How Cable Incumbents Are Transforming to Compete with Netflix, Hulu and Disney+
Incumbent providers have been moving fast to transform their offerings beyond the traditional bundle.
By Christopher S. Dean, Vlocity Vice President and General Manager of Media & Entertainment. Originally posted via Streaming Media.
Incumbent providers have been moving fast to transform their offerings beyond the traditional bundle. Altice, despite early Q4 losses, surged in December, added 17,000 broadband subscribers, a trend that wiped out losses in October and December. Comcast, with similar agility, added 1.32 million residential and 89,000 business connections to its high-speed service. The increase brought the subscriber total to 28.6 million, in a move that easily outpaced its cable TV losses.
In the European market, Sky has thrived in its first year as part of Comcast’s international portfolio. The provider boasted 394,000 new customer relationships and direct-to-consumer programming, giving profit margins a boost. On the LATAM front, Globo was the standout. In a recently announced deal with Roku, the Brazilian incumbent, through its Globoplay brand, will begin offering OTT live TV as well as on-demand movies and TV shows.
These providers have more than speed in common. They have also placed the customer at the center of the offering. As the traditional pay TV model dissolves, it takes with it unwanted channels and the Byzantine service model consumers have wanted to jettison for years.
The customer is the king of the new unbundled kingdom, with personalized content offerings drawn from usage data and guided subscription and service flows.
What remains to be seen is where the trend line will go in the next 12 to 24 months. Despite economic uncertainty and a market saturated with competing offerings, the importance of a subscriber-first mindset is essential, along with the ability to segment content for like-minded communities. In a recent study from PwC, friction-free usability, combined with personalized content, outpaced free trials and discounted offerings in terms of subscriber appeal.
The first step, however, is leveraging the right technology to deliver personalized content to subscribers across multiple devices. It’s a strategy that has served aggressive incumbents thus far, and one that will see new challenges with the arrival of Peacock and HBO Max and the continued enhancements of Netflix, Hulu, Disney+, and Apple TV. In the following piece, I will explain the rules of the new streaming landscape, as well as offer insight into what the technological underpinnings of the agile, omnichannel offering should look like.
Doing Right for Subscribers (AKA, Doing Right for the Business)
Subscribers expect providers to know their name—and what they like. Providers should be like the barista who’s already making the customer’s preferred coffee the minute they walk through the door. The locus of power has been inverted. The hegemony of the bundle has been replaced by the particulate value of the individual.
Incumbents who thrive and will continue to thrive are the ones that empower subscribers with personalized content, intuitive product recommendations, individuated messaging, and the most relevant next-best-action to serve them. The key to selling more is enriching the subscribe journey with digital transparency and intelligent engagement across each stage, from evaluation to purchase, care to retention, and advocacy to lasting customer value.
Such flexibility should extend across platforms and across business lines. Incumbents grow subscriber value across business lines by delivering seamless access to any content, consumed anytime, on any device.
They also prevent revenue leakage while standardizing bundled sales and service processes across all lines of business. With intelligent 1:1 engagement, incumbents can guide subscribers to select the products and services providing the best value for their needs, while protecting margins through sales process optimization.
When providers give relevant upsell choices for new content and service offerings, subscribers are happy to do the rest without the investment in traditional media buys and costly direct mail campaigns. In a halo effect between content and service, allowing subscribers to curate their content also trains them to self-care on their own terms.
When providers give relevant upsell choices for new content and service offerings, subscribers are happy to do the rest without the investment in traditional media buys and costly direct mail campaigns.
The upshot for incumbents is new efficiencies that reduce complexity of legacy product configuration, activation, fulfillment, billing, and servicing by transforming to a digital platform that ignites business-led innovation to help outpace industry disruption.
Inside the Omnichannel Offering
For media and entertainment providers, the subscriber-centric model requires a new technology platform. Legacy and homegrown on-prem offerings must be replaced with a hybrid, cloud-based platform, comprised of distinct and frequently customized layers.
Industry layer: At the most fundamental level, resting on top of the sales cloud, service cloud, marketing cloud, and commerce cloud offered by a provider like Salesforce, there is the industry layer. This is where the media & entertainment data model lives, alongside the media and entertainment process library.
Working together, the media and entertainment data model and media & entertainment process library extend core cloud capabilities with industry-tailored intelligence. Essentially, they form the brains of the offering, assuring that the OTT provider delivers specific omnichannel needs.
The secret is an industry layer that mixes rigor with ease-of-use. As any intelligent CRM should, Salesforce offers 120 data objects out of the box, which can be augmented with upwards of 300 media- and entertainment-specific objects. A healthy selection of 100+ media-focused business processes is also recommended, as well as a flexible and extensible integration layer for back-office systems. For example, "add new subscriber” is one such process a team could download and declaratively configure, without the need for custom code.
Enterprise Product Catalog: At the next level are the core product modules that the industry layer augments. The Enterprise Product Catalog hosts the attribute-based product capability of the platform. It allows providers to configure, price and quote (CPQ) their offering, based on individual interests of the customer. For instance, if a provider is onboarding a subscriber for the first time, one can say "would you like a print subscription to Barron’s as well as the digital edition of the Wall Street Journal?” Fulfillment occurs after the order is placed, and the subscriber enters the next stage in the customer journey.
Business Processes: At the operational level, there are the B2B and B2C subscriber management and care tools. These capabilities give providers a 360-degree view of the customer, based on usage and preferences, and enable the provider to manage the subscriber through their omnichannel lifecycle.
On an ongoing or as-needed basis, the tools allow incumbents to set the parameters for self-guided sales/service, dynamic promotions and personalized bundling. They also allow for omnichannel or purely digital commerce, empowering subscribers with guided selling, personalized cross-sell/upsell, and, when the customer reaches a critical junction, a next-best-action/next-best-offer (NBA/NBO) is suggested by the intelligence engine, able to accept signals and events from third-party AI engines like Einstein, Watson, and others.
On the service level, the subscriber management tools give providers a call center console. They also automate customer renewal and retention, as well as provide billing inquiry management.
The Importance of Exclusivity
Technology is essential. But it is not the silver bullet. Competing with Netflix and other new market disruptors depends on more than using the same, subscriber-centric tools. It also means leveraging the aggregate intelligence of the platform to pursue premium content that reflects the sensibility of the subscribers that support the platform.
If access to The Sopranos, Sex & The City, Dexter, Madmen, and Game of Thrones were essential to the pay TV universe, Disney+’s The Mandilorian, Hulu’s/Peacock’s Seinfeld rights score, and HBO Max’s Friends reunion to promote their library is the new coin of the streaming realm.
As with everything else in this market, Netflix led the way, creating a data-driven model of programming that the pay TV incumbents are replicating with compelling OTT offerings.
For the next 12-24 months, the question is not how things will change, but how quickly the cloud-based omnichannel will become standard and who will capture the loyalty of subscribers with the most personalized content and service. At stake is a market expected to reach $184 billion by 2027.