Netflix | Idea Marketing

May 30, 2014 by Chris Koch

I am in the vanguard of cord cutters, a small but growing group of cable TV subscribers who have decided to ditch the cable box in favor of a variety of geeky devices that serve up entertainment through an internet connection.

Between 2008 and 2013, 5 million (or 5%) of US cable subscribers cut the cord, with 1.3% brandishing the scissors in 2013 alone, according to Toronto-based Convergence Consulting Group.

When I told my wife and daughter we were trendsetters, they rolled their eyes and said I was just being cheap (again). Regardless, a change in the way we think about entertainment has swept through my household and 5 million others in the US: The TV is no longer a TV; it is simply the biggest screen we have for watching entertainment.

It’s All About Screens Now
That’s because our new content providers, Hulu and Amazon Prime, are as easy to watch on a computer, an iPad, or, in a real pinch, a phone, as they are through the Roku device attached to the former TV. (When we absolutely need to see live network broadcasts – my wife and daughter insisted on seeing the Oscars live, for example – I plug in a set of Radio Shack digital bunny ears to turn our big screen back into a TV for a few hours.)

The New York Times says that cord cutting doesn’t save much money but I can attest that in my house (near Boston) it saves $125 per month. Not exactly chump change. Plus, we never watched that much programming to begin with, so the savings are that much more satisfying.

As you might imagine, stories like these are starting to throw a scare into the cable companies and the entertainment industry as a whole. “In the U.S., consumers are seeing fewer differences between telecommunications and entertainment,” says Jack Plunkett, CEO of Plunkett Research. “It’s all the same thing. We have truly entered an era of convergence where data, entertainment, and communications are all falling into one package.”

Except now it’s the consumers doing the packaging rather than the cable and telecom providers. Research by my colleague Polly Traylor turned up three ways that the status quo is threatened:

Frictionless consumption. There is a reason why Netflix and Apple iTunes have been so successful: they both have world-class selection and make it extremely simple to find what you want and begin listening or viewing immediately.
Everything is an entertainment device now. Even the top providers of gaming platforms– Sony, Nintendo and Microsoft– are now vying for the same entertainment eyeballs as the studios and networks and are retrofitting machines into multipurpose entertainment devices that stream content from Netflix and other Internet video providers.
Disruptors are everywhere. I’m sure that by now you’ve heard of an Internet TV startup called Aereo that uses tiny individual antennas to let consumers in several U.S. cities watch live broadcasts on Internet-connected devices and store shows in the cloud to watch later. All the major broadcasters have sued for copyright infringement and pushed it all the way up to the Supreme Court. Needless to say, if a tiny, barely two-year-old startup is already having its day in (Supreme) Court (against its will), we are in the midst of interesting times for the entertainment industry.

How have you changed the ways you consume entertainment?

Marketing’s golden opportunity in innovation

April 22, 2011 by Chris Koch

Innovation is becoming more external to companies and more social.

When Netflix’s internal engineers struggled to get more than incremental improvements in the company’s movie matching algorithm, the company put the problem to the internet and crowdsourced a 10% leap in accuracy (of course, it didn’t hurt that they offered a million dollar prize). Even funding for innovation is becoming more external and social. A website called Kickstarter lets anyone—not just venture capitalists—fund innovation projects featured on the site.

Social media management and innovation
This shift in innovation has big implications for marketing. ITSMA’s social media research (free excerpt available) shows that marketing is responsible for monitoring social media and for training, governing, and supporting the organization in using social media. I think this means that marketing must be ready to take a larger role in facilitating the innovation process and in being the ears to the ground on all the innovation that’s happening externally to organizations out there on the internet.

CMOs can succeed where CIOs struggled
Marketing is in a similar position today to where IT was in the 90s. Back then, the rise of reengineering and enterprise software systems gave CIOs a unique opportunity to be facilitators of innovation. They were the only C-level executives involved in all the efforts to rethink the ways that companies did work across the entire organization. Sadly, few CIOs took advantage of this cross-company view to innovate the ways that their companies did things. (In CIOs’ defense, few companies felt comfortable giving CIOs the power to do this sort of thing.)

Move beyond brand stewardship
Today, CMOs have the same opportunity that CIOs did back in the 90s. Marketing is essentially in charge of collaboration both inside and outside the company through its leading role in social media. CMOs have to resist the tendency to view this stewardship as simply a continuation of their traditional role as the head of branding and communications. For CMOs, social media aren’t just for listening to what people are saying about the brand or pushing out messages. Social media aren’t even just for facilitating conversation and customer relationships. Social media are also for innovation, and marketing has a major role to play in making it happen.

Examples of the mandate for innovation
In a blog post this week entitled What CEOs Want from Their CMOs, Forrester’s CEO, George Colony, discusses the mandate for the CMO to keep an eye out for what’s ahead. I wrote a case study a few years ago about how IT services firm CSC has an innovation process that is facilitated by marketing.

So the question is, will CMOs step up to the innovation challenge? And will CEOs let them?

What do you think?

The TV Is No Longer a TV

Chris Koch

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