Starting a Streaming-TV Service? Here’s a Pre-Launch Checklist (Guest Blog)

In becoming “digitally ready,” traditional media companies have their work cut out for them

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Contributed By LEKAs we discussed in our previous posts, over-the-top (OTT) TV is a natural extension for most traditional content owners. But many media organizations still face challenges in deploying a digital strategy. Kevin Tsujihara, chairman and CEO of Warner Bros. Entertainment, said this only last year:

“I don’t think our business models are keeping pace with the changes taking place in consumer behavior. There’s been a shift from linear viewing to nonlinear viewing, and it’s happening in dramatic fashion. People are turning to Hulu, YouTube and even the networks’ own sites, but we’re still having a hard time in the television business monetizing that audience.”

Nancy Dubuc, president and CEO of A&E Networks, echoed that sentiment:

“Digital is the buzzword of the moment … we’ve learned that you can’t just put your promos up in a digital environment and expect the consumer will accept that as short-form content. Our challenge is to make sure we’re acknowledging the need to get much more sophisticated in understanding those changes in creativity.”

Even as OTT becomes more ubiquitous in our everyday lives, many of the traditional media powerhouses face the challenge of “digital readiness.” Simply defined, digital readiness is being able to serve the viewer whenever, wherever and in whatever manner he or she wants to engage.

Diagram showing digital readiness with the viewer at the center and all the various media channels surrounding them including linear tv, SVOD, mobile (apps), virtual MVPD, OTT AVPs, standalone OTT, online (web portals) and social mediaDigital readiness is about providing a seamless and integrated entertainment experience across platforms — anytime, anywhere — in order to engage with the viewers regardless of which channel they are watching. However, being digitally ready presents a new set of challenges for most TV producers.

TV organizations are great at creating and monetizing content (the set of functions in the dark gray area of the chart below). However, having great content and a traditional marketing engine does not necessarily translate to digital success. The digital enterprise needs to have a direct-to-consumer relationship. This requires housing customer data, collecting subscriber monies, developing a consumer platform, deploying customer service, etc. (the set of functions in the light gray area of the chart below).

Shows level of digital preparedness looking at traditional TV functions (pre 2015) and digital ready functions (2015 on)More functions are needed to effectively compete in the new ecosystem than were required for success under a traditional model. Furthermore, these additional functions take many content organizations out of their comfort zones. Most of these functions are not easy!

Traditional TV viewing is not dead — not even close. But it is under some pressure. And while millennials do consume OTT in far greater amounts, they also consume a large amount of traditional TV content. In short, the ship has not sailed just yet, and content/TV organizations need to prepare themselves for the future.

So what can these organizations do to become digital ready?

Answers the question of what organizations can do to become digital ready. A few ideas are end-state definition, current state diagnostic, gap analysis and barrier identification/resolutionThe first step is to decide what makes the most sense for your content and where you want to end up. For example you need to decide many issues, including:

  • Pay per transaction or subscription
  • Work with the traditional distributor or outside this system
  • High return/medium risk or medium return/lower risk
  • Direct relationship with the consumer or have a third party operate an OTT system for you

The next steps are about evaluating how we get to that ideal state. This will require an understanding of the external economy and an internal organization realignment.

Once you have answered the questions, understanding the financial implications of various scenarios will inform a go/no-go decision.

The above checklist for becoming digital ready is indicative and not exhaustive. But this list is a good starting point for any organization looking to evaluate whether it is ready to serve its viewers in the digital space.

This is Part 6 in a series on over-the-top (OTT) trends by Dan Schechter, Gil Moran and Francesco Di Ianni from L.E.K. Consulting’s Media & Entertainment consulting practice.