While cable services may be on life support, the simple truth is that live TV captivates audiences in ways on-demand content can’t. Maybe it was the anticipation that came with watching Roy Halladay fan 11 Marlins hitters in a perfect game for the Phillies back in 2010, or the anxiousness that occurs watching state-by-state election results roll in on a Tuesday night in November. The bigger point is that while on-demand content has become a big part of our daily viewing habits, live television and the revenue companies generate from those audiences is undergoing a renaissance.
“In order to do business, in order to have the things we need, we need to generate revenue somehow. So the payment for what happens, and the ability to create content, pay artists, funding great content has to come from somewhere. Either people have to pay for it through subscriptions directly, which is the SVOD space, that’s Disney+, Netflix, and the HBO Max, or they have to be willing to accept advertising because the advertisers are paying for the value there. These are the tensions in the trade-offs.”
Those tensions are creating an interesting dichotomy between traditional cable viewers and the trendiness that comes with being a cord cutter. But it’s also generating an even larger divide in how media companies distribute their advertising dollars. On this episode of Marketing Trends, Mike Woods, the SVP of Product for Amagi Corporation, joined me on Marketing Trends to discuss how media companies are approaching their ad buys when it comes to live streaming services, and why SVOD services such as Netflix and Disney+ are bucking traditional advertising with subscription based models. Enjoy this episode!
Main Takeaways
- Can We Just Drop That In?: Dynamic ad insertion is providing advertisers with the ability to insert advertisements within movies and television shows that was not possible on traditional cable networks. With traditional cable advertisements, media companies had to buy based on show demographics, which drastically limited their reach. With streaming services, advertisers now have the ability to drop in quick mid-rolls and post-roll advertisements that they are able to strategically target to various homes or audiences.
- Digital Divide: While streaming services have made dynamic advertisement a core component of their business model, there is still a big divide between how advertisements are sold on live streaming platforms. Oftentimes, agencies will have specific departments devoted to cable TV and another to digital advertising, which is causing companies to skew their decision making one way or another. Until these two areas are housed together, media buying for these companies will continue to not deliver a holistic audience.
- Is It Worth It?: The general assumption when SVOD services such as Netflix were born is that consumers were paying less for individual subscriptions than they were for entire cable subscriptions. But as companies have adopted similar models and invested in streaming services with their own platforms, the cable TV model of paying for individual channels has been replicated, with consumers often paying more for individual subscriptions as a whole than they were for their cable subscriptions.
Key Quotes
“ [Video streaming] is so dynamic, and it’s rapidly changing the things that we’re doing today that we couldn’t have even thought about five years ago. So it’s been an enormous amount of fun just to dig in and find a way through it.”
“Today all television is streaming and as we go through this transition into the streaming world, the pains of that are now entirely digital; they’re entirely cloud-based. What Amagi has done is taken the heavy lifting, video processing features that need to be done in boxes, and servers, and hardware in a data center, and took them, and imported them into the cloud. Now we’ve extended that into making really easy end-to-end connections for channel owners, for studios to create channels, to deliver those channels easily, to all sorts of different outlets, where the audience can watch it.”
“Netflix is like the movie center. Great content, but it only fulfills one part of your viewing experience. And there’s a bunch of other things that you need to have that holistic experience. [If you need] live news, how are you going to do that on SVOD? You need live events, you need the lay-back experience where you don’t want to think about things. You just want content spoonfed to you. These are the zones that FAST channels and streaming TV, and other areas start to bring in and make available to the viewer.”
“With dynamic ad insertion, we now have this capability to dynamically insert ads into the content and drive it with advertising so we can offer it for free. This is the core piece that underlies that FAST space, and made it compelling. We’ve got the tech in place. We’ve got content coming in that people actually want to watch, and we can now monetize it really effectively with the advertising. Now we can unleash that potential.”
“This transition from television to streaming TV is a change across the industry that ripples through every single part of. Right now we’re in the middle of this transition, which is super awkward. Television and digital and streaming TV sit in this weird, awkward zone in the middle between the two.”
“The conflict between the two sides [streaming and television] that we see today, and something that has to get reconciled that will get reconciled, is understanding how the shift works, and where it’s going. If you’re buying an audience today, and you’re buying one or the other, or some mix of the two, you’re missing out on markets, you’re missing out on the audience that you want to buy. If you’re buying cable TV, you’re skewing very old. The controls that start coming into how you plug in to the streaming TV space, that’s where the rest of your audience has come up. I started to turn that course between traditional TV buys and bringing those buys into the streaming TV space to do the full brand awareness campaigns, to get the value of TV advertising today that you would have gotten 10 years ago.”
“The state of the industry is that we’ve simply replicated the cable package into streaming TV. [In the future], we’re going to see phase two that starts evolving into greater, far better viewing experiences for the viewer. There’s two zones of that; One is that core content experience, where the viewer is experiencing the content, enjoying the content. The other is the advertising experience, and starting to make that a clone of what we did on television.”
“In order to do business, in order to have the things we need, we need to generate revenue somehow. So the payment for what happens, and the ability to create content, pay artists, funding great content has to come from somewhere. Either people have to pay for it through subscriptions directly, which is the SVOD space, that Disney+, Netflix, and the HBO Max, or they have to be willing to accept advertising because the advertisers are paying for the value there. These are the tensions in the trade-offs.”
Bio
Mike Woods is an entertainment tech executive with broad experience working with startups and small companies to the Fortune 100. In his current role, Woods serves as the Senior Vice President for Amagi Corporation. Before joining Amagi in February of 2020, Woods held various roles within the entertainment industry, including serving as the SVP and Head of Product for Wurl TV Network, and VP of Product Management for Maker Studios, which was eventually acquired by The Walt Disney Company.
Woods currently resides in Santa Monica, California.
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