On June 25, Aereo lost a huge battle in the Supreme Court which pitted established broadcast networks against the online streaming start-up.
A quick recap: Aereo is a company that lets consumers stream live TV over the internet. The Supreme Court shut them down for copyright infringement, saying Aereo antennas were redistributing private content without permission. The media is calling it the death of technological innovation in the television industry.
But here’s the thing: they're wrong.
Take a look at Netflix, which provides subscribers on-demand, commercial free access to an enormous database of content (TV shows, movies, documentaries, you name it). Netflix seized an opportunity to innovate in a changing industry — and it’s working. Netflix reported 31.7 million US subscribers at the end of 2013, a major jump from its 27.1 million in 2012. And last year, the Netflix series “House of Cards” earned itself an Emmy and made history as the first online program to be recognized among network and cable dramas.
What’s the point? Digital is changing the media and entertainment industry, and those who are able to evolve (like Netflix) are emerging as winners. Companies in every industry can learn some important lessons from the failures and successes of companies navigating digital disruption in entertainment.
Prepare for the Masses
More than half of Americans watch streaming video on a weekly basis. Just this past month, the World Cup broke all kinds of records for online streaming, even causing ESPN to crash due to the massive influx in traffic. LeBron James’s recent exclusive announcement on SI.com overwhelmed the internet. Paul Fichtenbaum, sports group editor for Time Inc. told USA Today: “I’ve never seen a spike like that in the 10 years I’ve been attached to the website.” The announcement was a surprise, and most sites buckled under the traffic — including Lebron James’s personal site.
The lesson? Flawless scalability is essential for any website — a breaking news story might bring the world to your site. This new generation of digital-first consumers are highly active online, whether it’s watching TV, following breaking news or interacting with your brand.
And it pays to be ready for this heavy traffic — it’s bringing in revenue and lots of it. CBS just reported their online content generates 20 percent more revenue than television per viewer. Companies can reap the same benefits if they prepare for the deluge by boosting up backend infrastructure and opting for cloud platforms that can scale to accommodate a rapid influx of site visitors. When sites can’t keep up (remember the Healthcare.gov fiasco?) it invites a backlash from customers across the web, damaging your brand. Take preventative measures to ensure your site is always up and running.
Focus on Community Experiences
Another important trend in the TV industry is the evolution of “second screen” experiences. Consumers are interacting with TV content online and tweeting, posting and blogging from multiple Internet connected devices. It’s a conversation that starts before the show premieres and continues long after the season finale.
For brands, inviting customer engagement online like this is essential. A recent publication by McKinsey & Company explains how brands that engage consumers online in fan communities and forums (a la Starbucks’ frappuccino.com) are not only better able to assess consumer interests but also encourage customers to become brand evangelists.
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