The power of AI

LONDON SCREENINGS: Mark Moeder, CEO of Denver-based data firm Symphony MediaAI, argues that distributors need to get a grip on data to boost their sales negotiations.

This year’s virtual London Screenings will do more than showcase the newest programmes for global distributors. It will also showcase the growing importance of data – especially artificial intelligence (AI)-assisted data mining – in negotiating distribution agreements.

Distribution agreements have long been negotiated based on historic rating and subscription data. But the Covid-19 pandemic and economic downturn sped up the cord-cutting and streaming revolution that was already underway. As a result, subscribers have grown even more accustomed to personalised content-on-demand, tailored to their preferences, available on a multitude of platforms. Licensing deals are more complex than ever.

As people spent unprecedented time inside in 2020 due to lockdowns throughout Europe, their entertainment options quickly narrowed. Millions signed up for new pay TV and streaming services.

The overall skyrocketing consumption of content shows no signs of slowing down. According to BARB, which monitors UK viewing trends, content consumption in the first week of 2021 in Britain averaged 210 minutes a day, 17 minutes higher than one year ago.

Globally, a Juniper Research study found that nearly two billion people will subscribe to on-demand video services in 2025, a 65% increase compared with late 2020, when viewing hit record highs.

These trends are occurring throughout the wider EMEA region. So-called ‘coronavirus escapism’ is reportedly transforming media consumption in the Middle East, where television viewing, VoD and other streaming increased by around 50% in the past year, according to CG Ramadan/Covid-19 Research. North Africa saw similar growth.

Adding to the complexity of rapidly changing viewership trends is the growth of advertising-based VoD (AVoD). Viewers are tightening their purse strings due to economic uncertainty. Consumers are more receptive now to promotional interruptions if it lowers their monthly bills.

In fact, more than 80% of UK consumers are willing to watch ads in exchange for free streaming content, according to an Integral Ad Science study. Almost 60% plan to begin using AVoD during the coming year. Most importantly, nearly two-thirds stated that they wanted to save money, while 30% felt as if they already paid too much for SVoD services.

The trend is here to stay. Once coronavirus is brought under control, nearly 90% of European viewers believe they will watch the same or more AVoD. On the flip side, subscription fatigue is likely to cause 24% churn in SVoD and 30% in live TV.

Smart distributors know that shifting consumer trends and multi-platform distribution models call for more sophisticated monetisation strategies. What attracts one customer may drive churn for another, even within the same demographic segment. To understand why, content distributors need more powerful tools to extract insight from the troves of data they’re collecting on customers and leverage it in negotiations.

AI is the best way to arrive at precise, objective and cohesive insight. It goes where humans can’t, engendering the predictive forecasting the industry needs to achieve forward-facing stability in licensing agreements and more.

Bringing data to the drawing board
Whether geared towards broadcasters, streaming platforms or cinemas, distributors can no longer say they deserve a princely sum for their latest content based on past programmes’ performances.

AI modeling can demonstrate whether new ideas will replicate past successes. Distributors must consider which audiences and streaming platforms will most likely increases the value of their offering. Regular and actionable insight is paramount to navigating the intricacies of 21st century contract agreements.

Distributors need a plethora of information to meet financial challenges and achieve revenue assurance in the face of dozens of content distributors seeking the upper hand in negotiations. They can find it. AI can generate knowledge unforeseen by humans using machine-driven predictive forecasting.

For instance, predictive forecasting can assess viewership based on specific directors, producers, genres and actors – in any combination. AI can mine data to explain how a certain director fares in different genres and how lead actors draw audiences, both individually and in past experiences working together. Owning this data gives producers a powerful negotiating advantage, especially now that an untold number of advertising dollars are up for grabs with the expansion of the AVoD market.

A distributor may generate data on its demographics and viewership down to the minute of the day, analysing log-in patterns and predicting churn for those very same directors, genres and actors.

Without this critical information, costly missteps will abound on both sides. Distributors may decide to release a series at the wrong time or focus on the wrong titles for their audiences. That could mean fewer viewers and less leverage in future advertising negotiations. These slip-ups, easily avoided with AI, leave money on the table and executive decision-makers taking the fall.

Why AI?
AI is commonly perceived as cost-prohibitive, difficult to integrate, or no better than current processes. That’s a potentially expensive misperception.

Traditional data aggregation is time-consuming and requires significant resources. Insights like viewership trends and advertising opportunities are lost as decision-makers miss the forest for the trees. AI and unsupervised machine learning in particular can reveal data correlations that humans may overlook. Further, AI supports back-office processes. It gives valuable data scientists and business analysts alike more time to devote to decisioning.

Still, too many media and entertainment distributors rely on limited data resources that are compiled manually via error-prone and lengthy processes. These processes can generate incomplete data (which is as useless as faulty data or, sometimes, no data at all). Distributors that incorporate AI into their business models gain a tremendous benefit.

This year’s London Screenings offer more than the chance to buy and sell new content. They’re also a wake-up call, and therefore an opportunity, for distributors who have yet to harness the power of technology.

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