Q&A with Alan Wolk: The “Flixpocolypse” is coming. Are you ready?
The Flixcopalypse is coming! Are you prepared? Don’t worry, SPROCKIT Thought Leader Alan Wolk has you covered. In an exclusive Q&A, Alan shared what needs to be done as more companies join the OTT world. Specifically, Alan explained the importance of a standard measurement across OTT platforms and the implementation of ad-supported programs.
SPROCKIT: What trends do you see as the biggest coming to OTT in the next couple of years?
Alan Wolk: The single biggest trend is what we’ve been calling the, “Flixcopalypse,” which is the fact that all of these new giant OTT services are going to be launching over the next year or two. Between Disney Plus, Warner Flix, Apple Flix, and others, abundance of OTT services are going to really explode. The number of OTT services is going to double any amount of TV that’s watched on OTT.
On top of that, a lot of the new services are going to have some ad-supported version. Certainly Disney, Warner and NBCU will have an ad-supported version, possibly something similar to what Hulu offers where there’s an ad-free version and ad-supported version. But there’s going to be a lot more ads on OTT, which is going to be a big change.
SP: What are the biggest challenges that come with that? Do you see any solutions to this Flixcopalypse?
AW: One challenge is that all OTT services have to figure out why a consumer would want to watch their service. In other words, if the consumer already has Netflix, Amazon and Hulu, what do they have to offer that is different or better. Now, it may just be a show that a consumer wants to watch, in which case the big problem is going to be churn. It’s really easy to unsubscribe and re-subscribe, I think a lot of people are going to binge on one platform and then get rid of one service for another because the services are not cheap. They’re all $10-$15. People are just going to wonder, “why wouldn’t I just cycle through them.” They have to have the factor of stickiness and how to get people to actually remain subscribers and encourage loyalty and also just create brands.
AT&T’s new head of HBO, Bob Greenblatt, recently said, “Netflix doesn’t have a brand. It’s just a place you go to get anything — it’s like Encyclopedia Britannica … That’s a great business model when you’re trying to reach as many people on the planet as you can.” His point was that Netflix doesn’t really stand for anything. That is also a problem for cable networks. Networks like CNN, HGTV and ESPN have strong brand identities and are in good shape. But there’s hundreds of smaller cable networks. It is going to be tough for those networks to justify their existence other than as a niche product. A lot of them are going to wind up going Video On Demand only with original programming.
SP: With subscribing and unsubscribing, is there a need for a standard viewership measurement?
AW: With linear TV, Nielsen is the currency that everybody agreed on, so if you were someone like Ford and you were buying your advertising, you knew you had an apples-to-apples comparison for everything that you were buying. It was easy to measure, but without a standard metric–and because everything is time shifted–it becomes very hard for brands to figure out what they are actually buying against.
Companies are either giving experimental budget or not putting big numbers behind it. As more viewers go to OTT, companies really need to start figuring out a way to measure it evenly because there’s going to be huge demand to get in front of all those viewers.
The other issue with that is whether we measure things by Gross Rating Points or by impressions. Impressions are a more digital measurement, but may be more accurate at a time when very little is watched in real time. We have to look at how many people saw a program versus what the linear method of GRPs are and figure out a way to combine the two. It gives buyers a common currency that they can transact off of and know whether they’re getting value for what they’re paying.
SP: How are OTT platforms measured now and is there anything that comes close to a uniform measurement across platforms?
AW: No one has an actual format. Neilson does do some digital measurement. They own a company called Gracenote that does Automatic Content Recognition measurement. They’ve been working to try and get something uniform. Gracenote only measures LG TVs right now, so that’s not a huge footprint. It is maybe 10% of all smart TVs. A company like Inscape, which is Vizio, has close to 30% of the market that they measure. If Neilson could strike a deal with Inscape that would get closer to measuring it.
I don’t think it’s an impossible thing to get going, but everybody has to agree on it. A lot of different networks have put forth their version. It is really a matter of seeing whose methodology prevails. Overall, There’s an agreement that a) we need a standard and b) it can’t just be one thing. It can’t just be panels, it can’t just be ACR, it can’t just be set top box. It has to be a little of everything.
SP: Are you seeing OTT players more open to these advertising models?
AW: Yes, definitely. There’s been the rise of something we have been calling the “FASTS,” which is Free Ad Supported TV Services. Essentially, just syndicated programming. Beachfront Media has a stat that they’ve seen over a 1600% increase in the number of ad avails on those free services. They have managed to get a big leash in the market. I think it’s definitely growing. It’s not as uniform as traditional TV, which is yet another reason why I think the more we have a standard unit of measure for all of it, the better.
SP: How do live sporting events play into both the need for measurement standards and where do you see advertising going in reference to those live events?
AW: Whether it’s live or whether it’s time-shifted, we need some sort of standardization that people can compared to. Live TV for advertising has a lot of advantages, especially for things that are time sensitive. If you’re having a sale on something, you want it to be live. Plus, with sporting events, you realize your choices are watch a commercial or listen to the announcers blabber on. I think people are much more likely to accept that advertising on sporting events. You can also run addressable, which is a big thing on both OTT and generalized sporting events. You can reach the types of people that you’re looking for and really target them.
Alan is a co-founder and lead analyst for TV[R]EV, which has created one of the media industry’s go-to sources for understanding the changes coming from Hollywood, Silicon Valley, Madison Avenue and beyond. You can find out more about TV[R]EV by visiting www.tvrev.com.