Cable Must Embrace Binge Viewing, Better User Experiences, Study Finds

It’s a brave new world out there, but providers have to do a better job of measuring user engagement, EY reports

Last Updated: July 10, 2014 @ 7:43 PM

The rise of Netflix and Hulu and the ever expanding array of smartphones, tablets and mobile devices means that television viewers demand access to their favorite programs whenever, however and wherever they want.

This has led to a dramatic shift in the power dynamic — now consumers, not creators are driving the television industry. In particular, binge viewing, which has become a hot term now that companies such as Netflix are offering up entire seasons of shows like “House of Cards” at one time, is having a profound impact on the business. It demands that companies do a better job of measuring viewership and personalizing programming, according to a new study on the future of television by EY, the professional services firm formerly known as Ernst & Young.

Gone are the days when Nielsen ratings could accurately capture the popularity of a program or when viewers could be expected to tune in at the same time each week to catch up with the latest doings on “Seinfeld” or “Dallas.”

“These new players are reinventing content creation and discovery,” Howard Bass, leader of EY’s Global Media & Entertainment Advisory Services, said.

Also read: Majority of Media, Entertainment Revenue Will Come From Digital by 2015, Study Finds

The use of mobile devices and streaming technology has substantially increased television consumption, meaning that Americans are never far from some sort of screen, Bass said.

“We need better ways to measure viewing,” he said.

These tectonic shifts in viewership are also requiring that television companies figure out new and more innovative ways to engage with viewers during live events such as the Super Bowl and the Oscars through the use of social media. There’s ample evidence to suggest that companies that incorporate Facebook and Twitter into their programs and promotional efforts benefit. Advertisers such as Pepsi, have seen users report a strong intent to purchase their drinks when they push out tweets targeted to people that saw their television commercials, and Nielsen data suggests that strong social media campaigns can lift the ratings for 29 percent of shows.

Yet, not every sector of the television business is well positioned to take advantage of these advances. Cable, in particular, has lagged behind its competitors in terms of its channel guide and video-on-demand interfaces. Unlike tech savvy companies such as Amazon and Netflix that recommend content based on what their customers have previously purchased, rented or rated, cable does little to suggest programming options.

Also read: A Bleak Picture for Non-Digital Independent Theaters: Convert or Die

That needs to change, the report argues.

“Users are frustrated with the cable experience,” Bass said. “These companies have a one-on-one relationship with their customers, but most cable players are doing little with all that information… The leaders of these companies are very innovative and very smart, but they’re dealing with a certain legacy and it takes a lot of maneuvering to move these aircraft carriers.”

The big winners, the study argues are story-tellers, who will find more outlets for their content, which in turn will allow them to take more creative risks. Because programming will be ubiquitous across devices and old episodes will be readily available on demand, content producers can devote more time to character and story development, instead of rehashing previous episodes and trying to target story lines to the broadest possible audiences.

The one downside to this panoply of devices and platforms will be making sure people get paid for their work. Studios and industry guilds are already facing enormous hurdles when it comes to tracking royalties and rights payments for actors and other talent given the range of ways that shows and films are now being broadcast.

“It’s challenging the existing system,” Bass said. “It’s an issue of daunting complexity they’re working hard to address.”


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