1. Netflix looking for an advertising tourist guide
Now that Netflix has publicly stated that they’re going to roll out an ad-supported option, they need to, you know, go out and start selling and serving ads. It’s not a skill set they currently have, and so rather than trying to hire people and go it alone, they’re looking to partner with someone wiser and more experienced, someone who can act as a tour guide and show them the ropes.
Rumors abound that Roku, Comcast, and Google are the top three contenders, though Roku may have been knocked out of that mix.
why is it important
Working with an experienced partner to learn the ropes is a very smart move on Netflix’s part. He acknowledges that they don’t know anything about the advertising business and that working with someone who does is the best way to learn.
Co-CEO Ted Sarandos said “the company wanted to design an advertising experience that would be ‘more integrated and less disruptive’ than traditional TV advertising” and that won’t happen overnight.
So why not partner with companies that have decades of institutional knowledge of how it all works?
Of the two finalists, it seems that Comcast has a real advantage
Let me explain to you.
For those of us closer to the action, Google’s “scary” factor looms large: people in the industry worry that the company already knows too much about consumers from search. and Gmail and they fear that their ability to add to this knowledge base of consumers’ television viewing habits will allow them to dominate television in the same way that they (along with Facebook) dominate digital advertising, which which would then introduce a whole host of privacy issues.
What’s unclear though is how much of a problem this is in the real world, both among brands and consumers, and how negative it would be perceived.
On the one hand, there is a strong anti-technology reaction. On the other hand, it’s unclear whether consumers see a cable company like Comcast as a valiant defender of consumer privacy rights, and whether brands really care about having to run all their digital advertising through Google. who certainly does a very good job. .
So Netflix may decide that the optics of going with a digital company like Google may be better than a traditional TV company like Comcast, making them look hip and modern and all that. Add to that the fact that Google is also working with Netflix’s main competitor, Disney, without much appreciable backlash.
That would be unfortunate though, as both companies, Comcast or NBCU to be more specific, have done banner work when it comes to innovation in the space.
In particular, they led the way in terms of cross-platform alternative currency research and results published last week from a currency pilot test they conducted in conjunction with iSpot, shows that brands are massively underspending on streaming.
According to said study, while the average media buy is 91% linear, to effectively maximize reach without overloading frequency. brands should actually only spend 60% to 70% on shelf.
A stat that Netflix will definitely want to use in its marketing decks.
To be clear, this isn’t a self-serving stat that NBCU and iSpot pulled out of nowhere. This is very much in line with other research, including a recent Samsung study that advocates that brands spend 40% of their budget on streaming in order to achieve effective reach/frequency goals.
So there’s that too.
What you need to do about it
If you’re Netflix, you need to keep your word and strive to create a better ad product for consumers and brands alike.
Ideally, you’ll combine forces with Disney, HBO, Paramount, and Peacock to try to impose much-needed standardization on the industry, from measurement and audience targeting to identity resolution and privacy. Because (and we can’t stress this enough) the more standardization there is, the easier it will be for brands to commit 40% of their budgets to streaming.
It will also involve learning how the advertising industry works and then innovating, rather than simply adopting the status quo. Many of us have high hopes for you in this regard, as you will come onto the scene in a position of great power, given the number of brands that would love to work with you.
Finally, don’t be greedy. It’s an easy thing to do with advertising, given how much brands are willing to pay you and the temptation to sneak in just one more minute can be great – just ask the broadcast and cable networks – but remember that the consumer experience is also important and a bad one can cost you more than the revenue you will get from that extra minute.
2. NCTC Considers Comcast’s Flex OS
In 2017, I was on the Stream TV Show (then called Pay TV Show) with Cheddar’s Jon Steinberg when we both had the Eureka moment wondering why no one was offering a turnkey TV platform based on streaming to replace the awfully unsexy linear pay-TV platforms that the majority of the more than 700 National Cable Television Cooperative (NCTC) members providing broadband then had at their disposal.
Fast forward to 2022, and it looks like the NCTC is looking to strike a deal with Comcast to allow its Xfinity Flex operating system to do just that – provide members with both a box and a turnkey platform. that they can offer their subscribers in place of whatever they have now.
why is it important
Steinberg and I just did the math. These linear platforms were expensive to maintain and relied on outdated set-top boxes that were rarely well-designed or user-friendly.
Also, negotiating carriage/retransmission deals with all the different broadcast and cable networks was extremely time and money consuming, given that a small cable company had limited leverage over a large network. and therefore probably ended up paying top dollar for the right to broadcast popular channels.
The proposed deal would appear to solve all of these problems, giving small MVPDs a well-designed streaming device with a user-friendly interface that allows them to offer streaming-based pay-TV service as well as high-speed broadband.
This is critical as MVPDs now derive the vast majority of their profits from broadband. Their pay tv services exist to create rigidity as most viewers still expect to get some form of pay tv with their broadband and it becomes increasingly difficult to switch providers if you have been slow to personalize said pay television service.
If NCTC members can get a turnkey solution that allows them to offer a product as good as, if not better than, the larger MVPDs they compete with, then that’s a huge plus.
On a macro level, this proves something we’ve been preaching for some time now: the big consolidation is coming and MVPDs are best placed to deliver these new packages that will be streaming heavy, with SVOD services playing the role they did before. by HBO and Showtime, and the FASTs playing the role previously played by the various cable networks.
If successful it will also give the bigger cable companies including Comcast some competition which is why on some level it’s odd that Comcast is pushing this, although I guess they did the calculation and that they are not all that worried.
Real competition will happen when (and if) telecom carriers — Verizon, AT&T, and T-Mobile — are able to deploy fixed-wireless 5G modems in the home.
But that still seems to be a long way off.
What you need to do about it
If you’re an NCTC member, this should be a great deal for you and a great selling point for potential customers. The Comcast name alone should do wonders for getting prospects to overcome fear of a smaller provider, and the well-designed, easy-to-use Flex interface will ultimately make them feel like they’re getting real value.
If you’re Comcast (or Comcast and Charter to be exact), this is a great way to introduce the device and the Flex interface to a whole new audience. I suspect you’re betting that most NCTC members are too small to seriously take a bite out of your business and that the profits you make from licensing deals will make up for any subscriber losses you incur.
Others have tried to corner this market – TiVo’s MobiTV comes to mind – but timing is everything and it looks like you might be in the right place at the right time.
If you’re an SVOD service, this is a great way to add subscribers, especially year-round subscribers to your service and get a third party to help you sell subscriptions. Who owns what in terms of data will be the tricky point here, but ideally some sort of mutually beneficial arrangement can be made, so it seems to be in your best interest to get on board.