LAS VEGAS—Content providers are investing in more and more programming every year. As they do, consumer demands shift—keeping the market’s top players in an ever-evolving creative state. Pairing the right technology with engaging content may be the key to thriving in the market—whether that’s on the residential side or in hospitality.
“We’re competing in the land of the giants,” said John Martin, chairman and CEO of Turner, a Time Warner Inc. company, during a panel on reimagining television at CES. “If you don’t think Facebook and Google and Amazon are the land of the giants, think again.”
With regard to content spending among some of the top players in the space, Netflix is planning to spend up to $8 billion; Apple is expecting to invest about $1 billion; and Amazon is intending to commit $4.5 billion.
“Capital doesn’t ensure success, but scale certainly helps,” he said. “We spend $4 billion at Turner on programming expenses… That gives you a lot of heft in the creative community to make sure that the best projects are coming, and you get a look. It doesn’t mean you’re going to succeed, but I would much rather be on the bigger side of scale right now than when you look at small, little cable network groups that are really going to struggle to fight for relevance as we move ahead.”
While many of the top names in the landscape have the capital to throw around on programming, their end goals differ from companies like Hulu.
Showing enthusiasm about getting into the ring with some of the industry’s top contenders, Randy Freer, CEO of Hulu, said the following: “When you think about it, Amazon and their Prime Video—it’s a terrific product—but ultimately, their goal is about Amazon Prime. It’s about membership. It’s about selling things. Apple is about selling hardware. Google—advertising.” On the contrary, Hulu’s end goal is to ultimately provide its entire subscription base with a controllable entertainment, sports and news experience, paired with or without ads, and available on-demand and live.
“We’re incredibly excited to sit there and think Hulu is going to go head-to-head with the likes of Apple and Amazon and Google and Facebook,” he said. “Quite honestly, I think we have a real opportunity to create a complete experience and win.”
His confidence stems from Hulu’s evolution. “[Hulu is] almost 10 years old, but really it was created constantly in a defensive position,” he said. “It was a defense against YouTube at one point in time. Then it was a defense against Netflix in another point in time, and a defense against paid TV erosion. I think now we’re in a place where we’re becoming very offensive in our investment, very aggressive in our marketing, very focused on adding subscribers.” Despite generating $1 billion in digital revenue last year, Hulu is still behind.
Many of the larger companies are generating digital ad revenue faster. In the first three quarters of 2017, with regard to digital ad revenue, Google generated $61 billion and Facebook $27 billion, according to recent reports. JPMorgan expects Amazon’s ad revenue to jump to $4.5 billion this year.
“When you think about competing against these large digital companies that are doing incredibly well in terms of monetization of digital ad revenue—they’re wildly successful companies, and I don’t [mean] to be negative—but they’re still largely utilities,” Martin said. “The last time I checked nobody really has a massive connection with their search history, and nobody has a massive connection with their shopping cart… There are going to be a handful of premium content providers that are going to be able to compete on a global stage, and then there’s going to be a massive shakeout of marginal players that are going to go away in the next 5-10 years.”
No matter the industry, companies rely on technology to flourish—especially content providers. “Every company in today’s world needs to be a technology company,” Freer said. “You have to be great at the technology it takes to deliver your product. You can’t fall down on that—whether that’s your distribution, whether that’s your transport, however you look at it. If you’re not great at the technology that bridges the gap between you, your manufacturing and consumer, you’re never going to be successful in this world.” Technology also helps evolve the advertiser-consumer relationship.
“It’s crucial for us to work with brands on really looking at how we create a relationship between the brand, Hulu, the price of Hulu with ads to a consumer in a way that they respect, they understand and they value that transaction,” he said, acknowledging data’s role in connecting the players.
There can no longer be a one-size-fits-all approach for brands. Customers consume content in a number of ways, and brands able to adapt to ever-changing preferences could find themselves in better positions.
“We’re going to have to be able to program for people in the way they want to consume the brands,” Martin explained. “That’s true for Cartoon Network and Adult Swim, and even our entertainment brands, CBS and TNT.”
Having the technology to deliver the content is one thing, but creating watch-worthy content is another. For example, the success of Hulu’s The Handmaid’s Tale gave the streaming service a bump in a few ways.
“One, it brought the creative community to Hulu in a way it wasn’t there before,” Freer said. “It drove [subscriptions]. We know that post Emmy awards, as The Handmaid’s Tale seemed to pick up traction, a fair amount of subs came in, and the first show they watched was The Handmaid’s Tale.”
The hit also impacted Hulu’s employees and culture in a positive way. “All of a sudden, what may or may not have been achievable, everybody believed we can aspire to this much higher bar,” he said.
“Creative opportunity and creative excellence is something our owners, Time Warner being one of them, have great experience in,” Freer said. “You see how hard it is for other companies and others to figure out what that right mix of how do you drive it, how do you make it work and how do you make it so it’s not just a one-off?” HB