Connections

By Chris Wagner, NeuLion –

The premium video digital entertainment market has evolved beyond all recognition over the last decade from side-loads to UV to 4K streaming and beyond, with 360-degree video and virtual reality on the horizon. Cast your mind back to the turn of the century. I’m sure your home, like mine, was defined by the DVDs and CDs displayed on the living room shelf with pride.

There lived common denominators Pulp Fiction and Reservoir Dogs—movies and soundtracks, of course. The shelves represented a canvas of who we were—our entertainment taste identity. Over the last five years, the world vastly changed to one in which subscription video on demand (SVOD) services have challenged the collectible mind-set. The digital era did not incentivize ownership or the notion of collection. Fast forward to today and all signals indicate that electronic sell-through (EST) is growing significantly, kick-started by early release window strategies. In fact, it is projected to be one the fastest growth categories through 2019, with a compound annual growth rate (CAGR) of 16 percent.

A global marketplace worth $3.2B today, it is forecast to grow to $4.2 billion by the end of 2019. So for EST, it genuinely feels the time is now. The question is, how can the digital world emulate the old DVD/Blu-ray collectible world? Or can it? Well, it can and must, but it will be very different. While some consumers will be migrating a physical collection into the cloud, the under-25 year-old generation will migrate nothing. They simply want a deeper, richer and more rewarding experience to validate paying full price for an EST title.

And therein lies the opportunity to design the future locker so that it essentially incentivizes consumers to collect (EST titles) and unleash network effects experienced so well by the gaming and digital communications industries.

Now part of NeuLion International, Saffron Digital has been at the forefront of EST design for a decade, powering services past and present for the likes of Samsung, HTC, British Telecom and Carrefour and we see the future locker opportunity as a game changer. Out with static catalog locker list pages and in with an immersive ecosystem that brings the product and consumer life-cycle across both theatrical and home entertainment together to enable users to enjoy collecting movies in an environment that is dynamic, rewarding and, most importantly, a platform to share their collections across social networks. Successful gaming companies like King.com can generate paid average revenue per user (ARPU) of up to $290, vs OTT stars like HBO, which generate $34 ARPU.

The gaming companies do so because they are excel-lent at mining their core paying customers with engaging content. The simple formula of sign-up, complete a task, get rewarded, earn points, move to the next level, repeat and buy “extras” to accelerate their journey, has seen the likes of Candy Crush become a global phenomenon or a global addiction.

By no means is the future locker one big game, but it can leverage gaming mechanics that power an immersive environment to essentially transform the locker into an entertainment portal of engaging content around titles consumers have self-selected to enjoy. No longer does EST remain a single transaction.

Now it becomes a dynamic longer-lasting (CRM powered) relationship with the retailer, which ultimately increases the lifetime value of each customer over time through continuous engagement.

So what does the future locker look like?

In essence, the future locker is a platform that is built upon four core pillars:

1. Content & collections

* First and foremost, this is a locker service to keep your EST titles in perpetuity and access on any connected device, anytime, any-where–a place to buy and keep your favourite movies and TV shows.

* The future locker will also deliver access to an array of dynamic bonus content including video extras, games, exclusive content rewards and potentially future formats like VR scenes for certain titles.

* Depending on the title and its genre, the EST menu of extra content will vary, but all will add value to the core title experience.

* The key difference here is that the viewer will be rewarded for consuming, reviewing and sharing content.

2. Community & rewards

* After content depth comes community. The DVD shelf of old was not just about collecting content, but also about showing it off to friends. The future locker will enable users to present and share their catalog with friends under certain secure rights rules.

* Once users are enabled to share their personal locker catalog with their friends across social networks, they will become eligible for a key ingredient to peer-to-peer growth… a reward currency. Consumers will be able to unlock extra content for completing various tasks such as watching a movie in full, sharing a review or evangelizing a new release across their social network.

3. Communication & the consumer lifecycle

One of the key differences with the static locker services of today is that the future lock-er will also be a marketing communications platform on which:

* Users can share their locker across all social networks and be rewarded for it.

* Content owners and retailers can market and reward their transacting customers with such incentives as early release windows, catalog bundles and exclusive content packs and promotions.

* Value-chain lifecycle partners are enabled to manage the communication of the title/ franchise lifecycle, such as a cinema chain selling a ticket to a franchise sequel or super ticket in conjunction with the content owner/retailer.

* Advertisers and sponsors might sell con-textually relevant product to highly targeted audiences; for example, Samsung sponsoring the Spectre early release window.

4. Locker Unification

Today, many early adopters have different lockers for different video services. The future locker will enable users to aggregate most of their lockers into one locker ecosys-tem that not only displays all their titles in one catalog, but also enables them to be re-warded for purchasing EST content regard-less of source.

At NeuLion International, streaming and download locker services come as standard. We have also been pioneering various promotional mechanics and we know that targeted campaigns like product bundling (e.g. 3 titles for $20) can drive conversions up by as much as 50 percent.

That’s why we have invested in a global CRM platform that extends our range of services to drive ROI for both consumer and retailer.

Once you harness these benefits for both retailer and consumer it enables a service provider to build a future locker framework, which we consider a win-win scenario.

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