Study: Turning content dollars into audience - Page 9

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The aforementioned market developments imply that the theory of “Content is King” holds true –

but what does Bill Gates’ quote from 1996 actually mean?

Originally, it was intended to highlight that the success of websites correlates closely with the

quality of the presented content. It serves as the basis for content marketing, which relies on

targeting consumers with sophisticated content instead of fuzzy brand messages.

In the context of the media industry and its current trends, it can be interpreted as the one

key criterion that the audience evaluates when deciding on which channel it will consume content.

Furthermore, in the digital arena, content is utilized to transfer people from non-paid to paid

content, i.e., it is the pulling factor to subscribe to a streaming service. If a streaming service offers,

for example, a blockbuster series on its platform for paid users exclusively, and consumers are only

able to see the first episode for free, then they are very likely to subscribe to the paid package to be

able to watch the entire series. While there are also other factors that influence consumers in their

choice of medium, such as brand image, ease of use of the interface, advertising frequency, and

price, content appears to be the decisive element, which is supported by our investigation.

The rise of streaming providers as part of the ongoing digitalization of the media industry is

examined in more detail in a consumer survey conducted by goetzpartners. The survey also

confirms the assumptions on the significance of individual key purchasing criteria for different

media consumers, which have been collected by goetzpartners in this consumer survey** and

analyzed (s. figure 1).

**226 participants in Germany

1.3 Content is King

The continuous revenue for streaming providers based on monthly subscription payments enables

them to spend decent amounts for content, both licensed and originally produced. Most of the

linear TV channels do not have the financial means to invest similar amounts into content, as they

either rely on advertising as the main source of revenue in case of private TV channels or on

monthly broadcasting fees paid per household for public TV channels. Especially productions of

original content are capital-intensive compared to licensed content, which is why linear TV

channels are limited in their investment possibilities for expensive original content production.