If you want millennial TV viewers, it’s interact or bust

Zane is CEO and cofounder of Watchwith.
It’s pretty much taken as gospel these days that millennials are cord-cutters, eager to abandon television as we know it — torch broadcast and cable business models along the way.
The reality, though, is a lot more nuanced. Yes, millennials are more likely to opt out of subscriptions to traditional cable-TV bundles. But they’re cord-cutting in only the most narrow sense—substituting one delivery system (linear TV) for another (on-demand streaming) and one type of hardware (cable-fed TVs) for others (mobile devices, and TVs and PCs rigged with over-the-top solutions).
They’re still watching TV shows — lots of TV shows — and consuming plenty of programming generated by the “traditional” TV industry. They’re just doing it on their own terms.
At Watchwith, our team of entertainment, technology, and advertising experts have been studying video consumption patterns since 2012. We’re particularly interested in understanding the psychology of what works and what doesn’t for the new generation of TV viewers, particularly when it comes to advertising messages. That said, here are three broad findings we’ve found to be true…

Mobile pre-roll feels like a personal violation for millennials

All of us tend to be deeply connected to and dependent on our mobile devices, but for digital-native millennials, omnipresent smartphones are almost like an extension of their bodies — and of their personalities. That’s why pre-roll and mid-roll advertising that might be acceptable (or at least tolerable) in a desktop setting becomes absolutely rage-inducing on mobile.
We’ve heard again and again from millennial consumers about their incredible feeling of frustration while watching pre-roll on a phone. There’s a profound mismatch between the pre-roll experience and a personal device like a smartphone. Pre-roll advertising in a desktop browser tab comes off as interruptive, but the same pre-roll on mobile feels domineering, like viewers have been temporarily deprived of the sense of control they take for granted when using their beloved devices.
According to a study just released by eMarketer, “young adults ages 18 to 29 are more likely to own a mobile phone or smartphone than a desktop or laptop, pointing to how mobile is becoming an all-purpose device that users are increasingly relying on.” But in a phenomenon that MaryLeigh Bliss of youth-market research firm Ypulse calls “ad A.D.D.,” millennials are turning a blind eye to traditional ads on their favorite platform. According to Ypulse research, says Bliss, “when we ask young consumers which type of advertising they usually ignore or avoid, 62 percent say online ads, like banner and video ads, and 68 percent say mobile in-app ads. In other words, online marketing — you’re doing it wrong. It’s not enough to be where they are. You have to be where they are, and match your message to their behavior.”

‘Interactive TV’ is entirely intuitive on mobile for millennials

Many digital-native millennials grew up, or at least came of age, thinking of media consumption as a tactile experience. It’s entirely natural — indeed, second nature — for them to feel their way through media on mobile devices. And that’s even more true for post-millennials, aka Generation Z; witness the various videos on YouTube like “Baby Works iPad Perfectly,” and “9 Month Old Baby Using iPad.”
All those years of people fumbling with remotes to navigate through cable guides and various iterations of “interactive TV” have given way to being able to touch, tap and swipe — in the process instantly controlling their content-consumption destiny. That’s part of what’s behind the explosive growth of millennial-favorite streaming-gaming platform Twitch, which Amazon acquired last year for $970 million as well as prioritizes real-time interaction on its mobile apps.
The very culture surrounding streaming video itself on both mobile and desktop engenders seamless interaction. Consider the billions of shares, likes/dislikes, and channel subscriptions in just the YouTube ecosystem alone.

Millennials are poised to interact—in context, in program

Millennials are incredibly distracted consumers of content. They’re media multitaskers. So, programming that allows them to multi-task in-program helps them satisfy their natural desire to touch, tap, and swipe their way through their content-consumption journey.
In a recent study Watchwith conducted in collaboration with Magid, we found that more than half of 18- to 24-year-olds are more likely to watch more episodes of a show if it has in-program (i.e., non-interruptive) ads. We also found that in-program ads have higher levels of unaided recall compared to traditional TV ads. The point is to let the show continue flowing, but still get the ad message across.
In other words, while millennials may be inveterate multitaskers, when they’re actually in the flow of content-consumption, they’re ready and willing to interact with brand messages on their own terms.

Facebook continues its fight for second-screen dominance

Facebook is working on new tools meant to encourage people to discuss the latest TV shows, breaking news, and live events on its service instead of Twitter. How? By making it easier for them to see their musings during broadcasts, making exclusive stickers for certain events, and becoming a polling service through which people can share some of their opinions with TV programmers.
The tools are part of the social network’s long battle to become the premier “second screen” service used whenever something interesting’s on television. (Seriously, these efforts have been ongoing since at least 2014, when the company worked with Fox to promote its apps during that year’s Super Bowl.) Facebook just isn’t content to let all the frenzied chirping happen on Twitter. And on top of that, the TV ad industry’s annual budget is something Facebook wants a chunk of as traditional commercials lose effectiveness.
Not that Facebook wants people to think it’s desperate.
“We highlighted one relevant study on our Facebook for Business blog which found that 85 percent of people who reported visiting a social network while watching TV said they visited Facebook,” its partner engineering director, Bob Morgan, said in today’s announcement. “Our own researchers discovered that Facebook usage peaks in primetime, in every country, and that the maximum daily Facebook audience occurs during maximum TV viewing.” See? Facebook’s already doing great!
But the company isn’t going to be happy until its services pervade every form of media. It wants text to be read via Instant Articles, videos to be watched through its native video player, and photos to be shared via Instagram. Then it wants all those forms of media to be scooped up from those services and shared via traditional outlets to create some kind of perpetual Facebook mechanism.
This is what that process could be like: Someone watches something on the television, so they use a custom sticker to share their thoughts with the world. Then they see that opinion on their television set, so they keep watch to see if other people’s opinions will be shared the same way. While that’s happening broadcasters can ask for viewers’ opinions through quick polls and surveys.
People would never have to leave Facebook — or the couch. Why use another application when anything you could ever want is right in Facebook’s? Want to read? Go for it! Wanna watch something? You can do that, too. Want something to do while something on the television plays in the background? Don’t worry, there’s something you can do for that, too. It’ll be all Facebook, all the time.
That might seem like a dystopian future to some, but Facebook probably just views it as a money-printing machine. This is why it keeps going after Twitter. Every tweet sent, every hashtag typed out, is a threat to Facebook’s dominance. So it’ll keep introducing features like this until people forget that they could ever share their thoughts somewhere else. All it has to do is kill that pesky bird.

Watchwith aims to help TV advertising evolve for the digital era

Say what you will about commercials, but TV video ads managed to generate upwards of $173 billion last year. The problem is, there are fewer pairs of eyeballs to watch traditional linear television these days thanks to a multitude of options to view instead on tablets, smartphones, and set-top box apps. Combine that with the rising preference for OTT (over the top) content, and TV programmers now have a growing conundrum on their hands — how do you keep generating advertising dollars as viewing habits become more fragmented and TV commercials lose effectiveness?
That’s an issue media startup Watchwith wants to do something about. The company came on the scene in 2013 with the launch of a platform allowing TV programmers to insert engaging, second-screen content while the show is playing, (sort of like a Pop Up Video). It uses meta data, information about the audience itself, and a few other sources to do this — either baking the integration directly into mobile app platforms or utilizing the ACR (automatic content recognition) capabilities of smart TVs to trigger perfectly timed engaging content regardless of where a program is being watched (cable, broadcast, on-demand via an app). Today Watchwith announced that it’s translating its technology for advertising, and has already forged many partnerships including CBSi, FOX Broadcasting, NBCUniversal, and Viacom.
More specifically, Watchwith is now giving TV programmers the ability to insert interactive ad spots while a show is playing. The ads themselves will take up a portion of the screen (I’m guessing either bottom corners or a banner across the bottom), and likely be similar to those animated promos TV networks use when watching linear broadcast/cable TV.
This is significant because it creates an opportunity for new forms of ads to be sold that are specific and unique to each moment of a program. And when you introduce audience data, you can get a much more relevant ad targeted at the right people. That’s the idea, anyway.
“What we’ve built is the perfect intersection between data and creativity [in TV advertising] that people have been talking about,” said Watchwith CEO Zane Vella in an interview with Gigaom, adding that the capability to insert contextually relevant in-program ads (perhaps not at scale, though) has been possible for years with the available technology. But, he explained, it took the TV industry a while to catch up.

A WatchWith ad pops on screen at a specific moment during Bravo's Best New Restaurant reality show.

A Watchwith ad pops on screen at a specific moment during Bravo’s Best New Restaurant reality show.

Watchwith ads can prompt viewers with a question, poll, or factoid related to a specific moment during a program, while featuring an advertiser’s logo. In this sense, the company (as well as many TV networks) are betting that people are far more accepting of these types of ad spots than the typical commercial break that lasts several minutes. I’m inclined to agree, especially with Hulu — the premiere ad-supported premium TV service — recently deciding to give its customers the option of paying more to eliminate commercials.
Vella explained that the TV industry landscape is much different now compared to even five years ago — in that programmers now have more sophisticated digital ad strategies as well as ad technologies at their disposal. That means they aren’t tied to the traditional practice of matching advertising based solely on the content of the show or the audience demographics — and hoping it has the desired affect of giving advertisers a ROI.
Watchwith essentially gives programmers the ability manage their advertising efforts directly, handling both sales and the delivery of those ads without involving a middle man. Of course when that doesn’t make sense, Watchwith ads can also be automated to run programmatic network ads. However, the main benefit remains that programmers have more control.
“We’re at a very interesting time in television, especially with Tim Cook’s recent proclamation that the future of television is apps,” Vella said. The Apple TV CEO’s statement was made in reference to the company’s new tvOS, a brand new operating system that will finally allow third-party developers to build apps for the company’s Apple TV set-top box.
If Cook’s prediction does hold true, then it puts Watchwith at the forefront. With more TV-specific apps being created for people to consume content, TV programmers and advertisers alike will be faced with an even more fragmented ecosystem — meaning, it’ll be harder to target the same audience across multiple platforms.

Hulu subscribers can now go commercial-free

Streaming video service Hulu will start offering subscribers an option to eliminate advertising during programs, the company announced today.
The move is significant because Hulu has traditionally thought to be against any business model that didn’t include commercials, which were identical to those found on cable and satellite television and nearly as lucrative. And since Hulu’s owners consist of major media companies (Comcast, Disney, News Corp.) — all firmly pro-advertising (or so it seemed) — it didn’t seem like that would ever change. However, it looks like the move was done at least in part to make Hulu more competitive against the likes of Netflix and Amazon Prime.
Hulu has priced the new ad-free option at $12 per month, $4 more than the base subscription, which the company will continue offering. At that price, it seems crazy not to spend a little bit more not to have to see the same irritating rotation of commercial interruptions 3 to 5 times per episode. (And with Fall TV premiere season right around the corner, I’m guessing a lot of people will chose to upgrade to ad-free.)
It’s also interesting that Hulu opted to price the ad-free option on par with HBO Go and Netflix. With the exception of CBS and a few popular cable networks like AMC and BBC America, Hulu gives subscribers access to far more current-season content than Sling TV, which starts at $20 monthly.
The new subscription option also comes days after Hulu announced it had secured a licensing deal to add hundreds of popular films from movie service Epix — just as competitor Netflix ends its own contract.
At 9 million subscribers, Hulu is still far behind Netflix’s 42 million domestic customers. But it’ll definitely be interesting to see if there’s any fallout from these two developments — with Netflix users canceling their service for Hulu, much in the same way Apple Music is challenging Spotify for greater marketshare.

Ray wants to be the last remote control you’ll ever buy

David Skokna wants to simplify TV, one button at a time. That’s why Skokna and his team at Ray Ventures are introducing a remote control to replace all other remote controls this week. The Ray Super Remote, as the $200 device is being called, combines the shape of a traditional remote control with a touchscreen and a customized app experience, and aims to deliver personalized content recommendations straight to your coffee table.

I’ve had a chance to play a little bit with a Ray remote control during a recent press briefing in San Francisco, and have to say the device looks pretty sleek. It features a 4.8-inch touchscreen, but with a unique aspect ratio that allows it to keep the long and slim design you’re used to from your regular remote controls. The design even extends to the cradle that is being used for charging the remote control, which includes magnets to gently lock the remote in place — a very Apple-like experience.


On the remote, you’ll find shortcuts to different content categories, including TV shows and kids’ content, each with lists of what’s currently being broadcast, and personalized suggestions for live and on-demand content. Skokna said that personalization is a big part of what makes Ray special. All Rays start with the same content, save for regional differences and the different types of subscription services you subscribe to. “In a week, your Ray may be different from mine,” he said, simply by learning what kind of shows you tune in to.

One of the things that’s interesting about Ray is that it is a common device. With control moving to phones and apps, increasingly, there are one or two people in a family household who have the power to change the music on the Sonos system, adjust the Nest temperature, or choose the show to stream on TV.

Ray brings that power back to everyone, Skokna said. Of course, one could argue that the same could be done with an iPad mini, which wouldn’t even cost that much more. Skokna responded that we are talking about different types of users. High-tech households that already control everything with their iPads aren’t really Ray’s target audience. Instead, the company is targeting users frustrated with their cable remote and guide, which is why the company already works with all major pay TV services. Users are also able to control Roku boxes and other streaming devices, but Ray simply emulates the traditional Roku remote with soft buttons for this experience, and doesn’t offer an ability to directly launch Roku channels.

Here’s what’s under the hood: Ray is running Android, and comes with Wi-Fi and an IR blaster that’s meant to reach every single box under your TV, thanks to IR antennas that have been integrated into three of the four sides of the device. For input, there is a microphone built in as well, but it won’t be active when Ray starts shipping. Ray also comes with Bluetooth and ZigBee radios to control thermostats, light bulbs and other connected devices around your house. Skokna told me that it interacts with Nest thermostats, Hue light bulbs and other devices, with the goal of eventually connecting to every device.

Actually, make that almost every device: Each Ray can only control one single TV. So of you have more than one TV in your house, you’ll have to also buy more than one Ray remote control — or just keep some of those old-school remote controls around after all.

So how does Ray want to make money? Not with hardware revenue, Skokna said. Instead, he envisions that Ray will eventually add premium services to its free apps and services. Personalized TV show recommendations will always be free, he explained, but Ray could possibly offer sports fans an additional package that gives them instant access to scores right on their remote control. Skokna also said that Ray will eventually have its own app store, with opportunities for third-party apps to run on the device as well.

Overall, I walked away from my demo of the Ray impressed, but not convinced. It’s a good-looking device, and the team that built it has definitely thought about this a lot. I’m just not sure people are willing to spend $200 on it, and I wonder whether the single-purpose nature of the device will make it look limited next to the many mobile screens doubling as remote controls we already all have in our pockets, on our coffee tables and even on our wrists.