Eight billion dollars. That’s the colossal amount invested by Netflix to produce series and movies in 2018…
…With the growing number of subscribers which moved from 54 million in 2014, to over 120 million in 2018, Netflix has appeared as the market leader for paid streaming offers. These past years, the entire video eco-system has evolved in terms of proposed offerings, the way in which they’re consumed, or even the formats even.
A review of the trend that’s upsetting the balance we’ve known for so long.
We’re several years after the war, in 1949 to be exact, the year television became common place. No advertising yet on our small screens: they appeared two years later in 1951 in the shape of sponsored shows. The shape of ads such as we know them today appeared in France in 1968 only.
To summarize, television has been popular for little less than 70 years and advertising on the small screen for 50 years. But let’s get back on track and the subject at hand: streaming, and the way in which it has over the course of several years, swept away half a century of television viewing.
If 2016 was the year of the streaming revolution in music, without a doubt, 2018, will be the year for the big change in video streaming.
“All of a sudden, everyone wants to be Netflix”, writes The Economist. Streaming has revolutionized our perception and consumption of video. In the United States, numerous paid video streaming platforms (SVoD) have launched into a mad rush to sell you “television on the Internet”. The expression would make one smile if it weren’t so oxymoronic.
But this race doesn’t only count the “usual” actors in the market. Besides Netflix, Amazon Prime, or yet again Hulu, you’ll find all the big names in Hollywood, television as well as media: Disney, Warner Bros, 21st Century Fox, AMC, and even Apple. Each of these companies is at the point of investing in the streaming market, and this confrontation of the giants will be played out with several billions of dollars!
For this year along, Netflix will invest 8 billion dollars to continue increasing its offer; Apple will shell out 1 billion to produce movies and series for its platform; several big name Hollywood studios and media groups have invested several billion in Hulu. I’m thinking notably of TimeWarner (which owns Warner Bros, HBO, and CNN), and The Walt Disney Company (which owns obviously Pixar, Walt Disney, and 20th Century Fox).
The actions of these large corporations are the result of a simple observation: streaming attracts more and more people, and to stay in contact with consumers, one must adapt to their habits of consumption. Return on investment for television advertising is down? So be it! Let’s evolve and touch the consumers where they really are. Because TV viewers have not disappeared. They’ve simply moved away from their TVs to video content with no advertising, and over which they have greater autonomy.
This is the issue which advertisers face: how does one advertise on a channel that is attractive because it has no advertising?
Reduced offers, product placement, work on images, …, there’s no shortage of ideas for advertising on streaming.
A first solution was rapidly implemented on the American Hulu platform. The idea is very simple: offer a reduced-price subscription to the platform ($7.99 a month instead of $11.99 a month) in exchange for viewing ads. A classic model with a traditional format maybe but it works with the users: January 9, 2018, Hulu announced having reached 17 million users world-wide with advertising revenues of 1 billion dollars in 2017.
The second model is subtler but just as effective.
At present, Netflix categorically refuses that advertising in the shape of ads accompany its content; However, it accepts product placement. Whether for food brands, clothing worn by characters, vehicles used in production, all means are good to place brands center stage.
To illustrate what I mean, you need only take Stranger Things: In this series, the character Eleven has a favorite food: waffles, but not just any waffle, Eggo brand waffles. Clever product placement? Not even.
Kellogg’s which owns the Eggo brand simply allowed the use of its brand. It wasn’t even an intentional and paid product placement. It’s even more surprising when you learn that the brand is mentioned more often on social media than half the Super Bowl advertisers. And the number of times the brand was mentioned on Twitter and Instagram increased 986% between September and October 2017.
But that’s not the only example. In the same series, Coca-Cola and also Pringles were successful in obtaining contracts for screen appearances.
We also have House of Cards which is the perfect series to illustrate this new format for streaming. General Motors supplied the vehicles for the American production. Dunkin’Donuts, the renowned restaurant chain, appears numerous times in the series’ episodes. Apple and Samsung are highlighted numerous times in the series and intentionally. The result is product placement that’s discreet and effective: the users hardly notice but their eyes capture the information and store it, unconsciously.
To give you an idea, to see your company in an Amazon or Netflix production, you’ll need to spend between $50,000 and $500,000. Everything depends on the placement made (time, relevance, visibility) and the series it’s placed in.
The third possibility for brands to appear in series of the moment is the layer. It’s an overlay, a layer, that is added to images in an existing series, and this time, AI plays a role. In this context, Accenture has used artificial intelligence to place, personalize, and embed in the most effective manner possible logos and products to appear on screen. The idea is to work a series’ images post production to place any element relative to the brand.
“We wanted to be able to monetize huge back catalogues of existing video content as well as offer content creators a way to place advertising in a non-disruptive way” says Alexandre Naserri, Accenture R&D Director.
The idea on paper is promising and simple. Advertisers could, in post production, add their logo on components in the series and/or the movie in question, quick and dirty, a couple clicks and the deed is done.
Reality has confirmed the former… but not quite the latter. The idea does hold promise, and Accenture even estimates that this new format could generate 1 billion dollars in revenues for advertisers within 5 years. Accomplishing this is a different matter. Accenture R&D spent an entire year developing this system with results that are satisfactory enough to be used by the SvoD platforms. But there’s still an enormous amount to be done before reaching the apex of this technology’s potential.
AI is also used in this project to estimate the price an advertiser would pay to appear, based on several specific criteria for each case (size, length, position, etc.) AI is used to behave like a human and simulate his/her attention. So now instead of a sample of 40 to 50 people to understand where their attention lies, one can use AI. This allows us to better understand attention zones but also above all, one can now determine with greater ease the value of a placement (logo or product) with regards to the user’s attention zone, at a given time.
So, sheer genius on the part of advertisers? Not really. We would qualify this as rather a smart move given the current context.
Besides, according to you, how far back was the first product placement in movies made? Towards the ‘50s? The 60s?
No. What we can consider the first product placement dates back to 1896 where one can see a case of Evian in the forefront of a silent film by the Lumière brothers, “Embarquement”. Yes, so product placement has existed for over 100 years at the movies. This isn’t new, but we can modernize it.