What lessons can pay-media operators learn from online retail?

With consumers as the common denominator, it’s not surprising that similarities can be seen across some industries.  In the media industry, the need for change to keep up with changing consumer demand is widely accepted.  But what is the formula for success? Can any parallels be drawn with online retail?

Online’s disruptive nature
It was a Forbes article that made me think: ‘The inconvenient truth about e-commerce: it’s largely unprofitable’. It explains that e-commerce has been disruptive.  The radical shift online is presenting challenges to traditional retailers plus there’s new competitors entering the market.  Although popular with consumers, much of the “pure-play” retail isn’t profitable and is dying.  Is the cause the discount driven environment which is undermining razor thin margins?

Where’s the overlap to media? Well, the disruptive shift to OTT is clear.  It too is presenting challenges to traditional operators and new competitors are popping up: legitimate and pirate.  Lower pricing is shaking up existing business models.  And as to how many of these pure OTT players will be profitable – only time will tell.

Blending the old and new
Maybe the answer for both industries is ‘hybrid’.  Look at Apple.  It has a strong online presence combined with its stores.  Same with Nespresso.  They complement their online offering with 450+ boutique stores and have had 30% growth since 2000.  Both companies have compelling products and they value the importance of consumer experience.  Others are following, for instance Amazon are also opening stores to provide a more personal shopping experience and to attract more customers.

From a media perspective, much is made of the viewing habits of millennials and generation Z.  Online is the way to go.  Of course, online must be part of the offering.  But all the offering?

Let’s not forget that we’re living in a time of rising life expectancy.  In fact, by mid-century those 65+ years old will account for 25% of the population and in some countries, this rises to 35-40%.  That’s a large segment of consumers who may prefer TV’s traditional lean back experience, where searching for something to watch is not in their comfort zone.

Given that, will the pay-media winners be the ones that successfully integrate online and traditional approaches to offer a consumer experience for all segments?

What does it mean for the industry?
To be honest, my guess is as good as yours. But my bet would be on operators who can provide a hybrid model.  Satisfying all consumers viewing needs. The media equivalent of the brick & mortar plus online shops concept used by the likes of Apple and Nespresso.

And with my background you will expect this next statement.  In the retail industry, you can accept a (low) level of theft of your goods but it needs to be controlled. The pay-TV industry is not (yet) as successful at stopping someone stealing the goods.  Implementing solutions such as watermarking and online piracy detection is certainly a good start!