Consumer Panel: Word of Mouth a Top Way to Get Content Recommendations

Despite the use of data and algorithms to attempt to serve up content consumers want, consumers on a panel said word of mouth was one of the top ways they find new stuff to watch.

The panel during OTT.X@Pipeline 2020 was moderated by Thomas K. Arnold, publisher and editorial director of Media Play News.

“Word of mouth among friends is big,” said Joe Carlson of Noblesville, Ind.

In addition to word of mouth, said Ava Payne, of Carlsbad, Calif., “if I want to watch a show I kind of spend time researching.” One of her favorites is Amazon’s “The Marvelous Mrs. Maisel.” She said she looks at reviews, as well as filmmakers and cast.

Zachary Kennedy, of Long Beach, Calif., said, “I read the trades an unhealthy amount,” paying close attention to content from filmmakers and actors “that he loves.” He also relies on awards shows, having discovered “Mr. Robot” when Rami Malek received an Emmy award.

“I trust the Emmys more than Netflix,” he said.

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In the early days of the pandemic, Devonee Alfrey, of Carlsbad, Calif., admitted she got roped into the Netflix “Tiger King” series hype.

“I can’t believe I sat down and watched the whole thing,” she said, calling it “a great waste of time.”

“Now, I would never watch it because it’s just terrible,” she said.

Erik Parker, of Albuquerque, N.M., said he was inspired by news coverage to watch HBO’s documentary series “The Jinx: The Life and Deaths of Robert Durst.”

Parker saw on the news that, during the series, “he admitted to killing people on the show.”

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Despite the rise of ad-supported video-on-demand, most on the panel said they were happy to pay a price to avoid ads.

“With Hulu we do have the more expensive one,” said Alfrey. “I don’t like commercials.”

Kennedy, too, said he pays more for Hulu with no ads.

Still, some said it depended on the content whether they’d put up with ads.

Carlson doesn’t like ads, but he does watch AVOD service Pluto TV: “They have some weird stuff on there.”

Parker likes to go ad-free with particularly engrossing content, but “if it’s just a cooking show, I wouldn’t mind.”

Kennedy said he likes AVOD service Tubi: “They have interesting stuff on there that isn’t available elsewhere.”

Still, he pointed out a big weakness with streaming ads — that they are often repeated too much.

Parker agreed.

“Last time I was paying for the ad-supported version of Hulu, every single ad break would be the same four ads,” he said. “That was very frustrating to sit through.”

OTT.X Announces 2020 Heroes

OTT.X (formerly the Entertainment Merchants Association) is honoring industry “heroes.”

Heroes are team members at digital platforms, channels and retailers; at content companies; and at service and technology companies that facilitate the flow of content to the consumer, “playing an important role in providing the needed entertainment to keep everyone sane during these stay-at-home months,” according to OTT.X.

The individuals are being recognized based on their contributions during the COVID-19 pandemic. Their contributions are being honored at the OTT.X Online Live conference July 22.

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Honorees are:

  • Abel Franklin, director of digital media, Maverick Entertainment
  • Aimee Rogers, manager, FP&A and sales analyst, Cinedigm
  • Alexandra Vigilione, director, product marketing, Cinedigm
  • Brenda Garcia-Ortiz, SVP, worldwide sales, Maverick Entertainment
  • Chris Pak, SVP, FP&A and business development, Cinedigm
  • Dan Sulzer, director, financial operations and royalties, Cinedigm
  • Danny Arroyo, content prep and asset management manager, BLU
  • David Johnson, packaging manager, BLU
  • David Millbern, VP, development and research, Here Media
  • Dylan Canfield, manager, content operations, Cinedigm
  • Erick Varillas, head of production, mitú
  • Evan Liss, digital media specialist, Maverick Entertainment
  • Ian Donnelly, manager, ad operations, Cinedigm
  • Jessica Ruvalcaba, director of content, mitú
  • Katherine Pond, VP, business development, Vizio
  • Kelcie Schwab, linear channel programming and digital coordinator, Maverick Entertainment
  • Lonni Silverman, director, client services, Sony Pictures
  • Michael Thexton, executive director, technology, BLU
  • Natalie Martin, VP, client services, Premiere Digital
  • Sarah Dixon, VP, client services, BLU
  • Tony Huidor, SVP, products and technology, and GM, networks, Cinedigm
  • Zack Coffman, CEO and founder, One World Digital

 

“We are proud to have individuals like this year’s heroes working within our industry,” said OTT.X president and CEO Mark Fisher in a statement. “Their contributions to their companies parlayed into contributions to every stay-at-home’s ability to cope through good quality entertainment delivered into their homes through the Internet.”

Panelists at EMA OTT Event Contemplate Effect of Coming SVOD Wave

A little more than a month before the start of a launch of a wave of big-name SVOD services, panelists contemplated the effect that the new, deep-pocketed players would have on the OTT marketplace at a Sept. 25 conference in Los Angeles produced by the Entertainment Merchants Association.

EMA president and CEO Mark Fisher noted a change in the title of the annual event from Digital Media Pipeline to OTT_X@ Pipeline.

“That’s our leaning in and supporting all over-the-top distribution, embracing SVOD [subscription] and AVOD [ad-supported] as well as TVOD [transactional], which we had primarily been supporting in the past,” he said.

In opening remarks, he noted the shifting landscape.

“While SVOD continues to have runaway growth and EST continues to reinvent itself and to promote consumer ownership, AVOD, a format that an industry sage used to refer to as ‘where titles go to die,’ has become all the buzz,” he said. “Frankly, with the launch of WarnerMedia’s subscription service, Disney’s subscription service, Apple’s subscription service, Universal’s service, and Hulu and Netflix and Amazon Prime as well as Britbox, CBS All Access and so many others, I believe even more consumers are going to be driven to cut their cable subscriptions and get all their content either through OTA or OTT and there is likely going to be a limit to what most customers are going to be willing to spend. And when they hit that limit, they’re probably still not going to have enough content available compared to what they’re used to with the hundreds of channels on cable, and they’ll end up supplementing that with AVOD channels. So I think many of us believe that next year will not only bring growth in migration in SVOD services but also unprecedented growth in AVOD.”

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That theme of how the market would change with an explosion of new OTT entrants was echoed by panelists throughout the day.

“The entertainment industry has become as susceptible to change and as volatile with change as the broader technology industry itself,” said Cinedigm Networks president Erick Opeka, who moderated the “Future Evolution of OTT” panel. “Gone are the days of the stability that many of us in this room became accustomed to, where you had 10, 12, 15 years between cycles of technology adoption.”

Mining a niche is a good way to compete with the big guys, panelists said.

“I believe there’s a lot of white space for passion-driven verticals that are underserviced,” said Natalie Farsi, founder and CEO of upcoming lifestyle channel SMART.

Ed Laczynski, CEO of Zype, added a niche OTT player can succeed “where there’s a high level of affinity and or passion and there’s a scarcity of content within that group.”

Focus is key, said Irina Shames, chief revenue officer of Obesh, an upcoming channel focused on outdoor adventure targeting millennials.

“I think there are many companies not necessarily asking, ‘Why are we launching an OTT or why do we need to be present on OTT?’” she said.

As SVOD services proliferate, AVOD may be a strategic move for smaller players.

“It seems to me that a lot of players that had started as subscription are going to be making a pivot to an ad-supported model,” said Opeka.

“With AVOD, we’ve still got about 82 percent of the U.S. that’s gonna want to watch ad-based content because they don’t want to have to pay for all of these services,” added Jeffrey Goldman of Premiere Digital Services.

Transitioning to AVOD “hopefully will be a better business model for us,” said the Africa Channel’s Sheila Cole on another panel, “Managing the Business of OTT.”

Indeed, the research on AVOD shows strong consumer growth.

“The ad-supported space is growing very, very quickly,” said ComScore’s Vince Muscarella. Recent ComScore research showed that the growth in hours viewed per household for ad-supported services is outpacing even subscription viewing. Ad-supported hours were up 60% in May-July 2019 from May-July 2018, while subscription hours grew 44% during the same time period.

David Sidebottom of Futuresource reported that AVOD is a “very U.S. phenomenon,” with one in five Americans having used one of these services in the last month, according to his research.

Still, internationally, as in the United States, “what we see more than anything is fragmentation in the marketplace” with consumers offered “huge choice,” he said. But every international territory is not the same. Netflix is driving SVOD growth in France and Germany, for instance, with TVOD starting to pick up in Nordic region.

Other changes noted at the conference were the impending launch of a new website and OTT newsletter from the trade association, as well as a push for diversity. Indeed, the conference included a panel on the subject and featured a diverse group on the dais.

“This is the first conference that it’s not just a bunch of us old white guys up on stage,” said the EMA’s Fisher. “We have 48% of our speakers being female and at least the start of integrating more underrepresented minorities and people of color into our program.”

He credited Parrot Analytics’ Alejandro Rojas, who presented research on OTT profitability, for pushing the organization to embrace more diversity.

EMA Event Spotlights Digital Delivery

The over-the-top market is exploding, and the Entertainment Merchants Association this year at its annual Los Angeles conference gave it a starring role.

The OTT_X conference, focusing on the OTT market, ran July 16-17 concurrent with the eighth annual Los Angeles Entertainment Summit presented by the EMA. In addition to OTT panels and spotlight presentations, the EMA facilitated OTT business meetings in addition to meetings scheduled for LAES participants. The joint event attracted about 400 attendees.

The new focus is part of a bigger shift for the EMA.

“It was really apparent last year that the event needed to change,” said EMA CEO and president Mark Fisher July 16 in opening remarks, adding “as the industry changes so does the EMA.”

“We’ve intentionally shed our support and income from the video game segment,” he said, to be more focused. The organization has also shed physical retail members and distributors.

“It’s a pivot,” he said, but “we’re not going to leave behind the TVOD space.”

A leader in that transactional VOD market, FandangoNow chief Cameron Douglas, also chair of the EMA board, noted the annual confab “used to be an event with meetings between retailers and studios.”

Now, the EMA, via its Ultimate Movie Weekend promotion, is promoting cooperation between studios and digital retailers.

“Who would have thought there would be a major studio backed campaign — except Fox and Disney — that was focused on rental instead of EST,” Douglas said.

Erick Opeka, president of Cinedigm Digital Networks and chair of the OTT_X  conference, explained the name in opening remarks.

“The X in the name really reflects the core mission of why we’re all here today,” he said. “It’s an exchange. First and foremost, it’s an exchange of ideas.”

Such collaboration is crucial in an era of fast digital disruption.

“These changes are happening so frequently and at such a precipitous pace, the only way we can come out of this is by fostering a community,” he said.

Key challenges for OTT video platforms are customer acquisition and retention, monetization and content discovery, according to speakers at OTT_X.

Having original content is one way OTT platforms are meeting these challenges, said presenter Kathi Chandler-Payatt, executive director and entertainment analyst, The NPD Group. Using Netflix Originals as a case study, she noted that while both original movies and episodic shows are a small percentage of content on Netflix, they garner an outsized share of viewing. Originals made up 16% of new seasons vs. licensed in 2019, but those originals garnered a prodigious 24% of minutes watched. The same holds true for original movies, which are 11% of content and 22% of minutes.

Part of the reason for the uptake of originals is preferential marketing, she noted.

“It’s very smart from a platform perspective to push originals,” she said because the platform owns it. Thus, making a show with Netflix may give content producers a leg up in discovery.

“People think content is king, but discovery is king,” she said.

Originals have a short window to prove themselves, she said. She quoted Netflix VP of originals Cindy Holland as saying that the service generally knows within 28 days whether a new show or season meets Netflix’s expectations in terms of audience reach. In addition to viewership during that period, metrics such as season completion also figure in renewal.

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OTT_X event chair Opeka moderated the panel “Monetization Trends in OTT.” Ad-supported VOD streaming services, such as Xumo, whose CEO Colin Petrie-Norris was on the panel, are ascendant, many speakers noted. Xumo has 160 curated channels and 40 million households in the United States, Petrie-Norris said.

AVOD “can generate very high yield per consumer” with advertising, he said.

Tubi chief content officer Adam Lewinson also cited the growth of AVOD in a keynote presentatoin. AVOD aggregator Tubi has 20 million monthly active users, with 100 million minutes streamed in June and well over 15,000 titles or 44,000 hours of content, “more than double the content volume of Netflix,” he said. June yielded its largest revenue month ever, he said.

“AVOD is for real,” he said.

There are challenges, however.

“The biggest challenge in streaming right now … in all VODs, it’s really about customer acquisition, retention and churn,” he said. “A subset to that is content discovery. Once you crack those problems, that’s when you get to scale.”

A seamless experience on the platform is also “incredibly important,” he said, “just having a seamless experience where the tech fades away.”

“You also want to be ubiquitious,” he said. “You do want to be everywhere that people are streaming.”

Tubi has also employed machine learning in its proprietary content personalization engine.

“The more data that we have on our viewers the more we are able to personalize,” he said.

A key advantage to AVOD is the “barrier to entry is so low” because viewers don’t have to pay, he said.

As for Tubi getting into original programming like its paid SVOD counterparts, “we have no intention of going down that road,” he said. “It’s tremendously competitive. You wind up overpaying for content.”

There is already too much content, he noted.

“Original series are just whizzing by at an epic pace,” he said.

That doesn’t mean Tubi isn’t willing to spend on content.

“I have a nine-figure content budget for the year, and we’re spending it,” he said.

On a panel about windowing of content, Paul Colichman, CEO of Here Media, said he was “worried that [AVOD is] the emperor’s new clothes,” a false hope of a monetary savior, noting the amount of revenue that trickles down to content producers who license their titles to such services is small.

Still, competition from increased content is pushing content owners to find new outlets.

“It used to take years for us to put up content on AVOD,” said Cinedigm’s Natasha Pietruschka, adding that now, “Where else can we fill those revenue gaps?”

Transactional digital retailers took the stage during the LAES session. Panelists noted that since consumers are paying directly for content, whether for rental or purchase, the key concern for TVOD platforms is making that experience seamless and easy and the quality top notch.

“The bar is so high because you have paid specifically for that title whether rental or purchase,” said FandangoNow’s Douglas, who was on the transactional panel. “It better play.”

He said FandangoNow has concentrated on making the viewing experience top-quality with extensive 4K offerings and a living room app that rivals any.

While Redbox has made its name on physical disc rentals, Chris Yates, GM of Redbox On Demand, said the new digital sales and rental arm doesn’t cannibalize that core business, it supplements it. It offers a choice when consumers don’t want to go to a kiosk and has resulted in “improved affinity for our brand,” he said.

Speakers at both events discussed the looming launch of new SVOD services, including Walt Disney Co.’s $6.99 Disney+.

Disney is “out in front of the others,” said IHS Markit’s Sarah Henschel during a research presentation. Awareness of the service jumped from 24% in Q1 to 35% in Q2 even before the Disney marketing machine really gets rolling, she said.

The firm expects upcoming services to add 36.7 million paying domestic subs by 2023.

“I think Disney and Apple [with its pending SVOD service Apple TV+] have a leg up because they are already consumer facing brands,” Henschel said. “Disney has the strongest hold in my opinion right now.”

When asked how many in the audience would buy the new service when it launches, the majority of attendees raised their hands.