TV Ecosystem Adjusting to Interactivity, New Revenue Models, Event Told

As interactivity becomes more of the TV experience, commerce is playing a larger role and could be a meaningful source of revenue, panelists said. People became much more comfortable with e-commerce in general during the pandemic, and Discovery saw that carry over to TV commerce, said Chief U.S. Advertising Sales Officer Jon Steinlauf. Discovery’s HGTV channel works with Wayfair’s Shop the Look, “where content inside of shows is inspiring people to order from the look of an HGTV show,” he said. Through a second screen, viewers can buy an item they see on a home improvement or home design show. Programs about the home, food and pets lend themselves well to driving commerce “but other formats not as much.”

Brands need to expand beyond being in the physical space,” said Miles Perkins, Epic Games’ film and TV industry manager. He referenced the game Fortnite, “where people could extend from being in the physical space into the virtual space.” Along the way, they wanted to personalize their experience through clothing, he said, citing a Fortnite-themed line of apparel from Balenciaga. With Fortnite a free game, “all the revenue” is coming from the personalization add-ons, he said.

Merchants are being challenged for viewers’ attention, and they need to “come with something creative,” Perkins said. “You can’t just throw a commercial out there and plan to have that level of engagement” because consumers may not want to watch a commercial or find a way around watching one,” he said. “But if you can create content that’s engaging that adds to their experience, that’s a whole new ballgame,” he said, saying some brands are doing so by venturing into the virtual space.

As TV advertising becomes more addressable, and there are more interactive advertising experiences, consumers are going to demand the convenience of shopping on the big screen, said Laura Tomlin, E.W. Scripps chief administrative officer. “We have to be there for them either with a call to action or selling something directly,” Tomlin said. Scripps is exploring and investing in the ATSC 3.0 space, she said, “and hopefully that will bring more interactive capabilities to broadcasters in the future.”

Perkins, whose role at Epic is to bring the company’s Unreal Engine to film and TV production, says virtual production accelerated in the past year because of the need for content. He sees that increasing as creators look to “get through the pipeline faster.” Competition among streaming services is creating a demand for content “unlike anything I’ve seen before.”

Perkins said the pandemic led to content creation with a “smaller footprint” that’s more efficient. He believes the shift from content consumption at the theater to the home is a long-term one: “There’s a massive opportunity here because I don’t think things will be quite the same as they were.” Consumers have “fundamentally shifted” their behavior, “and we have to meet those demands on the other side.”

What constitutes quality content has shifted, said Ira Rubenstein, PBS chief digital and marketing officer. News programs used to require their own crews to create a level of professionalism, for instance. “I think that’s all gone,” he said, referencing “podcasts on a video camera” that are available on free, ad-supported streaming TV services. He sees a further “explosion of content” with a “vast array of quality” that will continue to fragment the space.

Companies that are new to direct-to-consumer streaming will have to develop new skill sets, said Steinlauf. Media companies are "now in the retail game” after selling their networks via MVPDs. “We have to be better marketers to sell subscriptions,” then keep the subscribers, he said. He cited the new marketer journey of “free trial, roll to pay, eliminate churn and then how do you window your programming?” Content providers have to determine whether to put the top shows on streaming or cable first, or concurrently, he said: “It really does create an entirely new company for a lot of us.”

On the variety of ways consumers can watch streaming content today, PBS’ Rubenstein noted the different options have very different audiences. Those who watch PBS news coverage on YouTube “are never coming to the PBS app,” he said. More and more viewers are watching on the YouTube-connected TV app, not on the PC, “and that’s OK,” he said. The challenge for PBS is how to tie back a relationship to the local PBS station so that consumers understand it’s donations to the station that “support that content in the first place.”