As video content distribution evolves, new generations of consumers are shaping business strategy in ways boomers and Generation X never did.
Speakers during a Jan. 9 streaming video panel at the annual Consumer Electronics Show agreed that Generation Z, the youngest generation just now arriving at consumer age, are native to streaming video, and their comfort with the streaming platforms requires new means of engagement.
"Gen Zers think about TV differently," Hulu LLC Chief Marketing Officer Kelly Campbell said during the panel.
With the increased availability of multiplatform content, young viewers consider TV a gallery of shows rather than a grid of channels and networks, Campbell said. TV is "social currency," not only because of discussions between friends about popular shows but also in the ability to engage directly with the stars of popular programs, she said.
YouTube Chief Product Officer Neal Mohan said the ability to engage stars directly on the platform contributed to YouTube LLC's growth. The platform recently crested 1.9 billion monthly active users, according to the company.
"The real connection is not between audiences and the YouTube platform," Mohan said. "It's really the connection between the audiences and the creators."
Also driving YouTube's growth is strong recommendations. The average mobile viewing session has increased to about an hour on the platform, largely driven by stronger recommendations, with time spent on the platform up 10x in the past three years, Mohan said.
Hulu's research showed that the youngest generations differ from their adult peers in that they are much less likely to know what they want to watch when they begin a viewing session, making strong recommendations highly important for engagement, Campbell said. Hulu in 2016 bought personalization engine The Video Genome Project to beef up its recommendation capabilities.
Further, Generation Z is much more comfortable with advertising than older generations, Campbell said. Raised online with personalized marketing experiences, younger generations are more likely to find value in the advertising they are exposed to and less likely to mute an ad or change the program, she said.
Panelists agreed that there is a real opportunity for ad-supported video on demand. Farhad Massoudi, CEO of video-on-demand platform Tubi said many homes will likely supplement their subscription video services with advertising-based services.
"Most SVOD services are going to struggle to be a viable business, and I don’t think that's going to change in 2019 or 2020," Massoudi said.
The increase in content matched with limited budgets also creates an opportunity for transactional programming, Cameron Douglas, head of Comcast Corp.'s FandangoNow, said. The service provides access to specific shows, including programs originating from subscription video-on-demand services, such as "The Handmaid's Tale" and premium network television shows such as "Game of Thrones." As households manage their content budgets, Douglas hopes purchasing one-off episodes and seasons will be used more, in lieu of subscribing to entire services. In turn, he hopes more SVOD services, such as Netflix Inc. and Amazon.com Inc.'s Prime Video, will consider making their content available in a transactional window.
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