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What does HBO Now mean for marketers?

By
April 10, 2015

Jim Porçarelli is executive vice president and chief strategy officer of Active International

Jim Porçarelli is executive vice president and chief strategy officer of Active International. © Matt Greenslade/photo-nyc.com

By Jim Porçarelli

Television viewership, once built exponentially over decades, is crumbling.

There are seemingly endless options for cord-cutters who are opting to receive their content on-demand.
With Dish Network, CBS and Showtime establishing their own standalone streaming options, the trend took another giant leap forward recently with the announcement that HBO will be partnering with Apple on a new streaming content service.

Set for change
Set to launch in April, HBO Now will be an over-the-top, subscription-based streaming service available exclusively on Apple TV and mobile devices until it expands to other platforms.

The service will provide access to all of HBO’s original programming and to its catalog of Hollywood films. It will cost $14.99 per month and, according to Nomura analyst Anthony DiClemente, it is expected to attract 1.25 million subscribers by year’s end.

As the popularity of streaming content grows, it is not surprising that the number of cable subscribers has fallen during the same time period.

Last year, approximately 1.4 million of all new households either canceled their subscriptions or never subscribed to a cable service, according to MoffettNathanson.

Furthermore, the pay TV industry has lost almost 4 million households in total since 2010.

This shift away from traditional pay TV will likely accelerate as more content moves from broadcast to online platforms.

The National Football League recently announced that it plans to air an upcoming, mid-season game this fall only on a national online platform, rather than on broadcast TV.

If the NFL experiment proves successful, more sporting events, which are a significant content lure for many cable subscribers, will hasten their migration to online platforms, taking sports fans with them.

Not surprisingly, many TV companies are now offering viewers leaner, less expensive cable packages to maintain their subscriber base.

For instance, both Comcast and AT&T now offer TV bundles that cost less than $50 per month.

So what does this industry-wide shift mean for marketers?

Video gaga
It is both a challenge and an opportunity.

While traditional TV viewing behavior that was established decades ago is fading away, demand for video content is at an all-time high. This is urging marketers to reconsider how they allocate their budget across traditional and emerging media channels.

Marketers must now go beyond targeting the standard and static 18-49-year-old audience through traditional TV.

The upside of a fragmenting digital media marketplace is that it is becoming easier to identify, capture and engage specific consumer demographics with personalized content.

Consequently, marketers are developing and executing more focused, effective campaigns across digital, mobile and social channels and seeing more substantial marketing ROI.

MARKETERS WILL NOW need to spread their budget across this ever-widening range of media channels.

To do this successfully, marketers must invest in the technology and analytics to manage a much more complex advertising model, delivered by the programmatic platform.

While the shift away from traditional TV may cause initial uneasiness among marketers, the good news is that marketers are now well-positioned to create campaigns that resonate more closely with consumer wants and deliver higher returns than traditional TV channels are capable of doing.

Jim Porçarelli is chief strategy officer of Active International, Pearl River, NY. Reach him at jporcare@activeinternational.com.

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