The Internet and access to data continues to provide opportunities for innovation and new business models. In the TV sector this trend has changed the way consumers can access content and the ability for new media services to be launched.
Netflix is a prime example of a company that has successfully used data to drive their business. They moved to a Big Data platform after launching their streaming service in 2007 and this approach has allowed them to understand every aspect of their customer; analysing how content is consumed, details of what that content is and the quality of customer experience. As a result, Netflix continues to attract new customers with 44 million subscribers worldwide at the end of 2013.
The insight Netflix has gained has allowed them to provide a recommendation engine that creates individually tailored recommendations, use insight to inform which shows to buy or renew and focus investments in new content with a guarantee of success. Traditional TV broadcasters have started to use their data to understand their customers, however more investment is needed in capabilities to use the insight they gain to provide a competitive advantage.
For traditional TV distributors, advertising revenue is critical, making up 22% of revenue in 2012 (£3.9 billion). At the same time, advertisers are also expecting a greater return on their investments, in the world of the Internet where adverts are tailored in real-time based on rich individual customer profiles and an understanding of what costumers are doing at the time. We are seeing some investment into TV platforms that can serve targeted adverts based on customer profiles. BSkyB’s AdSmart is an example of one such platform that has enabled Sky to attract brands that had not previously advertised on TV.
TV distributers should innovate and start to look at new sources of data and methods for generating insight to target advertising. This may be through social data to get programme and brand associations, or using new technology such as Samsung’s facial recognition system to identify who is watching TV. Although this raises privacy concerns (that should be analysed and managed) these capabilities must be on the boards’ agenda, and investment needs to be made to avoid advertising revenue being redirected on more targeted advertising platforms.
Customer’s expectations are increasing, they expect a seamless experience across platforms with easy access to content. The quality and experience across providers vary in their ability to meet these needs. Customers still turn to illegal downloading when content is not available or the platforms make it too difficult to access. It was estimated that there were 5.9 million downloads of Game of Thrones using BitTorrent compared to 5.5 million views in the US. Data analysis should be used to monitor and improve customer experience by gaining detailed insight into how customers are interacting with platforms and what is making them turn off.
With competition increasing and new devices continually entering into the market, broadcasters with traditional TV business models need to take note. In all of these scenarios data and analytics plays a central role. TV providers must start looking into the future and building their digital assets and analytics capabilities or risk being victims of the inevitable market disruption.
Shamil is a Manager in Deloitte's Audit Advisory practice and helps companies in the technology, media and telecoms industry understand their organisations through the use of data and analytics. Attempting to keep the left side of his brain active, outside of work he seeks out creative photography projects, supporting the digital explosion.