Technology, Driving Changes in Audience Habits, Requires Adaptation by Advertisers and Agencies

This is Part III of a blog series on Davis & Gilbert’s recent report, “Advertising Law: 2013 Lessons Learned & 2014 Practical Advice,” which explores the significant changes in the law relating to advertising, marketing and promotions in 2013, and suggestions for advertisers and agencies to think about and address in 2014. 

By James L. Johnston, Partner, Davis & Gilbert LLP

James Johnston, Partner, Davis & Gilbert LLP
James Johnston, Partner, Davis & Gilbert LLP

The year in entertainment was marked by fundamental changes in audience habits driven by technological innovation.

The television industry dealt with challenges seemingly on every front. With “House of Cards,” Netflix showed it could produce award-winning programming as sophisticated and compelling as anything on HBO or any broadcast network.

Perhaps more significantly, Netflix’s practice of releasing an entire season’s worth of programming at once accelerated a sea change in viewing habits, encouraging binge viewing and altering the very notion of “season.”

On the distribution front, networks continued to fight an uphill battle against technological changes that are reshaping how television programming is delivered to consumers. The networks unsuccessfully sought to enjoin DISH from offering its Hopper service, which enables users to mass record primetime programming, remove the commercials with a simple push of a button and then watch that programming on any device. Similarly, broadcasters so far have been unsuccessful in halting the launch of Barry Diller’s Aereo service, which uses miniature antennas to pull free over-the-air broadcast signals without authorization and transmit them to its subscribers’ connected devices; the dispute now is before the U.S. Supreme Court. Together, these developments threaten to erode both the advertising and the affiliate fee revenue streams of programmers, fundamentally altering the business model for delivering video programming to viewers.

The music industry, finally stabilizing after years of upheaval caused by illegal file sharing, saw its paid digital music business begin to falter. In 2013, for the first time since the introduction of the iTunes Store back in 2003, digital music sales dropped. The decline no doubt is a result of the maturation of music streaming services such as Pandora and the entry into the streaming marketplace by Apple itself, with iTunes Radio. As Netflix has done with video, these services have altered how music content is consumed.

Looking Ahead to 2014

Advertisers and agencies will need to adapt to these changing habits by:

  • Creating marketing opportunities within subscription video services that take advantage of their unique relationship to subscribers.
  • Capitalizing on sports and live event programming to communicate messages in traditional channels, while identifying new ways to connect with consumers in an on-demand DVR world.
  • Leveraging the shift from music sales to music streaming, where more significant advertising opportunities are available, taking advantage of user location, taste and preference data inherent in music streaming services.

 


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