What is it that leads Netflix to grow revenues by 24% to $1.2 billion, or Spotify the music streaming service, to have one quarter of its 24 million customers opting to pay a $9,99 monthly subscription for its service? What is it about these digital content services that persuades consumers to pay - while many more established media and entertainment businesses are struggling to create successful direct-to-consumer propositions or get growth in their digital revenues?
At Oracle, we've worked with many industries who've faced the same dilemmas, and almost always the answer comes down to customer experience. The successful players in the digital space are those who focus relentlessly on every consumer: engaging them, creating compelling experiences and seamless customer journeys - and ultimately being rewarded for this by consumers who are willing to pay and subscribe.
Oracle's own research of media and entertainment executives around the world finds that most understand the importance of customer experience to the future success of their business. Indeed they believe that they risk losing 27% of revenue year-on-year by failing to provide great customer experiences. Yet in spite of this, around half of media and entertainment companies have no active customer experience strategy under way.
So what is it that media customers will pay for? The difficult truth is that great content alone is no longer enough. Harley Manning and Kerry Bodine, in their book Outside In: The Power of Putting Customers at the Center of Your Business assess research originally produced by Dr. Elizabeth Sanders in 1992.
Here they find that the most basic requirement is to meet then customer's needs. All companies need to do this of course. In the media business, that means making relevant content available to the customer. Unfortunately, that's where many companies stop. But in order to create growing and sustainable revenues, it's critical to move "up the triangle".
The successful content providers are those that not only provide content products, but make them utterly simple and compelling to use. Nothing illustrates this more clearly than the success of Apple's products. The iPod wasn't the first digital music player, and the iPhone wasn't the first smartphone - but Apple gained significant market advantage by making these products easy to use for the majority of consumers.
And to really prosper, companies need to create an emotional engagement with their customers, to the extent that consumers really enjoy using the products. Again, this is something that many new entrants to the media world appear to have achieved.
Fortunately, it's becoming easier for all media and entertainment companies to move up this triangle and build the sort of engaging experiences that consumers value enough to pay for and return to. Many media and entertainment companies are using Oracle's customer experience tools to help them do this. NBC Sports is engaging younger viewers through social media, and attracting them back to linear sports TV. The Boston Globe is building a paid-for customer base by focusing on delivering fantastic customer service. Dow Jones is making it simple for consumers to subscribe to their valuable content services, and Sony Computer Entertainment is insuring that PlayStation users enjoy a great gaming experience.
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