Cornucopia of Video Services, Formats Leads to Industry Frustration, Consumer Fragmentation
LAS VEGAS -- A growing number of subscription-video and other services with many ways that advertisements can be delivered and multiple devices used to view content in a variety of ways has some stakeholders scrambling to catch up with people's changing habits, said CES panelists Tuesday. Amid consumer fragmentation and many programming choices, some see using voice commands to search for and discover video becoming increasingly popular. A sign of how technology is changing habits is that more people are watching full-length content and not just video clips on a plethora of devices other than TVs, said speakers including MGM's Epix Chief Digital Officer Jon Dakss.
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Some said too many content choices exist for viewers to select along with the coming potential oversaturation of subscription-video offerings and ads that aren't always properly targeted at their audience in terms of criteria like length and format. Advertisers and partners bear some, not all, of the blame for lagging behind ever-evolving consumer patterns, and programmers struggle to figure out what small portion of content will be wildly popular, speakers said in Q&A including with us. Too many formats also were criticized.
"The advertising industry, and I put us in that same category, is woefully behind in terms of habits of consumers," said Time Warner's Chris Berend, senior vice president for CNN overseeing the network's digital video content. It's "a complete shit show" with many different formats, he said. "We're sort of facing this impact point between where consumers are very quickly going and these giant sort of aircraft carriers of [ad] campaigns that can't necessarily follow very quickly." CNN has "choice paralysis with our own products," which he wants to solve but hasn't tackled yet, saying it's hard to get away from 10-15 percent of content driving the vast majority of viewership. There are 100-200 pieces of CNN digital content daily, and "it's up to us as curators of our platform to surface the things that are relevant," which news naturally does with big stories, he said.
No complete solution is now available for the "shit show" problem, Berend told us later. "I hope somebody in the hallway" at the show "has a solution and I know a lot of people are working on it," he said. "I don't see an obvious one right away. It feels like we are sort of in a patchwork, prepubescent stage of it. It's really complicated. I'm not saying it's the advertisers' fault, necessarily." Big ad campaigns may have a 30-second spot in one format and an agency says, “'Now this is your turn, run it,' so that's how you end up getting a literally 30-second ad on the mobile web, which is soul crushing," he said. "There is a lot of onus on publishers and those building these platforms" to come up with things like shorter commercials, Berend said.
"Mass customization across large video buys is time consuming and costly," said American Association of Advertising Agencies Executive Vice President Louis Jones. A spokesman for the Association of National Advertisers and Jones declined to comment specifically on what was said, since the groups didn't attend the panel.
Shorter ads may mean taking "a revenue hit" but one that may help improve user experiences, said video tech platform company Beachfront founder Frank Sinton in response to our query. "The user experience is extremely important." Some 70-80 percent of most publishers' traffic comes from the mobile web and/or from within apps, he noted. Six- and 10-second ads "are actually really sort of a great user experience," Berend told us. Geico exemplifies an advertiser making over-the-top and mobile-centric ads, "but they're a rarity right now," he said. There have been more such spots amid "ad overload," a concept industry understands, said Nielsen Senior Vice President Scott Brown of "quick, hard-hitting messages."
Amid "incredible fragmentation" with many video services, "you really can't beat the value that you can get for your cable package and all that comes with it," said Epix's Dakss. "There are a lot of challenges to the business of offering subscription video services" that may compete with MVPDs, though it has a "halo around it now," he said. On pay-TV consumers using various devices to watch the channels they subscribe to, "I think everyone would agree there is still a lot of room for improvement in TV Everywhere," he said. CNN's Berend worries that "we're going to wake up ... and have too many video subscription services" at some point in the coming year-plus. "It's sort of a race right now to plant your flag, and real estate is getting really'" scarce, he said. Sinton disagreed there are too many such services. People are "overwhelmed" with finding content, and more are using voice interfaces to find what to watch, said Senior Vice President Mark Young of NBCUniversal's Fandango.
Changing usage is borne out in statistics Nielsen's Brown showed. "Live television viewing is beginning to decline a little bit" but don't necessarily "hit the panic button," he advised, as mobile and browser viewing "will continue to get more sophisticated." Consumers want the "best screen available" at the moment they want to watch, he said.