news, music, local/regional entertainment, sports – to build focused audiences and focused advertising/marketing opportunities.
The key for FAST channel growth will be enhanced/enriched search/recommendation engines that will help folks find that unique, special content – shows/films – they really enjoy and appreciate.
While Netflix surprised a lot of the other streamers and Wall Street by adding video games to their roster, a lot of folks wondered what took them so long.
Gaming – Video games are enjoyed by people in every age group and equally by males and females. In addition, while game genre may vary, folks enjoy them in every country.
Global gaming specialists Newzoo and Gitnux estimate that there are more than 3.32B gamers worldwide and they will spend more than $189B this year.
Serious gamers we know only deal with downloaded or boxed PC games, which account for about 22 percent ($39B) of the sales; but the real money, as Apple and telcos know, is in mobile games that account for nearly 50 percent of the “investment” or $90.8B.
Even though the most popular game genres (sports, strategy, role-play, action, adventure and horror) may be developed with males in mind, the video gaming guy may be a she (49 percent).
And while they may watch a lot of shows/movies, they spend eight plus hours a week with their games.
As if we didn’t have enough video content to watch/interact with, short-form video platforms like WhatsApp, Instagram, TikTok, snapchat and others have become the go-to source for news, information and entertainment.
Social Videos – Yes, people enjoy shows/movies that are professionally developed, created, produced and distributed; but they also find short-form social video to be a great way to learn about new shows, work, product and interesting things people are doing. Creators and consumers are increasingly concerned that some of the services may be restricted and possibly even banned.
According to Pew Research, more than a third of US adults and 63 percent of teens regularly turn to social media.
The services not only enable studios, broadcasters, producers, actors and other professionals to efficiently and effectively promote their projects and stay in touch with audiences around the globe, but they also provide an income to a new generation of creators.
While Jeff Katzenberg’s Quibi failed to capture a meaningful audience, short form video has enabled YouTubers, artists, writers, musicians and video bloggers to become a sub-industry valued at more than $480B last year.
Our daughter, her friends and thousands of viewers and creators said that banning TikTok in the US and some European countries would bankrupt them emotionally and financially.
Of course, Zuckerberg (Meta/WhatsApp) and Pichai (Google/YouTube) thought it was a wonderful idea and we’ll just have to see how things finally play out.
For the time being, a lot of content creators, followers and viewers are concerned because they have a feeling that Aydin might be right when he said, “Justice doesn’t even exist in nature.”
However, people will adjust/adapt.
Video content creation/consumption will continue to educate, inform and entertain us … in a variety of forms.
The best will continue to be done by people.
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