Netflix vs. HBO: Using social intelligence to predict long-term commitment


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One of the common problems that companies and agencies face today is determining the impact of new product development on brand perception. How well are your efforts really driving brand affinity?

Lisa Tanaka, Research Director of SDL’s Professional Services team and Stacey Megoloff, Social Research Analyst, will walk you through a case study of how this can be done in a rapidly changing industry—the online entertainment industry. Learn how adding original content as a point of differentiation for networks such as Netflix and HBO has directly impacted their brand in this heated industry competition. Find out which of the brands is driving brand advocacy from their original programming.

What you’ll learn:
• An effective way to measure the impact of innovative program development on brand affinity
• Best practices for using social intelligence to inform your brand strategy
• A new methodology for measuring your efforts and their effect on the end-to-end customer experience

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Netflix vs. HBO: Using social intelligence to predict long-term commitment

  1. 1. SDL Proprietary and ConfidentialSDL Proprietary and Confidential WHAT ARE YOU GOING TO WATCH? Netflix vs. HBO: Using social intelligence to predict long-term commitment
  2. 2. An evolution of viewing entertainment Viewers begin with watching major network programming Then comes HBO, Showtime, Cinemax— “A theater experience in your living room” The wave of “Primetime is anytime” is birthed with Netflix and Hulu revolutionizing the entertainment arena Begins with… Along comes… Next generation… 2
  3. 3. Original programming - the latest battle HBO brings viewers new and competitive original programming in a push to win your attention, subscriptions, renewals, and brand loyalty with programs such as Trueblood and Game of Thrones Netflix competes in the original programming battle with the creation of House of Cards and Orange is the New Black. Original programming becomes a new territory for Netflix as they’re looking to find innovative ways to capture your attention and dollars 3
  4. 4. Today’s focus - who is winning and why? Using social intelligence to: • Highlight the changing landscape of entertainment viewing • Identify the extent to which original programming is creating a competitive advantage • Evaluate customer journeys to understand distinct points of difference • Understand which brand is ultimately delivering what matters to create long-term brand affinity 4
  5. 5. Social intelligence gives you a contextual view into your customers’ experience 5
  6. 6. 80% Businesses think they understand their customer 8% 6
  7. 7. The value social data brings *Source: Gartner By 2015, the 20% of enterprises that employ social media beyond marketing will lead their industries in revenue growth.* 7 7
  8. 8. Customer Relevance Score (CRS) SHARES Brand Commitment Score (BCS) ADVOCATES Our social intelligence tools Product Commitment Score (PCS) SHOPS Driving measurement from the business goals 8
  9. 9. Measuring who is winning the game and why… • PCS allows us to look at viewers’ desire to subscribe and/or continue subscribing to a particular network • BCS allows us to look at the emotional commitment viewers have for the network • This connection contributes to whether or not viewers become brand evangelists and be loyal to the network Brand Commitment Score (BCS) ADVOCATES Product Commitment Score (PCS) SHOPS 9
  10. 10. So let’s get on to the winner… 10
  11. 11. +/- 30 Million subscribers Brand affinity is about more than just subscription numbers… This industry and the consumers are multi-dimensional: • We wanted to see which brand is better enabling its customers along the emotional and purchasing journey - knowing there are a number of elements that contribute to whether or not a consumer subscribes and/or continues a subscription 11
  12. 12. The actual programs viewers prefer to watch on a particular network Creating a difference in long-term commitment Content - the programs The actual experience viewers have when interacting with the network Experience - the delivery The actual success of a network in connecting its programming with its overall brand Branding - the alignment Three main elements 12
  13. 13. Original programming – standouts 13
  14. 14. 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 38 40 42 44 46 48 50 52 Arrested Development House of Cards Orange Is The New Black Hemlock Grove True Blood Game of Thrones The Newsroom Boardwalk Empire Content is important • HBO is the leader in creating strong emotional connections with their programming content • Overall Netflix trails HBO – but not by much BCSscore (representedbylinegraph) BCSvolume (representedbybargraph) BCS: programming scores and volume HBONetflix
  15. 15. “I love, love, love The Newsroom. Please bring it back for Season 3!!!!!!” “I think True Blood and Game of Thrones should have two seasons a year. Omg that would be soooooo great!” “I started watching the Netflix show Hemlock Grove and I'm so hooked. Like a drug....bam. Episode number 5” “Just finished Orange Is The New Black. Easily the best show on TV. Netflix is killing it w/ Arrested Development and Orange. #OITNB” How does emotional connection to programming affect overall long-term commitment to the network? 15
  16. 16. • Despite HBO viewers having a stronger emotional connection to HBO original programming, this does not necessarily translate to overall loyalty for the ‘HBO’ brand • Netflix is building stronger emotional commitment to its overall brand 40 42 44 46 48 50 52 54 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Content is important, but… BCS: network scores BCSscore HBO Netflix HBO has strong emotional connection to their programs, so shouldn’t they have the strongest emotional connection to the brand? 16
  17. 17. The customer journey to brand loyalty 6 7 85432 Eight core emotional states 1 17
  18. 18. The customer journey to brand loyalty 6 7 8 When you become aware of a gap that needs addressed, this creates initial stages of interest or intrigue in brands that might satisfy that need 5432 Eight core emotional states 1 AWARENESS 18
  19. 19. The customer journey to brand loyalty 1 6 7 8 When you connect your need or desire with potential brands and create your consideration set AWARENESS 2 CONNECTION 543 Eight core emotional states 19
  20. 20. The customer journey to brand loyalty 1 6 7 8 You explore the brand and react reflexively to emotional impressions and responses AWARENESS 2 3 CONNECTION EVALUATION 54 Eight core emotional states 20
  21. 21. The customer journey to brand loyalty 1 6 7 8 You are attracted enough to the brand that you believe the assertions that brand makes and you become excited about the hopefully positive experiences to come AWARENESS 2 3 4 CONNECTION EVALUATION TRUST 5 Eight core emotional states 21
  22. 22. The customer journey to brand loyalty 1 5 6 7 8 You buy the brand and begin to have reactions to it. These reactions can be positive or negative and can be conscious or subconscious AWARENESS 2 3 4 CONNECTION EVALUATION TRUST EXPERIENCE Eight core emotional states 22
  23. 23. The customer journey to brand loyalty 1 6 7 8 After a positive experience with the brand, you begin to develop loyalty AWARENESS 2 3 4 CONNECTION EVALUATION TRUST EXPERIENCE 5 AFFINITY Eight core emotional states 23
  24. 24. The customer journey to brand loyalty 1 7 8 You leverage your affinity and experiences to influence other people’s opinions about the brand AWARENESS 2 3 4 CONNECTION EVALUATION TRUST EXPERIENCE 5 AFFINITY 6 INFLUENCE Eight core emotional states 24
  25. 25. The customer journey to brand loyalty 1 8 You develop such close affinity with the brand that you promote it whenever possible and it becomes your go-to to fill that need AWARENESS 2 3 4 CONNECTION EVALUATION TRUST EXPERIENCE 5 AFFINITY 6 INFLUENCE 7 EVANGELISM Eight core emotional states 25
  26. 26. The experience plays a crucial role Viewers are enjoying their experience with Netflix more • What we see is that of the eight core emotional states – HBO does not lead in any of them • Netflix is better enabling its customers to feel emotionally connected to the network AWARENESS CONNECTION EVALUATION TRUST EXPERIENCE AFFINITY INFLUENCE EVANGELISM 65 64 64 63 65 64 68 66 64 62 64 64 63 63 64 64 Brand Commitment Journey Scores There is more to building long-term brand commitment than just having strong programming 26
  27. 27. Experience enablers - Netflix is winning • Next generation of viewing • Values diversity • “Rebel” from the norm • Free trial with no commitment • Not dependent on having cable (but need internet) • Variety of content at my fingertips • Access to content not available elsewhere • Primetime is anytime • Recommendation engine • Feeds “binge” / “all you can eat” viewing • No commercials • Netflix customers share through a variety of social media channels (some of which are automated) • “Netflix” comprises nearly 85% of the data set Netflix is enabling important brand building experiences INFLUENCEEXPERIENCETRUSTEVALUATIONCONNECTION 27 • Free trial with no commitment • Upfront pricing - $8 month for unlimited online access
  28. 28. • Dependent on cable (even to access HBO GO app) – Consumers would love to pay separately for HBO GO app only • Question the value of HBO (price of cable + price of HBO) Experience barriers - HBO is missing the mark Significant separation exists between the programs viewers love and the network delivering it • Reputation of being owned by ‘the man’ (aka Time Warner) • Viewed as constrictive – have to experience it the HBO way (e.g. one new episode a week) • Primetime is not anytime – HBO GO accounts for less than 0.5% of online video streaming* • Lacks variety to take the place when “my show” is over or on break – This gives customers a reason to unsubscribe during breaks in their favorite program(s) 28*Source: Sandvine – Game of Thrones is one of the most pirated shows
  29. 29. “Netflix is the future of rather then a typical cable subscription.. House of cards is a great example.” “Netflix has shown us that we can watch whatever we want whenever we want for a fraction of cable's ridiculous price. There's no going back.” “Almost a year in between seasons is ridiculous. Fans of game of thrones deserve better. i love the show. The planning of which i detest. 10 episodes in season 3? Come on?” “ I honestly think Game of Thrones should win the Emmy for “Best Drama Series”, but a large part of me wants House Of Cards to win just to stick it to HBO (Time Warner). Netflix feels like what the future of television should be. Traditional Cable as it stands right now needs to adapt or die..” Netflix is giving viewers the experience they want 29
  30. 30. Branding - leveraging program affinity Netflix original programs are tightly aligned to the network HBO struggles to create positive network associations with its original programs A popular program does not necessarily equate to a popular network % of network conversations that mention network and program in combination 17% 23%7%6% 45% 50%40%25% 30
  31. 31. 42 44 46 48 50 52 54 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Netflix is sustaining product commitment • Netflix is creating customers who want to commit to Netflix and stay with Netflix • There is reduced dependency of having to have “hit” content, when experience and branding are strong • HBO is more strongly dependent on “hit” programs • Viewer loyalty is fleeting and remains with the program, not the network PCS: network scores (measuring the commitment viewers have to subscribe to the network) PCSscore HBO Netflix 31
  32. 32. “I would say the value of Netflix Originals isn’t just in driving new subscriptions, but retaining existing ones. I’m more likely to stay subscribed if I know there is a new season of House of Cards coming, or some other new show in the pipeline.” “Have you guys seen that Netflix show Orange Is The New Black?? Its soooo good!” “I just want you to know that I will be cancelling my HBO after True blood ends, I watch GOT [Game of Thrones] but it is Cheaper for me to buy it at seasons end…” “Other then GOT [Game of Thrones] and BE [Boardwalk Empire] that is – [HBO] is not worth $18 a month on dtv [Direct TV] after BE ends this season—I’m out.” Netflix viewers are creating loyalty to the brand not just the shows 32
  33. 33. And the winner is… 33
  34. 34. Enable the right experiences Content • Give some time for original programs to build up their fan base – should see growing BCS over time • Offer similar genre and programming in the off season of popular shows to shorten the “gap” feeling between seasons Experience • Improve customer pain points currently creating barriers for some viewers (e.g. streaming quality) • HBO GO app is not equally comparable to the fully mobile feeling of Netflix, consider offering at a higher price without a cable subscription Branding • Continue to align the Netflix brand with original programming content • Ensure that popular programming is always extensively aligned/stamped with the HBO brand 34
  35. 35. Thank you Lisa Tanaka Research Director Stacey Megoloff Social Research Analyst “Cutting the Cable Cord”—Analyzing the Entertainment Shift to Streaming Services A certain sub-set of consumers, who refer to themselves as Cord Cutters, have decided to cobble together their own entertainment solutions instead of finding the ‘best of the worst’ cable or satellite provider. These consumers are quickly revolutionizing the entertainment industry and demanding programming on their terms – content when, where, and how they want it without contracts and lengthy bills. Join us for this webinar on October 30 SDL analysis of publicly available data; not commissioned by any representative clients. All company product or service names referenced herein are properties of their respective owners.