Internet TV: can we all just get along?
What’s attracting people to internet TV? Amongst other things, binge-watching is a big deal. 73% of US consumers, and nearly 90% of Millennials and Gen Z, say they binge-watch content.
PR guy admits shocking truth about internet TV
I’ve had a few PR roles over the years and have variously been called spin doctor, evil spin doctor, and even Voldemort’s spokesman (yeah, I’m proud of that one). I’m pretty sure a few marketing colleagues also christened me that $#@% from PR after a particularly heartfelt rendition of my patented PR IS NOT FREE ADVERTISING sermon, but that’s another story.
What’s this got to do with internet TV? Journalists typically look for stories with tension and conflict – because that makes for interesting news. I’m often asked “how is Showmax possibly going to survive with X in the market?” or “aren’t you worried about competition from Y?” or “how much share are you stealing from Z?”. I’d love to be able to respond with a juicy headline-worthy quote about the impending blood bath, but the truth is far more boring. The challenge I’ve got, given the poor reputation of the PR function (there’s irony for you), is selling the answer “I think we’re all going to get along just fine”.
For what it’s worth, the official answer to questions about how Showmax plans to compete with formidable global internet TV services with deep pockets and some damn good shows is:
We don’t see this as a binary question – it’s not a winner-takes-all market. The evidence we see from other markets is that people are happy to sign up for more than one service as long as they get value from each.
Or to put it another way, as long as you have something people want to watch, and as long as your apps and delivery network do what’s expected of them, then you’ve got a seat at the table.
Rather than taking the PR guy’s word for it, take a look at this recent study by Activate, predicting that by 2018, more than half of US subscription video users will have signed up to two or more paid services. Indeed, by 2020 that number will be more than 60%. Backing this up, GfK has found that the number of US consumers self bundling, or subscribing to more than one subscription video service, has increased 50% over the last three years.
Another point perhaps more relevant for Africa is that we genuinely do welcome the entrance of more services into our markets. Why? Because one of the biggest challenges we face is introducing an entirely new category and explaining to people what internet TV is, why they’d want it, and how they get it. Every time a new service enters, we actually get a bump up in our customer base thanks to the buzz and media coverage from the new guys.
Clearly it’s a gross oversimplification to say that we’ll be just fine because people are happy to sign up for more than one service. We still have to earn the right to survive and in our case we’re doing that through hyperlocalisation. What’s that (other than a great PR buzzword)? Showmax’s Chief Product Officer Barron Ernst defines it as follows:
“Hyperlocalisation is all about understanding needs and barriers at the granular local level. It obviously doesn’t make economic sense to build an entirely new service for each country, but we’ve found it’s possible to do more than just light-touch localisation while still retaining scale benefits at the back end of the business.”
In practical terms, hyperlocalisation involves things like introducing prepaid vouchers into SA retailers when every other service requires a credit card (and not everyone in SA has one). It means deep integration with local telcos – the add-to-bill options we’ve got with Vodacom and Telkom reduce friction and give us a foot in the door with millions more customers than we’d otherwise have access to. In Kenya, it means sorting out M-Pesa payment and launching an entirely new tier of Showmax focused on local content at a really affordable price.
The great thing about this approach is the more you do it, the more adept you get at tearing up your product and business and rebuilding them to suit the unique needs of each country. Over time, that organisational agility becomes a key competitive advantage.
A second question I’m often asked is whether internet TV is killing off satellite and cable. Clearly, if true there’s a juicy sibling rivalry story given our position in the Naspers stable alongside MultiChoice. The boring answer is that so far, we’re not seeing it. If anything, Showmax appears to be additive rather than a replacement.
The recently published 11th edition of Deloitte’s Digital Democracy Survey had some interesting stats that reinforce this point. First, the good news about the growth of internet TV. Almost half (49%) of US consumers now subscribe to paid streaming video services, up from 31% in 2012. Importantly, the proportion of subscribers rises to around 60% when looking at just Gen Z, Millennials and Gen X.
What’s attracting people to internet TV? Amongst other things, binge-watching is a big deal. 73% of US consumers, and nearly 90% of Millennials and Gen Z, say they binge-watch content. Yet despite the popularity of binge-watching and the big increase in subscription video in the last few years, according to Deloitte, subscriptions to cable or satellite TV have held pretty much steady in the US over the past few years at around three-quarters of households. In other words, internet TV isn’t killing the cable/satellite TV star.
Similarly, this 2016 BARB survey found the same thing in the UK. Households with Sky Movies (now called Sky Cinema), something that in theory competes directly with internet TV services, are, according to BARB, actually more likely to have a subscription to an internet TV service than households that don’t have Sky Movies. In the words of the survey:
“The picture is clear: SVOD homes are not swapping out their traditional TV for SVOD, they are using SVOD services to get even more of what they already have.”
So what’s my rousing conclusion? As much as I’d love to tell you a media-friendly story about a bloody fight to the death, revolution, and the birth of a spanking new golden age of internet TV, in truth, things are a little more prosaic. Internet TV is definitely changing how people consume TV, and it’s even changing the shows themselves, as writers and producers embrace the binge and design shows to be consumed in marathon chunks. Should journalists be poised to cover the epic battle between internet TV services until the one true winner emerges? Should they start prepping their obits for satellite and cable TV? Nah, probably not on both counts.
On the upside (or downside if you’re in PR), nothing ever runs to plan and no doubt I’ll be needing my tap dancing shoes soon enough.