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The New Media Value Chain: Part 2

The New Media Value Chain: Part 2

Paul Goetz is the senior vice president of sales at Brightcove. This post is the second in a two-part series in which Paul explores the creation of the "new" media value chain.

In my last post, I set the stage for the current media consumption landscape, highlighting how new technology and shifting behavioral norms have changed the game for profitability in the digital media world. In this post, I will further explore the journey from a volume ecosystem to a multi-point value network.

Brands bypass the middleman
No other member of the original media value chain has embraced the potential of a smaller--but truly cultivated--audience more than the big brands that were always its driving force. Call it content marketing; call it native advertising. Regardless of nomenclature, brands are going directly to consumers. And, they're going around the broadcasters and the cable companies. Most importantly, these brand pioneers are adhering to what McKinsey calls "on-demand marketing," a hyper-personalized content engagement strategy.

Some marquee examples of incredible brand marketers that are speaking to consumers directly with video include:

  • Red Bull: the Felix Baumgartner jump is just one recent example of Red Bull's work to establish itself as a cutting-edge, adventure brand. It has established its owned Internet properties and social network portals as "go to" destinations for original entertainment.
  • Burberry: the iconic British fashion brand has established itself as a media force to be reckoned with, including a reliance on livestream fashion shows with interactive elements. Another fashion brand that exemplifies complementary content is Hugo Boss; in addition to the runway show livestream, Hugo Boss has created on-demand theatrical short films, available on its website, that depict the essence of the season’s collection.
  • Lexus: with Studio L, the luxury car brand has created a portal of free, original video entertainment--all centering upon topics that the company believes align with its target consumers’ interests. Lexus is buying studio-produced content and then airing it for free.

Volume vs. value: enter Big Data
So what makes more siloed brand marketing efforts effective for content publishers? The reasons are multi-fold. Consider the old value chain, where content owners were able to monetize volume because they built massive audiences. Today, it's widely accepted that value is more of an exchange. Perhaps rich, great content doesn't work for a mass audience, but there are people--key to a content provider's target demographic--who might be willing to subscribe to it.

And from a corporate, brand perspective it's possible to target these key audience members through big data. For decades now, companies have been accumulating massive sets of data on both customers and prospects. Customer relationship management--or CRM-- and marketing automation systems are fully entrenched. And companies are taking advantage of the personal information bounty these systems have reaped to deliver both programmable services and advertising. For instance, if you've recently purchased a home, you may soon be targeted with home decor advertising--or perhaps a call-to-action to join a DIY community online--from a variety of sources. And, these sources will reach you via the Web and your mobile devices. With cookies, there's no hiding--and advertisers have found a captive audience. It's also easy to take advantage of your existing marketing assets to retarget; for example, analytics and demographic information derived from your online video portal can easily aid your pursuit of a hot lead.

Creativity from the networks, cable providers
Brands aren't the only players innovating via both strategy and technology to stay relevant. Consider Cablevision, the primary cable provider on Long Island. Cablevision identified an area ripe for livestreaming: high school sports. The company has established itself as "the" provider of live sports programming on Long Island, ensuring that its subscriber base has an additional reason to continue its relationship. This topic relates directly to TV Everywhere authentication, a means to protect proprietary content while also ensuring consumers can access desired programming anytime and anywhere.

Traditional broadcasters are also offering authenticated content online. Universal Sports, for example, allows cable subscribers with Universal on their channel roster to stream exciting athletic coverage live online. HBO has gone as far to consider partnering with broadband providers, ensuring that its content can reach people even if they do not subscribe to cable.

The government is getting involved as well. Lawmakers, led by Senator John McCain, have introduced the Television Consumer Freedom Act. The legislation is designed to allow consumers to "unbundle" their cable subscription and pay for only the channels they frequently watch, in an "a la carte" fashion. This way of doing business has even generated discussion amongst the cable behemoths, under pressure from start-ups such as Aereo, which offers basic live TV online along with DVR functionality.

What it all means
Mobile device proliferation has led to the reconceptualization of what TV actually is, and the role it plays in the entertainment ecosystem. For brands and broadcasters working to connect with their audiences (customers), they must be aware that viewers are eager for a more personalized viewing experience. While the traditional television paradigm was in the form of a linear broadcast--recorded and then played--the digital space is entirely programmable. From interactive TV to mobile, the new digital media value chain is more malleable. The convergence of "digital" and "programmable" ensures that the "Future of TV" is both a content and a technology issue. Audiences have moved and have varying expectations about both their consumption experience and their content choices. Rather than a linear value chain based on tonnage, a multi-point value network with a mix of volume and value has emerged and really is the only way forward. Most importantly, both brands and broadcasters need reliable technology solutions that will allow them to reach their audiences with visual, video content on any medium or platform.