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Streaming wars: The data-driven revolution

Frederic Vander Sande, vice president – Telecom, Media & Entertainment at Capgemini, explains why media and entertainment need to learn to balance creativity, tech and data.

If you could take one streaming service with you to a desert island, which would it be? Would you go with the masses, and choose Netflix? Or would you rely on Disney Plus, Peacock or Salto to get you through the day? 

It’s a competitive marketplace, and the need for differentiation is strong. With Netflix, Disney Plus, NowTV and other streaming services growing quickly and globally, traditional players need to step up their game if they are to stay relevant. 

To maintain their position in an increasingly aggressive market, players in the media and entertainment industry need to identify new ways to reach customers. To guide them, we have taken a closer look at the driving change behind the industry’s revolution. We conducted interviews across a network of senior media industry executives and experts, to better understand how data unleashes differentiation and competitive edge across strategic dimensions such as content sourcing, customer acquisition, customer loyalty and lifetime value, and cost optimisation.

OTT streaming rules the market 

Three years ago, subscription video on demand (SVoD) services lagged behind paid TV globally. Now, they are poised to overtake it in more than 30 countries before the end of 2021. In the UK, Netflix surpassed Sky in terms of subscriber numbers back in 2018. In response, and recognising the need to adapt, Sky developed its own OTT service – now seen as its major driver of growth.

This phenomenon is global. The United States is far ahead but the evolution of OTT is beginning to accelerate elsewhere. In countries like India, China and Germany, OTT services are starting to challenge paid TV’s position in the market, and Netflix now has more subscribers outside the US than inside. As well as borderless domination, OTT services also know no bounds when it comes to age. While under-35s used to be the main users, the service now leads in share of video consumption for those up to 50 years old and is nearly as popular as pay-TV among those over 50 in the US and parts of Europe.

Content is king, data is the ace

As OTT streaming becomes more dominant, media companies are beginning to expand the forms of content they offer, providing audiences with more choice, adding gaming, live and on-demand sports and podcasts – even streaming theatre. The Covid-19 crisis boosted an already-thriving market; Netflix alone more than doubled its global subscriber base in the first quarter of 2020.

Where rights-holders previously held the cards, the likes of Netflix and Amazon have mastered commissioning and creating their own content. To compete, right holders need to find a way to become distributors, utilising the assets they do have and creating new direct-to-consumer (D2C) platforms. The most recent and successful example of this has been the launch of Disney Plus. With established brands, and an understanding of customer needs, both traditional and tech giant players stand a chance to be relevant and survive.

The fragmentation of the market and the rising competition for subscribers and advertisers is driving new challenges for the whole media and entertainment industry, such as access to content, customer attention and experience. In a congested market, media players must stand out from the crowd with  more attractive value propositions, while ensuring cost efficiency. Data is the underlying solution to many of these challenges. Of the industry players we interviewed, two in three identified data as business critical for survival. That’s not surprising – after all, the strategic use of data can help to create standout content, brand and user experience. 

Data mastery is still a myth to the masses

Without a robust and effective strategy in place, no amount of data will transform a business. Despite understanding its importance, two-thirds of media companies reach only basic levels of data maturity. Even today’s best-in-class OTT players like Netflix and Hulu are on a data-augmented, rather than a data-powered, system. The true data-powered companies – Facebook, Google, and Amazon – are leading the way when it comes to customer attention and time spent, as well as advertiser budget spend. Geography plays a part here: American players are significantly in front of their European peers.

By following the best practices established by market leaders, media players can tackle data maturity challenges. Setting data at the core of business strategy, and communicating this throughout the C-suite, is vital. Equally, it’s important that there is an environment of trust among customers, providing higher level of transparency and giving the control to end-users over their data.

Data can provide an extremely high level of personalisation. Thus, to set themselves apart and provide a customised service, OTT players need to understand their customers on an individual level, rather than viewing them as an aggregated audience. This requires the OTT to include as much data as possible, from internal and external cross channel information, and through optimisation of user levels.

Having robust algorithms at the centre of your strategy is fundamental to stay ahead of the game. Gather information from many sources of interaction and data, transform them into insights, and decide to act upon them, any time, any place, and in real-time, delegating to people only when necessary. At the same time, ensure that you enhance algorithmic output with human curation, leveraging data and AI, rolling it out at scale and reinforcing and combining human opinion. 

Powering the future 

With the unprecedented rise of OTT and streaming services, the media and entertainment industry has truly entered the age of data. The growth of digital media consumption, the launch of direct-to-consumer services and the advancement of advertising-based business models have made data strategically vital. 

It is evident that acceleration in this area is needed to stay relevant and attractive for subscribers, content providers and advertisers. In an algorithm-driven competition, failing to extend reach and to deeply personalise the entertainment experience will threaten long-term survival. 

The age of data creates challenges for the industry as it learns to balance creativity, tech and data across its offering. At the same time, it creates unique opportunities to differentiate. Media and entertainment companies must become more intelligent, trustworthy and relevant by leveraging both data and people to safeguard media creativity, independence and diversity.