Well, they were a lot more gracious than I was. The end result was an interesting back-and-forth with Bryan Hill of Interxion about the cord-cutting phenomenon, the fundamental shifts he is seeing in media consumption, and why. I'll pull some stats and highlights from our convo, and wrap with some enterprise takeaways.
Quick background on Interxion: they bill themselves as a "leading provider of colocation data centre services across Europe supporting over 1500 customers in over 40 Data Centres." Though Interxion's deployments are in Europe, their customers are international in nature, including some of the biggest social media and advertising companies. They support several key verticals, including the cloud, connectivity, and financial services verticals. It's their heavy involvement with media companies that gives Interxion sharp insights into changing media habits - something we are obsessed with at diginomica, for obvious reasons.
Fundamental shifts in media consumption
Hill's online media experience goes back to accessing the Internet via Telnet, so he's seen enough hype cycles to scare a Gartner analyst. His 20+ year background includes video startups and the early days of web marketing. That begs the question: is this current media shift different, and if so, why? The first big shift Hill sees is the democratization of content:
Content consumers are becoming content creators. This is partly to do with the democratization of content creation, with technology enabling you to take photographs that are - technically at least - nearly as good as those created professionally. Then you come into a new world view of e-sports, and video game spectating with the likes of Twitch, where people are becoming broadcasters by themselves, broadcasting their own network to what we've seen on the multi-channel YouTube networks. Now, particularly with Facebook's push for live streaming, that means we effectively become broadcasters ourselves to the masses, and in a live fashion we couldn't do before.
Tied directly to that trend is mobile consumption:
The second one for me - which is really interlinked with it - is mobility. One data point that always sticks with me: in Western Europe, currently the mobile data usage, not mobile as a fixed line, but data mobile usage, is about half an exabyte a month. By 2019/2020, this will be 3.1 exabytes a month, so it's going to go up a multiple of five or six times. Mobile changes consumers: they want the right content to be delivered in real-time now, to whatever device and wherever network they are.
Changes don't mean smooth sailing - consumption obstacles
Many of these trends are double-edged, or come with an undertow companies must reckon with. Take for example the pros and cons of data-based personalization, or what Hill calls "unitasking":
The second piece is enabling that move from multi-tasked to uni-tasked, which means I can be treated as an individual, and I'll want to be treated as an individual. That raises questions about analytics versus privacy, and what trade-off I'm willing to make for my data in return for a more relevant service.
That's not the only tradeoff: the surge of live streaming poses another round of headaches for media companies, copyright holders, or for that matter, any company that wants to exert control over meetings and events. That's what happens with live streaming tech is democratized:
If everyone's live streaming, and the technology is enabled to do that, where do we reside in terms of intellectual property rights for events or sports events? We saw some of that with the Floyd Mayweather boxing match. That's a big topic all by itself.
Consumption experiences are still hamstrung by data silos and geographical barriers, for example the infamous Netflix VPN ban the company has started to enforce to prevent streaming from different countries:
We've had the proliferation of content, but don't have an overarching service across all those proper curation services. Netflix is famously described as an analytics company that provides content as well. But that's across their own service. Who's providing that level of curation across all the multitude of content services and feeds that will exist in the future, so that someone's giving me exactly what I want? Is it Facebook or is it Google or is it Apple?
So is cord-cutting real, or hype?
Which brings us to cord-cutting. While I agree that cord-cutting is having some impact, there are two major barriers to the "disruption" to TV some are salivating over:
- I can't just subscribe to one user-friendly service for all my content. Netflix has some good stuff but is hardly the one-stop-shop some proclaim it to be. To get quality programming, I am still paying for five or so services, including HBO and Amazon. And forget about watching when I'm in other countries.
- Live sporting events, a big key to cord-cutting, are not universally available online. The companies that own these contracts have specific - and often expensive - access terms that are not portable across countries.
Getting back to that PR pitch, how do you respond Mr. Hill? What he is seeing is closer to "cord-shaving" than cutting:
If you look at a typical cable subscription, you might have access to a couple of hundred channels, let's say a hundred to be very conservative. Something like 95% of the content is viewed between 11 and 15 channels. There's a lot of content there that isn't viewed that you're paying for access to. I agree, based on the landscape in Europe, we're not going to see - and we haven't seen - cord-cutting. What we're seeing is cord-shaving. It's going to come down to paying for a few content sources across that niche, maybe one that has premium sports content, one that has a wide video-on-demand library, one that has a premium up-to-date entertainment content.
Hill shared more trends from Europe:
- Particularly in English-speaking territories, Interxion sees OTT providers being very successful. (OTT isn't a simple term to explain but it's basically streaming media content that ISN'T provided by the IPS, but by a paid delivery outlet like Netflix or Hulu).
- American media content distributed on the BBC or Sky has also been very successful. (That bodes well for Interxion's data centers).
- The UK is the most advanced OTT market in Europe. Germany is currently probably the least, and then it varies by territory.
- Quality of service is a big issue for the big content owners. The tolerance in terms of number of seconds of poor quality is getting shorter and shorter and shorter, down to three or four seconds.
- The content providers are dealing with customer churn issues, because once you've binged on one company's content (e.g. Netflix's "House of Cards"), you move on to the next.
Hill acknowledges streaming live sports are still in their infancy. Viewers want big screen action and a higher quality of service that we're seeing now. Hill sees a breakthrough with a lesser-known entity, Major League Baseball Advanced Media, which he calls "the greatest technology company that no one's ever heard of," due to how they are providing real-time analytics that enhance the viewing experience:
In the U.S., they provide all of the live sports and real-time analytics for baseball, but they also provide the OTT service for HBO Now for Game of Thrones. What they're providing as well is that real-time analytics, adding value that gives you trajectories or pitches and average speed of running from first to second base.
Hill thinks these interactive features will be one draw that pushes live sports further towards mobile/online consumption.
My take - and advice for enterprises
It wasn't the most intense debate; Hill and I agree more than we differ. I do think live sports could be an (ahem) tipping point for cord-cutting; it's sports that lock folks into big cable/satellite contracts. Hill conceded that cable companies are going to fight this tooth and nail, which creates the predicament that most big cable TV and content providers are working against consumer's "consume it anywhere" interests. I don't see how that gets resolved anytime soon.
Hill does see "fundamental change", especially when it comes to the under 25 demographic. This is the generation that is geared towards creating and uploading their own content. Or you take a video game community site like Twitch; Hill cited stats that the 20+ hours a week average on Twitch is coming directly from TV viewing time.
How that changes as users get older and settle into family routines remains to be seen, but Hill said that aside from the content creation themes, which do correlate with a younger audience, mobile consumption shifts in Europe are similar across generations, up into the 55+ demographic.
For diginomica readers, the most interesting part of our convo came at the end, when I asked Hill for advice on how enterprise marketers and media producers should think about content. I explained to Hill that too often, enterprise content doesn't pass the relevance test and that marketers fall into the trap of trying to "go viral," creating cheesy content with little brand relevance. Hill offered this advice:
- Excellence in UX and content delivery - make the experience of consuming the content easy and guaranteed.
- Achieve relevance by understanding your community - align your content distribution with the cultural values of your community and the way they think: "There is no substitute for being authentic."
- Be wary of trying to monetize your content and alienating users, particularly with excessive advertising - "One company - I can't say who - made a big mistake because they created all of the relevant content, but they then tried to monetize against that. The advertising was programmatically delivered and was in no way culturally aligned to their audience."
- Build a content platform that makes engagement easy - "If your audience is a group of IT professionals or CIOs, everything around that content should encourage those people to comment on it, share and provide insights, ask questions. All that has to be aligned to the way that community operates and works."
- Viral pursuits can undermine communities - If you try to monetize or you try to create virality outside of that cultural empathy, you risk losing your audience.
Sound advice. Hill might not be an enterprise content guy, but he'd fit right in - or shake things up - depending on which marketing department he found himself in.