As the Kings of Content Battled, The Digital Revolution Continued

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Why Viacom and DIRECTV Fought the Wrong Battle: A Social Media and Marketplace Analysis

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As the Kings of Content Battled, The Digital Revolution Continued

  1. As the Kings of Content Battled,The Digital Revolution ContinuedWhy Viacom and DIRECTV Fought the Wrong BattleA Social Media and Marketplace Analysis
  2. Introducing: The Kings of Content• Viacom, the Producer of Content. – Channels include MTV, BET, Comedy Central, and Nickelodeon• DIRECTV, the Distributor of Content. – Reported 19.89 million subscribers in 2011
  3. Introducing: The Issues• The two had been working behind the scenes to negotiate a new Carriage Agreement• Viacom wanted DIRECTV to pay more to continue carrying their channels• DIRECTV wanted Viacom to make less content @ available for free online
  4. Preparing for Battle• As negotiations took a turn for the worse each side began a campaign to drum up public pressure on the other – Commercials, online ads, websites, videos, and social media accounts were used by both sides to sell their message
  5. Preparing for Battle• The message: If “the other guy” didn’t yield, DIRECTV subscribers would lose access to all Viacom channels
  6. Preparing for Battle• As seen in the chart below, very few people were talking about the battle on social media in the first week of July The green line represents the # of mentions
  7. Preparing for Battle• By July 9th people were tiring of the rhetoric:
  8. The Battle Intensifies• Unable to reach a fee agreement, Viacom pulled their channels from DIRECTV on the evening of July 10th
  9. How Would DIRECTV Subscribers Watch TV?
  10. DIRECTV Seemed to Agree…• DIRECTV began promoting places to watch Viacom’s content online• Viacom responded by pulling many free online offerings of their programs – The company “temporarily slimmed down our offerings as DirecTV markets them as an alternative to having our networks.” Carole Robinson, Viacom spokeswoman
  11. People Responded Accordingly• When Viacom pulled their shows offline, they pushed people to other online sources.
  12. The Battle Intensified• As seen in the chart below, pulling the channels had an immediate effect on the number of social media mentions The spike in mentions starts on July 9th, and peaks on July 10th
  13. The Chatter Increased July 2012 210,957 Mentions of their Battle Twitter 82.9% Facebook 5.8% Blogs 1.3% Comments 9.5% *Platforms contributing less than 1% included forums, videos, and images.All mentions tracked were public and included references to both of the parties involved.Since many Facebook users use privacy settings, posts on that network are likelyunderrepresented. Short form posts on Twitter were quick commentary, while actualComments tended to be longer and more involved.
  14. The Chatter Grew Angry
  15. The Battle for Hearts, Minds, and $• DIRECTV and Viacom both went online to reach and respond to their audiences• They posted videos:
  16. The Battle for Hearts, Minds, and $• They used Social Media:
  17. The Battle for Hearts, Minds, and $• And they created websites:
  18. The Battle for Hearts, Minds, and $• The Battle was fought in board rooms and online• But the Revolution was happening in living rooms and on mobile devices…
  19. The Impact was Immediate & Severe• Viacom’s ratings started to sink – MTV’s daily audience dropped by 43% (July 10 – 13*) – Comedy Central’s daily audience dropped by 21% (July 10 – 13*) *Los Angeles Times, Nickelodeon ratings tumble from loss of carriage on DirecTV by Joe Flint, July 16, 2012
  20. People Began to Find New Content• DIRECTV began offering Disney Jr. to replace Nick Jr. for impacted subscribers• Nickelodeon’s ratings dropped 20%*• Disney’s ratings jumped 20%* *Los Angeles Times, Nickelodeon ratings down 20% after DirecTV drops network by Joe Flint, July 19, 2012
  21. People Found New Content Sources
  22. The Kings Made Peace• After 10 days, Viacom and DIRECTV finally reached an agreement• Viacom channels were restored to DIRECTV customers on July 20th
  23. Trying to Maintain the Old Order• Viacom and DIRECTV are not unique – In early July AMC pulled their shows from Dish Network after they failed to renegotiate a Carriage Agreement• Why all of the conflict?
  24. Trying to Maintain the Old Order• These companies are operating based on multiyear contracts written before technology like iPads existed – Things like rights to streaming on tablets may not be covered under existing contracts – Technology and consumer behavior are changing faster than the contracts
  25. So Did Peace Come Too Late?• The way that content is consumed is changing• During the battle even more people realized that offline content could be found online
  26. The Digital Revolution• People (of all ages) are consuming information and watching content on the internet and mobile devices* *Nielsen, State of the Media: Cross-Platform Report Q1 2011
  27. The Digital Revolution• The number of homes with broadband Internet and free, broadcast TV increased by 22.8 percent over last year.* *Nielsen, Cross-Platform Report Q3 2011
  28. From Digital to Content• The Digital Revolution enables the Content Revolution• The line between content creators and consumers is blurring – One smartphone enables both
  29. The Content Revolution• Dropping costs make it easier for people to make their own videos – In 1987 the average cost for a camcorder was $1,600 – In 2012 a cellphone with a videocamera can be purchased for less than $200
  30. The Content Revolution• Videos are posted and viewed online – 72 hours of video are uploaded to YouTube every minute* – Over 3 billion hours of video are watched on YouTube every month* *http://www.youtube.com/t/press_statistics/ retrieved July 24, 2012
  31. The Content Revolution• The internet and social media make it possible for talent to cut out the middle man – In December 2011 Comedian Louis CK decided to sell his comedy special Live at the Beacon Theater online – In one week he had made over one million dollars…without the help of a major network
  32. The Content Revolution• The ease of “sharing” on social networks makes it easy for this new generation of content producers to gain an audience
  33. The Share Scare• But people aren’t just sharing content that they’ve created• More people downloaded pirated episodes of Game of Thrones than watched it on HBO – Episodes averaged 3.9 million downloads, according to TorrentFreak – Episodes averaged 3.8 million viewers
  34. The Share Scare• The Original Kings of Content are all closely watching the courts – Copyright holders have been aggressively pursuing file sharing sites like MegaUpload and isoHunt
  35. The Kings of Content: What Next?• Hope the courts change human behavior?• OR learn to exist in a new Kingdom of Content, where cats, comedians, and kids with cameras rule?
  36. Bottom Line:• The Revolution is not going away• It’s time for the Kings to hit FFWD and catch up with the rest of the Kingdom – or risk losing their thrones
  37. MakeMeSocial.Net

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