While millennials and youth audiences are consuming more video than ever, they are often seen as being at the forefront of cord-cutting, writes Andy Fry. But what can entertainment businesses do to win the millennial dollar?
The good news for broadcasters and producers is that youth and millennial audiences (18- to 34-year-olds) are still watching TV. But the bad news is that the way they watch is more fragmented than ever. Anyone with serious ambitions about appealing to this commercially valuable demographic needs to be thinking well beyond the traditional linear television box.
Research from several sources underlines the scale of the challenge. A GfK survey of 25,000 US consumers, for example, found that millennials are significantly more likely to have turned their backs on traditional PayTV subscriptions than other sectors of the population. According to GfK, almost a third of millennials are without PayTV compared to just 16% of the older ‘baby boomer’ group (51- to 69-year-olds). Around two thirds of their viewing time is based around streaming, with Netflix, Amazon, Hulu, Crunchy Roll, Twitch and Adult Swim all benefiting.
The thrust of GfK’s research (see panel) is reinforced by a Limelight Networks report, State of Online Video, which estimates that 22.8% of millennials watch 10 hours of online video per week – much more than people in other demographics. Millennials are also more likely to subscribe to more than one OTT service, with 21.5% paying for two and 11.9% having three.
Limelight, which researched the US, UK and Canada, also identifies a second key challenge with millennials, which is that the smartphone has moved centre stage for for them to watch online video. After this come desktop computers, laptops and TVs connected to a streaming device. The conclusion from Nigel Burmeister, VP of global marketing at Limelight Networks, is that “consumers are demanding access to content when they want it, using the device of their choosing. Traditional providers and delivery models are at risk of being left behind as consumers become more savvy.”
“Consumers are demanding access to content when they want it, using the device of their choosing. Traditional providers and delivery models are at risk of being left behind as consumers become more savvy”
All of the above is confirmed by Ooyala’s Global Video Index (GVI), which provides a quarterly summary of trends in the market. In its most recent GVI (Q3, 2016), Ooyala forecast that 2017 would see a continued trend towards cord-cutting, driven in part by the rise of skinny bundles. It also flagged the astonishing growth of mobile video: “More than 52% of all video views this quarter were on mobile devices. Since Q3 2013, mobile video views have increased more than 233%.”
Of course, the emergence of mobile and the shift towards on-demand viewing only tell part of the story when discussing youth and millennials. As Ooyala reminds us, this is the biggest demographic in the world – which means content providers have to take certain psychometric factors into accounts.
Bauer Media, owner of brands including Heat, Empire, Grazia and Kiss, identifies five distinct segments of the demographic that it refers to as Influencers, Adopters, Apprentices, Entertained and Contented. Under this schematic, Influencers, as the name suggests, are especially significant: “The Influencers are the smallest group,” says Bauer. “They account for just 11% of millennials and are more likely to be male. They have the highest media consumption and exhibit the widest range of media behaviours. They like their voice to be heard – especially online where they are highly active – and follow trends closely.”
Also significant within Bauer’s model is to distinguish between the younger and older ends of the millennial spectrum. Relationship status and career profile, for example, can influence a given individual’s media usage and behaviour.
Research into millennials also provides some important insights in terms of content preferences, selection and discovery. For example, Ericsson says that YouTube accounts for about 40% to 70% of total video traffic for almost all measured networks, with social networking accounting for around 15%. For traditional channel operators and content creators this is very significant when you consider mobile video’s rapid growth.
A shift towards short-form video has been well-documented in recent years. But 2016/2017’s big trend has been the growing interest among millennials in live content on platforms such as Facebook and Twitter’s Periscope. Speaking at CES in Las Vegas, Facebook’s VP of advertising and business platform Andrew Bosworth said this was a response to the growing professionalisation of non-live video. “The fact live can’t be so heavily produced is one of the things that makes it compelling for audiences. It is real and there is no extra editing.”
Seemingly sacrosanct areas of content such as sport (a key driver of PayTV bundles) are also under pressure. Ampere Analysis claims that young millennials are moving away from sport because of the wealth of TV and online video content available to them. “The shift in perception of sport among younger consumers should ring alarm bells for traditional media companies reliant on high value – and increasingly high cost – sports rights,” said Ampere Analysis director Richard Broughton. “Younger consumers are turning off sport in favour of scripted and social video content including comedy, sci-fi, romance and action & adventure. Clearly a one-size-fits-all content strategy will not last as a pan-generational plan.”
So how are legacy companies responding to this perfect storm of millennial media disruption? At boardroom level, a big development has been to acquire, invest in, or partner, digital native firms. Disney’s acquisition of Maker Studios, A&E Networks’ partnership with Vice Media and NBCUniversal’s US$200 million investment in Buzzfeed are examples. NBCU used Buzzfeed to run its Rio Olympics Snapchat channel – a decision that “a lot of the people inside NBC Sports considered it heresy,” said NBCU CEO Steve Burke at a recent conference. His view, however, is that people who watched the Snapchat channel were more likely to go on and watch NBC during primetime.
Exploring new methods on content distribution are also key says Arran Tindall, SVP commercial and content distribution at Viacom International Media Networks (VIMN) – owner of brands like MTV, Comedy Central and Nickelodeon. While VIMN’s loyalty to traditional PayTV platforms means that it is cautious about how it engages with SVOD players, Tindall says “the trend towards skinny bundles is of interest to us. But I would stress that we see a lot of new behaviour among millennials is complementing rather than replacing PayTV”.
VIMN’s loyalty to existing PayTV partners means a lot of its efforts to engage millennials is done in partnership with them, says Tindall. “An example is Play Plex, a series of branded apps that enable our affiliate partners to offer our content across multiple platforms.” Available in about 180 countries, it offers VOD access to a range of current and library content, plus live, local linear streams of channels and, where relevant, games.
In addition to making content available on all platforms, there’s been a clear move towards the creation of ancillary content that can connect with millennials via social platforms, says Tindall. “Our most popular shows like Geordie Shore and Ex On The Beach have a strong connection with millennials via social media. A few years ago, there used to be a fairly static relationship between shows and fans but now it’s 24/7.”
It’s similar at Disney. In an interview with Ad Week, Andrew Sugerman, EVP content and media with Disney Consumer Products and Interactive Media, talked about his company’s use of ‘digitologists’, people who can “create what's authentic to platforms and look at what's currently trending to put it through a relevant lens for Disney fans.” In practical terms, this involves creating 6,000 pieces of content a month across platforms such as Facebook, Twitter, YouTube and Snapchat.
This approach can have three benefits. Firstly, it deepens the consumer’s relationship with the company’s most important revenue-generating brands – whether that be Marvel and Star Wars at one end of the spectrum or Princesses at the other. Secondly, it can provide a promotional push to send audiences back in the direction of linear services. And thirdly, it can create sophisticated and personalised advertising opportunities.
Karen Ramspacher, SVP consumer insights & trends, within MRI's product innovation and management team at research firm GfK is clear that the last is a crucial consideration – especially in the costly world of quality drama. “Millennials have shifted strongly towards binge viewing but the question that raises is how advertisers will be able to speak to them.”
Ramspacher argues that the drama ecosystem will struggle if it doesn't find ways to maintain its importance to advertisers. “The good news is that millennials are happy to watch advertising if it is relevant to them. There are also some emerging solutions such as product placement and targeted addressable advertising. There are a lot of people talking about how to put the pipes and measure in place to make this work.”
Why are they cordless?
- They are watching via streaming services like Netflix, Hulu, and Amazon Prime
- They don’t have time for TV [mostly true for Cord Nevers}
- They are trying to keep down expenses
What would make them go back?
- They want to be able to channel surf
- They want to watch live sports
Screen Size and Mobile Viewing
- Almost half of all Cordless Millennials currently watch movies, TV programmes, or other videos via their mobile phone
- 20% of Cordless Millennials’ TV time is spent watching on a Desktop/laptop computer, 10% via a smartphone
- Almost three-quarters of Cordless Millennials say screen size is important to them
- One-quarter say when they are with their family they often watch different programs on different “screens”, but in the same room.
Things very/somewhat important to Cordless Millennials when watching TV
- Little/No Commercials
- Quality programming
- Variety of programming
- The ability to access older episodes or seasons of a show
- Easy access/login to however they are watching
- The ability to watch whenever they want
Overall Cordless Millennials feel advertising appears at inconvenient times and is repeated too often, but almost half agree that advertising whether on TV or Internet provides them with useful information about new products and services.
Insights provided by Jillian Andersen, GfK Research Director, Client Relations & Analytics