4 Ways the Entertainment Industry Should Respond to Surprise Competition
These erstwhile passive content libraries are beginning to turn out some pretty good stuff. Could be a plus, right?
For consumers, yes. For moguls from the traditional TV networks and movie studios seeing powerful new competitors staring them down? Not so much.
These executives have a right to be nervous. Netflix alone has 40 million global subscribers. And there are other former wallflowers getting into the game besides Netflix and YouTube that have some pretty decent name recognition like, umm, Amazon (162 million visitors per month to Amazon’s Web sites in the last quarter of 2013 according to statista.com).
It’s Not Just about Comedy or Drama
These competitors are not just treading on entertainment’s turf; they’re even making a play in news gathering. In the course of my colleague Polly Traylor’s research into the future of the entertainment, she discovered that Netflix acquired in November the first-run rights to a documentary on the Egyptian protests in Cairo’s Tahrir Square.
How should the entertainment industry respond to these diverse threats? Polly’s interviews with SAP entertainment industry experts and others have turned up some interesting advice so far:
- Get over brand identity and focus on niche content. Today, most people don’t care where the content is coming from or who makes it, only that it’s easy to access, cheap, and targeted to them. That means understanding and catering to a much broader range of consumer preferences and segments, says Kurt Kyle, Media Industry Principal with SAP.
- Develop a direct to consumer strategy. To gain a better understanding of what consumers want requires a more direct relationship with them, whether through social media or other online channels. One such example of this is Flixster, a streaming site owned by Warner Bros. “You’ll find studios trying many different channels and many different experiments to see what works,” says Blake White, director in the entertainment media practice at Price Waterhouse Coopers.
- Get the data. Big data and social media networks have become powerful tools for content owners to develop and nurture the consumer relationship. “Internet channels like Netflix, Amazon Prime and iTunes channel have a lot more information about content than they ever did before and can demand bigger and better deals downstream,” says Richard Whittington, Senior Vice President of Media and Entertainment at SAP. Traditional entertainment companies can fight back by collecting feedback and profile data from consumers through social media before and after a film or show is released, he adds.
- Become frenemies. Suddenly, studios are reeling in big bucks from exclusive licensing deals with Internet channels. A deal involving a blockbuster title can deliver tens of millions of dollars to the studio, “I talk with people in digital licensing at the big studios and they can’t believe how the pricing has changed so dramatically – and it all goes to the bottom line,” says Ed Epstein, author of a book on movie economics.
How has increasing competition in entertainment affected your world so far?