OTT programming presents big data opportunity for entertainment channels
Over-the-top (OTT) programming has been referred to as the death knell for traditional television advertising, but services such as Netflix and Hulu have instead become popular competitors to traditional entertainment channels. Increases in Netflix viewership have not equated to decreases in cable viewership. Additionally, traditional entertainment competitors can use big data to tailor their own OTT programming, or learn from OTT and create content packages accordingly.
Wrestling with options
Though viewers are still locked into historic viewing patterns, OTT has become a viable option for content creators. World Wrestling Entertainment (WWE) launched an OTT service in February 2014, priced at $9.99 a month. As of March 2015, WWE Network had about 1.3 million subscribers, according to Wrestling Inc.
While this is a success story in its own right, Michelle Wilson, chief revenue and marketing officer at the WWE, mused at an industry event in November 2014 that "it's almost overwhelming the amount of data that we're pulling in on our users. We can now track when they are watching, what device they are using, how long they are watching. That really helps us deliver a customizable experience that's really the next wave."
No mass exodus yet
Some 40 million Americans now subscribe to Netflix, according to The Verge. Analysts such as FBR Capital Markets believe that the online media provider will have a larger audience than all the major TV networks — ABC, CBS, NBC, Fox and NBC — by 2016, Variety reports. Though Netflix is an advertisement-free zone, a recent CutCableToday study featured on BGR found that 67 percent of 829 surveyed Netflix subscribers still had paid television service, though 9 percent said they planned to cancel and another 16 percent said they weren't sure they were going to continue with their television subscriptions.
HBO's true detective work
Similarly, when HBO unbundled its HBO Go service in 2010, the entertainment company began receiving a flood of data on its consumers. The network has since offered a companion OTT programming option called HBO Now for noncable subscribers. As HBO's CIO John Gallant told IDG Enterprise in 2012, "We really weren't gathering a tremendous amount of data previously, but with social networking, with electronic sell-through, which has increased the number of transactions that are occurring, and even more specifically, with HBO GO, where there is a lot of usage data we're getting, we went from getting about 2,500 rows of data a day — which isn't a lot for most companies — to 2.5 million rows of data a day." At the time, HBO was just beginning to use the data to inform its programming decisions.
Learning from Netflix
As a few entertainment brands, such as HBO and WWE, wade in to OTT, it's helpful to look at how the biggest OTT service of them all, Netflix, uses data. A 2014 article in The Atlantic detailed Netflix's data program: The company has broken down its entertainment into 76,897 microgenres, including categories like "emotional fight-the-system documentaries" and "period pieces about royalty based on real life."
Slicing up the content in such complex ways has given Netflix a view into its audience's tastes. As the article notes, "When they create a show like 'House of Cards,' they aren't guessing at what people want." Netflix's penchant for data analytics is often compared to Amazon, another firm with huge OTT ambitions. Entertainment properties should not be complacent in the face of such competition, especially when they have the same capabilities and technologies as Netflix. While some, like cable TV broadcasters, have proactively built out an OTT business, none have fully unlocked its potential yet. The first to do so will gain a huge competitive advantage.
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