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Multiscreen & OTT 2015 > Introduction

Digital TV Europe July 2015

The rise of OTT OTT

TV has ceased to be a thing apart from the mainstream. OTT video providers are now extending their reach, both by targeting traditional pay TV operators’ own networks – example include Netflix’s deals with multiple European service providers – and also via social networks. This year’s Multiscreen & OTT series of online articles looks at four key topics that illustrate the advance of OTT and its embrace by traditional media. Today, we publish all four parts together in a single volume. First, we look at the relationship between OTT and pay TV operators. The launch of advanced connected TV platforms by cable and telecom service providers has provided an opening for OTT players to reach the main TV in the home directly, via the set-top box. Such partnerships are seen to be mutually beneficial, bringing additional content to pay TV operators’ services and reinforcing the value of the broadband and TV bundle, while enabling OTT providers to extend their reach in the living room. However, tensions remain in the relationship, particularly over who controls the user experience and manages user data. Second, we looked at the way in which OTT providers have targeted social networks to extend their distribution and look at how the social networks themselves have expanded into video, with major initiatives from the likes of Snapchat, Twitter and Facebook to capture a foothold in the video space. Third, we looked at the ways in which OTT providers have sought not only to compete with traditional pay TV head on – à la Netflix – but to use their global reach to target niche audiences with content of interest to them, including providing services to diaspora groups scattered around the world. Finally, we look at the way in which OTT and multiscreen viewing is having an impact on the TV advertising business, and the ways in which pay TV operators and OTT providers have sought to capture some of the available revenue for their own services. l

Published By: Informa Telecoms & Media Mortimer House 37-41 Mortimer Street London W1T 3JH Tel: +44 (0) 20 7017 5000 Fax: +44 (0) 20 7017 4953 Website: www.digitaltveurope.net Editor Stuart Thomson Tel: +44 (0) 20 7017 5314 Email: [email protected] Deputy Editor Andy McDonald Tel: +44 (0) 20 7017 5293 Email: [email protected] Contributing Editor Stewart Clarke Sales Director Patricia Arescy Tel: +44 (0) 20 7017 5320 Email: [email protected] Art Director Matthew Humberstone

Stuart Thomson, Editor [email protected]

Contents Monday July 27

Friend or foe: OTT and pay TV services

Tuesday July 28

Social climbing: social networks and OTT video

Wednesday July 29

Minority report: the search for niche audiences

Thursday July 30 Friday July 31

Sponsors

Ad and multiply: OTT and multiscreen advertising The complete series

Publisher Tim Banham

SUBSCRIPTION HOTLINE INFORMA GROUP TEL: +44 (0) 207 017 5533

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Multiscreen & OTT 2015 > Pay TV & OTT


Friend or foe: OTT and pay TV services

With Netflix forging multiple distribution deals in Europe, cable and IPTV pay TV operators are increasingly welcoming OTT services on board. Stuart Thomson explores some of the issues raised.

Is OTT

a friend or foe to pay TV? Netflix, the leading OTT player internationally, has teamed up with multiple service providers that also package their own pay TV offerings, while multiple pay TV providers are looking to make fresh content available to advanced connected settops to stimulate take up and cut churn. On the other hand, pay TV operators have also joined the rush to launch their own OTT services, such as Sky’s Now TV, to head off the competitive threat and – potentially – address a market segment that has hitherto proved resistant to the allure of ‘full-fat’ pay TV.

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Potential partners Everything ultimately depends on context. According to a recent survey carried out for technology provider Nagra by MTM, two thirds of operators see partnerships with OTT providers as “an important opportunity for their business” to keep audiences on the platform, differentiate their offerings and overcome a lack of in-house content assets and capabilities. According to the study, 76% of respondents agreed with the concept that standalone

premium OTT services are valuable potential partners, whether these are major international services such as Netflix or Amazon Prime Instant Video of the direct-toconsumer offerings of pay TV networks such as HBO. Small cable and telecom operators are more likely to see the benefits of teaming up with large known OTT brands than large pay TV operators with significant portfolios of premium content rights. The latter are more typically looking to surf the OTT wave by launching their own paid-for OTT services, carefully tailored so as not to cannibalise their mainstream offerings.

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From the other side of the equation, OTT providers see partnerships with pay TV providers as a way to extend the reach of their services to large, established pay TV subscriber bases. They also stand to benefit from established billing relationships and the marketing power of the larger operators. It is noteworthy, however, that pay TV providers most keen to forge partnerships with OTT operators such as Netflix are those that make money from bundling TV with other services including broadband internet access, based on their own infrastructure – in other words telecom and cable operators. Satellite pay TV operators – even those that have branched out to offer broadband and other multi-play offerings – seem more reluctant. This was borne out by the MTM study, which found that the opportunity to bring third party services onto their platform was rated more highly by cable operators and telcos than by satellite pay TV service providers. MTM’s survey respondents said they believe there will be a significant number of OTT service launches on a territory-byterritory basis over the next few years. Eight per cent of respondents stated a belief that pay TV operators will themselves increasingly use linear premium OTT services to offer higherquality formats such as 4K TV to supplement their own efforts. Standalone OTT services from broadcasters are largely expected not to go head-to-head with pay TV broadcasters to secure premium sports rights and other premium pay TV offerings.

Other technology providers closely involved in the integration of OTT with pay TV platforms agree. “There are opportunities both to increase revenue incrementally and to increase the attractiveness of the overall bundle from pay TV operators. For OTT operators the key advantages are increased audience and device reach,” says Paul Mardling, vice-president of strategy at OTT technology provider Piksel. “Our feeling is that is that this will be key for many service providers. They will have to integrate these new platforms and other sources of content,” says Simon Trudelle, senior product marketing manager at Kudelski-owned technology provider Nagra. Such integrations enable operators to deliver OTT services via the same TV input and the same remote control as the pay TV service – a key advantage of the partnership model. While such partnerships are growing in number, they are not without tensions. The question over who has ultimate control over the look and feel of services in this context is one of the thorniest. For a player such as Netflix, the look and feel of its service is seen as one of the key selling points in its overall proposition, along with access to a long tail of content and highprofile originals such as House of Cards and Orange is the new Black. At the heart of possible tension between the OTT provider and the pay TV operator is how

pay TV services differentiate their offerings, not only from traditional competitors but from the coming wave of OTT services themselves. The two main vehicles for differentiation are content rights – encompassing exclusive deals for premium sport and movies as well as the development of wholly owned channels and commissioned drama series – and the user experience – encompassing the look and feel of the service, the programme guide and search and navigation tools. For the majority of pay TV operators – especially cable and telecom service providers – the acquisition of big rafts of premium content is not part of the core strategy. Exceptions include pay TV giants such as Sky, Canal+ and Telefónica. For small cable operators and telcos, such as strategy is beyond their resources and not part of their core expertise. Liberty Global and a few other large players stand somewhere in between, viewing ownership of content assets as important but not to the same extent or in the same way as the likes of Sky. The MTM study found that over 90% of industry participants believe providing an integrated user experience across platforms and offering service through mobile and tablet devices will become increasingly important, with differentiation being achieved through the provision of easy integration, highperformance set-top boxes and the ability to offer supporting tools and services to partners.

More the better Despite the misgivings of large players, it seems that partnerships between pay TV operators and OTT providers are likely to become more common as operators seek to boost the appeal of the services to a broader audience with an appetite for non-linear internet TV services. For Charles Dawes, senior director, international marketing at technology provider Rovi, increasing number of service providers “just see [OTT] as content that [subscribers] want to watch – the more content you have the better,” says Dawes. HBO Go is an example of the ways that the lines between pay TV and OTT are becoming blurred.


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Degree of control

OTT and pay TV: the technical challenges

Not all OTT providers are so determined to retain a high level of control on the Netflix model. An alternative approach has been adopted, for example, by ProSiebenSat.1owned German OTT service Maxdome, which has adapted more readily to the requirements of cable operator and other partners. “Our strategic goal as Maxdome is to reach our users on every platform. We have very attractive distribution partnerships in Germany. For example we fully integrated our SVoD offer into the offering of Unitymedia with availability for all TV and triple-play tariffs, which can be booked by more than seven million Unitymedia customers,” says Filmon Zerai, managing director and chief operating officer at Maxdome. “We expect that the relevance of paid content and the number of internet-enabled television sets will increase over the next few years, opening further revenue opportunities for ProSiebenSat.1. The use of internet video libraries will increase considerably. That’s why we also arranged agreements with many leading television manufacturer like Samsung, Philips, LG, Panasonic, Loewe, Toshiba, Humax or Technisat since 2010.” The position the OTT provider adopts will depend on a rang of factors. “Both options will exist and, dependent on the relative position of the players in a given market, the two could be used on the same platform,” says Trudelle. “You could have a native Netflix app alongside a marketplacetype platform where several OTT providers could sit in a ‘mall’ set-up with different content shops within the main interface.” For Andy Hooper, VP, cloud solutions and services, EMEA at technology provider Arris, “pay TV operators have moved on from viewing services as a threat to seeing them as an important part of the content mix”, while OTT providers no longer necessarily see pay platforms as obstacles in the way of their goals. However, he points out that this doesn’t mean pay TV and OTT complement each other perfectly. Both OTT providers and pay TV operators want to control the user experience, with the OTT provider typically prevailing in cases where services are seen as adding value to the pay TV proposition. Murali Nemani, chief marketing officer at ActiveVideo, the cloud technology provider

The technical complexity of opening up platforms to OTT services is forcing pay TV operators to shed long-held assumptions about how to manage their platforms. “Most pay TV platforms have been closely managed by the operator. They have very specific requirements around conditional access,” says Charles Dawes, senior director, international marketing at technology provider Rovi. Opening up to multiple OTT providers means embracing multiple DRM systems. “You need to be adhere to robust content protection requirements while being able to pull content from multiple sources. You can’t support every DRM under the sun, so there will be choices made about which DRMs are needed and which OTT services support that,” he says. For TV technology provider Nagra, the key challenge is to provide the flexibility required to incorporate multiple services in a single interface and “ensure the integrity of the platform at multiple levels on the client side”, according to Simon Trudelle, Nagra’s senior product marketing manager. He suggests that the ultimate goal of creating a fully connected TV environment will take “a couple of more production cycles at the set-top box level”. Andy Hooper, VP, cloud solutions and services, EMEA at technology provider Arris, points out that “fragmentation” of platforms is a wider problem – and one that is growing, citing the diminishing levels of support for plug-ins on the popular Chrome browser and Google’s attempt to enforce a standardisation of delivery based on its own Widevine DRM and

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recently acquired by Arris, points out that consumers have an interest in getting content via a single interface and input to the TV rather than have to deal with multiple devices and sources feeding content into the same screen via a confusing multiplicity of interfaces: “For consumers, it also means accessing more long-form content and things you might want to watch on a TV rather than a mobile device.”

Search and discovery Not all industry participants share the view that pay TV operators want to add third-party OTT services to their offerings. For Matt

the MPEG-DASH adaptive bit-rate format. “All the platforms are locking down the number of options they support. Where in the past you could homogenise [distribution] with plug-ins, now it is becoming less easy. If you buy an electronic sell-through movie you want to see it on all devices but the operator may need to support five DRMs. This is something we are addressing,” he says. ActiveVideo’s chief marketing officer Murali Nemani agrees that DRM fragmentation adds

Dawes: there is a need to adhere to robust content protection requirements.

to the cost of delivery. “Do you put all these different DRMs on your boxes and pay the fees for all of them, driving up the cost of the box, or do you limit yourself to a few types of DRM?” he says. Combined with the need to support different browsers for different service offerings, this can make life complicated for the pay TV operator. “All of these are challenging and this is one reason things are not rolling out faster. It’s difficult to build a new platform and then keep it current as the browser and graphics and DRM technologies keep moving all the time. New devices many only reach 10% of your footprint…and by the time you reach them the technology is out of date,” he says.

Smith, chief evangelist at video technology provider Anvato, viewing the industry from a US perspective, the main preoccupation of pay TV operators is getting their own services on as many devices as possible and addressing the competitive threat presented by lowcost OTT offerings that could “cannibalise” their customer base. “A majority of pay TV brands we work with are looking to extend their services to devices such as Android and iOS smartphones and tablets, Roku and Apple TV,” he says. For Smith, most pay TV operators are focused on using OTT to extend the reach of their existing services rather than “shoehorning OTT onto a set-top box”, which is challenging because of the fragmented


Q&A: Andy Hooper, VP, cloud solutions and services, EMEA, Arris Andy Hooper, VP, cloud solutions and services, EMEA at ARRIS, talks to DTVE about the integration of OTT offerings with pay TV services.

How viable are partnerships between pay TV operators and OTT providers and who controls the experience? Pay TV operators have moved on from viewing services as a threat to seeing them as an important part of the content mix. OTT providers, on the other hand, see that there are intelligent ways to distribute content to the users of these platforms rather than seeing pay TV platforms as an impediment. However, the OTT providers want to control the experience. Netflix has to be consumed via a Netflix app. The operator acts as an aggregator, but once you are in the OTT app, the content provider is mandating the look and feel of the experience. What are the platform requirements for the integration of OTT services as part of the pay TV offering? The requirements are quite high. Broadly speaking, if you look at the number of devices Netflix is distributed to, including iPhones and tablets, it isn’t so interesting for them to integrate to a lot of different set-top boxes that don’t have that kind of huge installed base. One of the advantages of our ActiveVideo acquisition is that ActiveVideo can play the role of an aggregator. The integration of the OTT app doesn’t happen in the set-top box – with ActiveVideo, the integration happens in the cloud TV platform. This creates a more homogenous integration environment. This is what we did with YouTube for UPC in Hungary, and we’ve found that app providers are very pleased with the way it’s done, because they don’t have to do a separate integration every time. It is in the app providers’ interest that we get ActiveVideo on as many end points as possible, and it is more straightforward for the operators as well. What challenges are there in integrating user experiences from third party OTT providers? In terms of the look and feel of services, predominantly it is the internet content provider that calls the shots, determining what branding and marketing is placed around the service, and taking charge of content origination and negotiation. If a pay TV operator signs up to distribute an OTT service they get the content plus the app and have to sign up to how the OTT provider wants it to behave. That can be a challenge for set-top box-based pay TV operators. You have different kinds of optimisation in graphics and so on, but we can simplify all of this by delivering a virtualised experience, as we did for YouTube. The industry

is also facing a lot of fragmentation around browser support, adaptive bit-rate formats and DRM preferences. To deliver a seamless experience increasingly requires more complexity in the TV platform. If you buy an electronic sell-through movie, you want to be able to view it on all devices, but this means that the operator needs to support four or five DRM formats, and this is something we are addressing. Are operators in a position to provide universal search and unified billing? With regards to search and recommendation, this comes down to the terms of the agreement between the pay TV operator and the OTT provider. There is demand for universal search and recommendation, and operators want their subscribers to be able to find content no matter where it is. OTT providers may see a benefit in opening up their APIs because the benefits of unified search are significant. Internet content providers may also see an advantage in unified billing. From a consumer standpoint, if different content sources are bundled with a single bill, it enhances the value of that service. For now, however, many internet content providers have their own content deals that are based on individual per-subscriber charges, meaning there is a need for a separate bill that can be linked to the overall pay TV bill. The pay TV operator that distributes the service wants a margin on top of this. However, the current model typically is that if you want to be a Netflix subscriber you need to sign up with Netflix rather than subscribe to a fully integrated service with a single bill and subscription management system. How can pay TV operators differentiate their services in a world where people consume content from multiple sources? Every pay TV operator wants to provide a compelling experience and this is still a differentiator for the industry. The user experience is linked to the operator’s brand and position in the marketplace, but operators are becoming less concerned with the technological aspect of how things are done and are worrying more about performance. Operators are becoming storefronts. They don’t care how the storefront gets built as long as it enables the business models and use cases they wish to support. They want to present a brand and a recognisable high-quality experience because they know that otherwise they may be displaced.



The set-top versus the cloud One of the biggest technical challenges of integrating OTT within pay TV offerings is the continued presence of legacy set-top boxes among the pay TV operators’ subscriber base. “On new platforms a lot can be done, but on legacy platforms integration could be a challenge,” says Simon Trudelle, senior product marketing manager at Kudelski-owned technology provider Nagra. For OTT providers, integrating their offering with multiple set-top boxes with relatively small user bases – even if they are technically capable of receiving the service – seems a Herculean task compared with the relatively straightforward Android and iOS iterations that enable them to reach millions of potential customers in a single bound. One way round the limitations of older devices and the limited reach of new devices is to “move intelligence to the cloud”, in industry parlance. Arris-owned ActiveVideo has focused on the cloud-based deliver of advanced services, including OTT services, with a reference deployment of YouTube to legacy set-top boxes for UPC Hungary among its achievements. Chief marketing officer Murali Nemani says that “trying to predict what you have to put into set-top boxes and getting them at the right price point” is not a winnable strategy for most operators. “The problem we have been trying to solve is to enable operators to reach a cross-section of devices and achieve ubiquity in terms of app performance and diversity of support for multiple technologies like HTML5 or native browsers or DRM systems,” he adds. Despite the attractions of cloud-based delivery, the set-top has remained key to pay

nature of set-top technology and the presence of large numbers of legacy devices that are supported by the operators. While US pay TV providers have largely continued to view OTT as a threat, European cable and telecom players are more likely to see OTT as adding value to their platforms. Nevertheless, there are a number of commercial obstacles to deals being done. For example, how much space do operators want to give to other brands, particularly those, like Netflix, that identify their value around their unique user experience as much as on their

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TV operators’ strategy, with major operators investing heavily in advanced set-top box platforms alongside a growing focus on ways in which the cloud can enable them to launch and change services more efficiently. In order to maintain parity with the pace of change on the web, cable and telecom operators have looked to deploy advanced TV platforms that give them the flexibility of OTT providers. The cable industry’s RDK initiative and Google’s Android TV ecosystems are emerging as the principal platforms of choice.

“The Android app environment is increasingly standardised. In mobile world everything is simple. Set-top boxes are still a bit more fragmented but things are improving with HTML5,” says Jean Moonen, VP of product management and business development, SeaChange International. SeaChange is closely involved in the development of the RDK platform and Moonen says he believes RDK is “even better than Android because it has a shared governance model – you can incorporate APIs – while Android is tightly controlled by Google”. However, he admits that the massive Android app developer community does give the latter a certain strength. Technology provider Metrological recently developed an app store framework for RDK,

which enables the platform to provide the kind of environment that Android users would find familiar. “The rise in the number of devices plugged into multiscreen services means that operators must invest in future-proofed interoperable solutions that allow them to deliver a seamless experience on all devices,” says Neale Foster, COO and VP, global sales at multiscreen technology provider Access. “Standards hold the key for UX as well, as most devices are HTML5-compliant. Using solutions that support a wide range of standards and platforms…enables operators to easily create a single interface for all content, regardless of the screen size and interaction method.” The issue may not so much be whether operators should invest in advanced set-tops to enable as part of their future strategy, but to decide which key differentiators need to be boxenabled and which can be more efficiently be delivered from the cloud. Even Nemani, whose company’s raison d’être is to promulgate cloud solutions, says that ‘end point’ devices will still have a role to play – but one that is about enabling multiscreen distribution rather than the rendering of the user experience per se. “Devices have a great role to play in enabling HEVC decoding and networking capability, moving content around the house, storage functionality that provides access to ondemand or personal content and great WiFi that allows you to do multi-room distribution and shift to 4K – these are value-added elements provided by the device,” says Nemani. “Everything else – browser functionality and the app domain –should be in the cloud where it can be rapidly updated.”

catalogue of content rights? Pressure to find a solution is coming from users themselves. Most want to have a single billing relationship, for example, rather than pay separately for an OTT service that they receive through their set-top box. Control of an established billing relationship is one of the key strengths of the pay TV operator. Trudelle suggests that the direction of travel is for pay TV operators to become more and more like large supermarkets, offering a wide variety of content packages from multiple brands. Jean Moonen, VP of product management

and business development at technology provider SeaChange International, points out that pay TV operators and OTT providers do have different objectives in relation to the user experience overall. “Operators want a uniform experience across different OTT providers with different services. If you are Netflix or Maxdome you want your experience to be common across different operators. You can’t fully satisfy both,” he says. Search and recommendation are key here. Moonen says that attempts to provide unified search across OTT apps have not so far been

Moonen: the set-top world is still fragmented.




ActiveVideo has provided cloud-based versions of OTT services such as YouTube.

very compelling. However, there is work underway to harmonise metadata across apps. For Rovi’s Dawes, maintaining consistency in search and content discovery is a major challenge, as is the provision of unified billing. Both are key points of differentiation for pay TV operators and ways of presenting something of value to paying subscribers. “In terms of the look and feel of services, predominantly it is the internet content provider that calls the shots, determining what branding and marketing is placed around the service, and taking charge of content origination and negotiation,” says Arris’s Hooper. “If a pay TV operator signs up to distribute an OTT service they get the content plus the app and have to sign up to how the OTT provider wants it to behave. That can be a challenge for set-top box-based pay TV operators.” Hooper says that while operators seek to differentiate their offerings through search and recommendation and unified billing, they are running into problems when trying to do this across third-party OTT services as well as their own content. While OTT providers may be willing to open up their APIs because “the benefits of unified search are significant”, the challenges around billing are thornier, thanks in part to the contracts the OTT providers have with their own content suppliers. Delivery of content to multiple screens – now an integral part of the pay TV offering and key to the value of OTT – is another potential source of tension in the relationship between pay TV operators and their OTT partners. Multiscreen delivery of OTT services


provides a potential flashpoint if the pay TV partner has launched its own TV everywhere service. For the most part, OTT providers want to team up with pay TV providers only to reach TV viewers via the set-top box, seeing delivery to tablets and smartphones as their own province. But pay TV oprators also want to deliver a uniform service across tablet and smartphone via their own TV everywhere services. However, as Dawes puts it, consumers “don’t want to dive in and out of multiple apps and be disappointed – research we’ve done shows that 80% of people are going to turn off a device if they can’t find the content they’re looking for”.

User data Perhaps the biggest source of tension between the OTT provider and the pay TV operator is over who gets access to user data. Data about the way consumers interact with and view video is seen as having a high value, feeding into their ability to sell advertising as well as make programming decisions. “The increased data pool primarily enables advertisers to easily profile their target audiences. However, advertising is just one of the key advantages of data sharing. By analysing that mobile video viewers tend to favour shorter clips and that Personal Video Recorder users recording content typically find their set-top box storage capabilities limited, video service providers that aggregate subscriber data can offer tailored functionality. From this, operators can upsell services

or offer add-ons to relevant subscribers, providing personalised services that deliver the utmost quality of experience for each individual consumer,” says Neale Foster, COO and VP global sales at multiscreen technology provider Access. Given the advantages that control of data can confer, this is a key battleground between content providers and operators. “OTT players like Netflix have kept control of their data and leveraged it smartly to improve their content buying and commissioning, and they have commissioned on basis of what they know about their viewers,” says Trudelle. ActiveVideo’s Nemani says that views differ in particular over whether to share metadata for unified search, for example, with US OTT providers Hulu and Netflix taking different positions on this. While Netflix, with its large catalogue of long-tail content, sees search and recommendation as key to its appeal, Hulu, which is keen to heighten the discoverability of its recent content library, is more willing to share data with distribution partners. Despite these problems there are strong motives for OTT and pay TV providers to team up. With regards to content, OTT platforms have not so far invested heavily in the key live rights that form the backbone of major pay TV offerings. Netflix is primarily a service with a large long-tail catalogue that could, in most cases, be seen as complementary to mainstream pay TV offerings. The lines that separate different types of operator are in any case becoming blurred. While traditional operators for the most part are becoming multi-play providers – and are launching OTT packages of their own – other players including social networking sites and broadcasters are branching out into offering OTT video services. As content rights fragment and on-demand viewing grows, agreements such as those between Netflix and its multiple European distribution partners, or between Maxdome and its cable distribution partners, are likely to become commonplace. The variety and complexity of the commercial deals struck by the various parties, and the implications for the experience of consuming content on pay TV platforms, remains to be seen, but the pay TV proposition is likely to become much looser and more allencompassing as time goes by. l

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Multiscreen & OTT 2015 > Social networks & OTT video


Social climbing: social networks & OTT video

Social networks have long been used to share video clips, but how viable are they as broadcast platforms in their own right? Andy McDonald reports.

Social

networks have long been a place for people to share video clips, but recent developments hint at broader content aspirations among some of the main players in this space.

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Earlier this year Snapchat partnered with a host of major TV broadcasters and publishers to launch a new in-app feature called Snapchat Discover, in a major step into the premium content space.

Twitter has long seen itself as a ‘second screen’ to TV, but as its relationship with the broadcast space continues to grow, it too has launched a new feature in the form of live video streaming platform Periscope.




MTV has invested in social media initiatives.

Sky. Announcing the update, Snapchat said that Discover will allow media companies to “build a storytelling format that puts the narrative first,” with the service supporting photos, videos, long-form text and advertising. The launch marked a new direction for the messaging service, which was set up to let users send captioned photos and video clips to each other. Discover gives premium brands a place on the platform and lets them publish daily bulletins containing ‘snaps’, or stories. Alan Strange, Sky News’ launch editor for Snapchat Discover says that the broadcaster is “always on the lookout on ways to attract new younger audiences” and has a “culture of experimentation” which fitted in well with the new service. “This was just a perfect marriage for us, because [Snapchat] are obviously bringing to the party a very large pre-existing user base, one that’s really active, and very hungry for mobile video, which is one of our strengths,” says Strange. He now oversees a dedicated team that works full-time to produce daily content for Snapchat Discover,

far: “The numbers are really healthy and we’re working with Snapchat on ways to make them grow constantly.” He also said that Discover will be one of Snapchat’s “key priorities over the next few years” and that the messaging service wants Snapchat to be “the ultimate destination for millennials to get news”.

Twitter ups Periscope Twitter has, for a number of years, positioned itself as a go-to companion service for TV. But with the launch of short-clip service Vine, and more recently live-video streaming platform Periscope, it is evolving its video strategy at the same time as it is forging an ever-closer relationship with the broadcast sector. Dan Biddle, the head of broadcast partnerships at Twitter UK, says that Twitter and TV have a “symbiotic relationship” whereby TV drives Twitter activity, and Twitter activity in turn drives viewing. He says that Twitter takes the point where TV and Twitter coalesce and helps broadcasters make the most of that engagement, as well as monetise

“Whether it’s the producers themselves or whether it’s a channel marketing team, they will absolutely be saying ‘where’s the Twitter gold, what’s the Tweet-spot?’” Dan Biddle, Twitter

Facebook is currently trialling a ‘suggested video’ feature in the US that promises to not only put a bigger emphasis on video but lead to partnerships and revenue sharing deals with premium content providers. Elsewhere, the influence of the social web is clear to see. Not only are broadcasters like MTV looking to social video to inform their linear output, but new platforms like Twitch have also built huge video audiences online by tapping the power of the crowd.

Voyage of discovery Snapchat unveiled its new Discover service in January with a host of big-name broadcast partners – including National Geographic, Vice Media, Comedy Central, Scripps and


with different staff members brought through each week to transfer skills internally. “I really do see it as a way for us to experiment, to reach out to new audiences, improve our own story-telling,” says Strange. He says that Sky works across different platforms that have “their own little idiosyncrasies” and “different behaviours and habits.” Snapchat viewers in particular “want something more instant; they may not want the traditional 24-hour news cycle,” he says. “The kind of things that we would otherwise be known for at Sky News, which is the news as it happens, doesn’t necessarily translate over to Snapchat, because it’s not updatable every hour,” he adds, referring to Sky’s once-aday publishing cycle for the platform. Strange doesn’t reveal audience figures for Sky News on Snapchat Discover, but says Sky is “very happy” with the traction it is getting so

it through its Amplify ad service. Biddle refers to big TV moments that will prompt viewers to comment on the social network as the ‘Tweet-spot’ – events like someone being fired on The Apprentice, or eating something grotesque on I’m A Celebrity... Get Me Out of Here. Broadcasters will put clips on Twitter to accompany these moments, says Biddle, and with Amplify, Twitter lets them make money by adding short pre-roll advertising. Broadcasters and producers are increasingly thinking about these live moments in relation to Twitter, with people more likely to share content if it is presented to them in the first instance, says Biddle. “Whether it’s the producers themselves or whether it’s a channel marketing team, they will absolutely be saying ‘where’s the Twitter gold, what’s the Tweet-spot?’ You only have to look at BBC One and their Twitter feed or ITV and you’ll

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be able to see that these are broadcasters that are very much attuned to the power of real-time video and getting content out into Twitter to be shared as it is happening live on both screens,” he adds. With the launch of Periscope in March, Twitter is enabling broadcasters to experiment further. Biddle cites a number of UK examples where Periscope has been used by presenters and talent to give a behind-the-scenes glimpse at a broadcast – Ant and Dec during the semi-final of Britain’s Got Talent, Kay Burley during Sky News’ general election coverage, and Roger Federer during the opening stages of Wimbledon. As Biddle points out, in these cases, the audience is literally in the palm of the presenter’s hand, offering a powerful connection between them.

Facebook against YouTube In January, Facebook reported that in the previous year the number of video posts per person on the service had increased 75% globally and 94% in the US. Worldwide, the amount of video from people and brands in the site’s news feed has increased by a factor of 3.6 year-on-year, and that on average more than half the people who use Facebook every day in the US watch at least one video daily. With the service claiming to have averaged more than a billion video views every day since last September, video is clearly a core component. In an online ‘Townhall Q&A’ with Facebook users, CEO Mark Zuckerberg even said that in the future “video will be even more important than photos” on the service. Facebook is now testing a ‘suggested video’ feature in the US, designed to serve up content based on what a user likes or is watching. Suggestions will appear as a video feed that starts playing as people scroll. News of the plans broke at the beginning of July, with Facebook reportedly planning to share video ad revenues with content makers for the first time – offering a similar ad split to YouTube. Facebook is also rumoured to be to be trialling suggested video advertising with professional content providers like Fox Sports, Hearst, Funny or Die and the NBA. Richard Broughton, research director at Ampere Analysis says: “I think there’s certainly a very strong incentive for content companies to start disseminating videos on Facebook – not least the fact that if there’s

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more competition in the market from a platform, it puts the content creators in a much better negotiating position. This means in a year’s time they can go back to YouTube, or indeed Facebook, and say ‘these guys are offering me better terms, what can you do to match it?’” A recent Ampere research report claimed that Facebook is making a “serious play” for content owners and that recent trials with the likes of Fox Sports “suggest it’s primed to become a plausible alternative to YouTube.” Ampere predicted an “advertising ‘arms race’” between the social network and YouTube. “Ultimately, the objective with Facebook, as with most companies, is simply to make more money. Video is a good avenue for that, because video adverts are more expensive, so advertisers will pay more for them. So obviously Facebook’s been ramping up the video over the past few years to take advantage of those higher associated CPMs,” says Broughton. IHS director for operators and mobile media Jack Kent agrees that Facebook’s move into the premium video space puts it more into competition with the likes of YouTube, and says the social network is now being “very aggressive in its video strategy”. Kent cites a recent partnership between Facebook and HBO as another example of its video ambitions, in which HBO offered free access to the first episode of its two latest comedy series, Ballers and The Brink, on Facebook for a limited time. “Compared to YouTube the monetisation [on Facebook] might not necessarily be there yet. But if you look at the speed at which Facebook can change its business around – in 2012 mobile advertising revenues were virtually zero, now the vast majority of advertising comes from mobile. So Facebook can change its strategy quite quickly, to mobile and now to video,” says Kent.

MTV’s social rebrand While it is now customary for broadcasters to use social media to connect with viewers, a recent MTV International rebrand is seeing


Sky News has teamed up with Snapchat and is providing content for the site daily.

the youth network harness the power of social networks for its linear output. In a bid to evolve the brand from ‘I want my MTV’ to ‘I am my MTV’, the network has begun to spotlight social media videos from its audience and talent, both on-air and across all platforms. Viewers that share Instagram or Vine videos on Twitter with the tag #MTVbump could see their video appear on-air within two hours, in what MTV says is the first of many ways that it will open up the brand to young people. Viewers can also visit MTVbump. com to see all the ‘bumps’ that have made it on air around the world. Tanya Leedekerken, MTV International’s vice-president of marketing, says the rebrand is designed to keep pace with the wider changes in the media landscape since MTV International unified its worldwide brands in 2008. “We’ve upgraded that look throughout the years [but] it’s pretty close to where we started out. In the meantime the market has developed and we’ve noticed that the way that young people are consuming content over different screens and the way that they communicate with each other has really changed significantly. So for us, we felt that it really was time for MTV to take the next step in the constant evolution of the brand,” says Leedekerken. She claims that new technology has surfaced “an enormous amount of talent amongst young people” that MTV wants to spotlight and celebrate. “We really are looking to give back the brand to our audience and all the talent out there and give them the context to create and have fun on our channel in the [programming] breaks,” she says. “What we’ve essentially done is we’ve created a connection between broadcast technology and the internet and it’s fantastic because honestly this means that if somebody’s at V Festival in the UK and they’re producing this wonderful Instagram video it can be on-air in Sydney even a little bit quicker than the two hours. It can basically go on air almost immediately depending on how ontop of the curation people are.” Leedekerken says the initiative makes MTV feel “super


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Twitch has tapped into the social instincts of games enthusiasts.

topical, localised and immediate”, but that it also plays into the network’s wider strategy to seek ‘shares’, ‘likes’ and generate buzz for its programming on social media. “Obviously MTV has a massive footprint – I think we have 304 million fans across all platforms, globally. We know that most of our audience is on social media, and we also know that one of the big topics on social media is television. So on our end, music and reality television are the perfect fuel for what we call ‘likeonomy’. Our content is produced with that in mind,” says Leedekerken.

Twitch’s social ascent Twitch, a video platform and community for games enthusiasts, has grown into an online phenomenon over recent years. Initially borne out of broad-based live video platform, Justin. tv, Twitch launched as a standalone service just four years ago and has since grown its audience more than ten-fold to reach more than 100 million unique viewers per month. Despite this, the first time that many nongamers would have heard of the service was when Amazon acquired it for US$970 million

(e880 million) in cash in August 2014 after reportedly fending off a rival approach from YouTube. “People ask me why is Twitch so successful? There are lots and lots of reasons why, but at its root I think it’s because gamers as a group tend to be very, very social people, despite what popular stereotypes might be of the shut-in basement-dwelling gamer guy. Nothing could actually be further from the truth,” says vice-president of marketing, Matthew DiPietro. “We launched Twitch in June of 2011 and it’s been a rocketship ever since. I think we have really profoundly affected the video game industry in particular. I think we’ve also provided an all-new, wholly different type of entertainment for gamers all over the world, and that’s something that I think we’re all very proud of.” Gamers stream footage of themselves playing games, while others can watch, comment and interact on comment boards. The site now covers gaming events such as the E3 games expo in Los Angeles. DiPietro claims that the gameplay and the social aspect of the service go hand-in-hand and that the chat is “absolutely critical” to the Twitch experience. “Chat has essentially allowed the community to develop this language and this culture that is unique to Twitch, that doesn’t exist anywhere else,” says DiPietro. “The way that people speak to each other and express themselves through emoticons and through chat is really fascinating. If you’re not a Twitch Twitter has launched live video-streaming platform Periscope.

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user, it might seem a little bit bewildering, frankly. But it’s the thread that pulls everybody together... it’s the social fabric that connects the whole site.” Although it has diversified somewhat in recent years, DiPietro says that the Twitch demographic skews to a younger, male audience that, crucially for advertisers, tend to be cord-cutters and do not have a cable TV subscription. “They consume content over-the-top, on mobile, on game devices and things like that. They just don’t watch television – broadcast, cable or otherwise. They watch things like Twitch.” For this audience, traditional marketing channels are becoming “increasingly irrelevant”, says DiPietro. While games companies and platforms have predictably embraced Twitch “in a profound way” as a means to promote their titles and products, a more interesting development has been that “non-endemic brands are starting to tune into the value of Twitch as a platform,” he says. Large consumer brands like Taco Bell, Old Spice and Coca Cola are now turning to Twitch because its audience is a “very, very hard audience for advertisers to get their message in front of.” While social media is not replacing broadcast television, the lines between social and broadcast content are becoming increasingly blurred. The TV industry uses social platforms for promotion, but the power that these services now wield and their own video aspirations could make them a force to be reckoned with in years to come. l


Q&A: Matt Smith, chief evangelist, Anvato Matt Smith, chief evangelist at Anvato, talks about making money from TV everywhere and VoD, advanced advertising and cloud-based delivery What are the most promising ways for service providers and content owners make money from TV everywhere services? The largest and most ubiquitous way is/will be dynamic ad insertion, or DAI. This is the process of replacing the ad units that appear in a broadcast with new ads in the digital realm. This can be done for both live programming as well as on-demand content. In fact, live content that has been prepared for DAI is immediately ready for ad replacement as a VOD asset, with no additional preparation required. This represents entirely new revenue streams for programmers, content creators, and networks of all shape and size. For the service provider and operator, offering OTT and TV Everywhere could also mean additional monthly fees for the service. For example, the most lucrative subscriber on a system may be offered OTT/TVE services to enhance the value of their monthly bundle of services. However, a data only or lower tier customer could be offered an upsell opportunity, where a tier of OTT channels could be added/offered for a small incremental fee, as determined by the operator. What are the challenges to realizing value from advertising on nonlinear and multiscreen platforms and how can companies make money from this? The real challenge is in ensuring the content is ad-ready and has been properly marked -- at the start/end of the asset in addition to along the boundaries of the ad breaks. When a signal is processed from a live channel, a great deal of complexity is removed. However, file-based assets can still be ingested and prepared for ad replacement. The critical takaway from this is that all media assets are prepared -- whether live or on-demand. Sometimes this means that standardized markers (like SCTE 35/104) aren’t present. This isn’t as big a hurdle as it was just a few years ago. We can now use a variety of other commands and technologies to signal the presence of an ad pod and properly act on that data. Some examples are GPI triggers, communication interfaces with video playout and delivery platforms, and even human interfaces (think big red button) when sporting events are the focus. How far can targeting of live and on-demand advertising benefit content rights holders and distributors and what types of targeting work best? This is the least understood and implemented element of DAI today. Given that each viewer maintains a unique connection and session with the cloud through which they consume video content, we are able to deliver ads (and programming) specific to each viewer. That’s significant. Using geo-targeting, we can deliver an ad most relevant to the viewer and the brand. Imagine if you were delivered an ad for a Costa Coffee while you were just a few hundred meters from a store. Maybe the ad would even feature a redemption code for a discount on your cup of coffee. These experiences are possible today.

What are the technical and commercial advantages of cloud-based delivery of advanced TV applications such as VoD and DVR over other methods of delivery? The cloud opens up and enables experiences that were previously only possible in the home. Imagine being able to watch any program on your tablet or smartphone with a simple tap of the finger -- even if it aired 36 hours ago. This is Cloud DVR and is opening up experiences on screens where no connection to a set top or hard drive is needed, as before. Today, the HLS streaming protocol is available on every screen, eliminating the need for older, more inefficient solutions where packaging or storage of various streaming formats was required. Further, the cloud provides us with unrealized compute resources that previously required complex logistical planning and significant capital expense in the not too distant past. This isn’t to say that an “all cloud” strategy is sensible. In fact, with most video workflows, a hybrid approach that uses platform intelligence to leverage on-premise hardware combined with cloud capabilities is extremely cost-effective yet powerful. What can content rights holders do to maximize the value of programmes beyond their initial broadcast through on-demand delivery? Simple: make them accessible. Beyond the traditional viewer, we are seeing enormous new audiences for this content whose primary screen is one not tied to a cable or satellite dish. This reason, and the economics of reaching them through either subscription fees or ad revenue, should be motivation for any content creator or programming provider to bring this content to every screen. The cost to make this content available today is dramatically less than it has been and the benefits in terms of brand reach and monetization should outweigh past considerations around cost and complexity. What are the key distinctive elements in Anvato’s approach to providing solutions for these services? First and most importantly, Anvato provides every element needed to bring an OTT/TV Everywhere offering to viewers in one end-to-end platform. There is no longer the need to cobble together disparate elements that perform some tasks (encoding, clip cutting, players, syndication, CMS/MAM to name a few) from various vendors into a handicapped semi-integrated “solution”. We’ve engineered every element organically, eliminating the fear of compatibility from vendor to vendor, technology to technology. Further, Anvato has removed the old, costly proposition of buying purpose built, specialized hardware. In this fashion, operators, programmers and content creators can pay as they go, adding more content or channels as needed without breaking the bank.

Multiscreen & OTT 2015 > The search for niche audiences


Minority report: the search for niche audiences

Serving niche audiences on a global scale is becoming an increasingly viable business model in an online world, reports Andy McDonald.

As

over-the-top video starts to mature, the market is increasingly giving rise to players that cater for specific audiences. While the rise of the Netflixes, Amazons and Hulus of the web offers a new route to market for TV and movie content, there is a new wave of online players specialising in specific

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genres – ranging from foreign content to documentaries and factual programming, little-known drama and Japanese animation. Online distribution is cost-effective when targeting small audiences, and the nature of the web means that small niches attain a significant scale when applied to a global

market. A recent study by Horowitz Research claims that 88% of urban TV viewers now have the ability to stream video and states that multicultural viewers are more likely to have made OTT video a part of their lifestyle. Lebara, a telecoms company that offers low-cost international calls, is just one of a



DramaFever is an example of an OTT service than has outgrown its original niche

number of companies looking to target this type of audience. In June, it moved into OTT video by launching a multi-ethnic content service aimed at migrants living in Europe. Lebara Play kicked off with more than 150 TV channels and 3,000 movies from around the world, launching in the UK, Germany, Netherlands and France. The firm plans to roll out to the rest of Europe over the summer and worldwide by the year-end, starting with Australia and New Zealand, with the final stage of expansion to be North America.

Niche audience Aditya Thakur, CEO of Lebara Play, says that the service is based on understanding migrants and supporting them – “from their first steps” in a new country, when they want to call home, to when they are more established and want to then be connected to the entertainment from their homeland. In line with this, entertainment makes up just one part of a wider plan by Lebara to serve its audience with various apps and services. A Viber-style internet calling service and banking and travel products are all in the pipeline, according to Thakur. Lebara Play – which is available on mobiles, tablets, computers, and selected set-top boxes – offers linear channels and VoD content aimed at Tamil, Turkish, French West African and English West African audiences in Europe. The catalogue is due to expand to include Romanian, Polish, Hindi and other packages covering 13 languages. Content partners to date include: Tamil broadcaster Sun Network; pan-African channel Ebony Life; Nigerian network Silverbird; French Nollywood movies channel Nollywood TV; Turkish channel ATV Avrupa; and African Movie Channel. Thakur says that Lebara will not offer new language packs until it has licensed a comprehensive line-up for that given market – something he believes sets Lebara Play apart from some of its competitors. “There are a lot of packs out there [in the market]. We believe that what’s been constructed for migrants [previously] is very makeshift – a few channels here, a few channels there and you call it a booster pack, or an Asian pack, or whatever else, but it’s not really thought



through. It doesn’t really give you the depth that people are looking for,” says Thakur. “As and when we introduce [new language] packs we’re going to make sure that they’re fairly complete. Obviously we’re a legal player and we don’t have the luxury of just plucking out channels from thin air and offering them on our packs. It’s been done by a lot of satellite players across the region – we refuse to go that way. That’s the legal stand that we’ve taken.” While Thakur cites piracy as a “big competitor” he claims that Lebara Play’s selling point is that it combines the best of live TV, and the best of VoD and catch-up “in one compelling offering at a very simple price”. He also points to the very large addressable market for the service. “From the initial projections that we have done, we’ve put that number at something close to 15 million in Europe itself. This is the official stats, and we know that there’s lots more people out there that are not even declared on the official stats.” Thakur says Lebara Play was made possible because of the increasing affordability of smartphones and availability of broadband. However, the service was also able to launch

first mover. David Vargas-Racero founded Cloudio TV in 2011 as an internet TV and web video provider aimed at diaspora audiences, offering content packages based around various languages – including Arabic, French, Korean, Portuguese, Spanish, Tamil and Vietnamese. Vargas-Racero led the firm as CEO until earlier this this year. However, a shareholder dispute over what he describes as the future direction of the business saw the founder step down in May to set up a rival operation called Stream Republic. Vargas-Racero says that Stream Republic, like Cloudio TV, aims to help international communities put their content online – delivering live channels and VoD across different platforms, all around the world – though he claims his new business will take a more tailored approach to individual markets. “I’m looking to target specific communities on their own, rather than [be] a big store for everything,” says Vargas-Racero. “I’m creating Brasil Play, which is for Brazilians, Carib Play, which is for the Caribbean diaspora living in Europe, and we are now in discussions with other communities. Everything we’re doing is

“We’re working hard on creating smart TV apps that will help us stream 4K live to viewers, so that’s part of our mission this year.”

Elizabeth Hendricks North, CuriosityStream

thanks to a technology partnership with SPB TV. A provider of OTT, IPTV and mobile TV solutions, SPB has worked on projects for the likes of Russian mobile operator MTS – delivering an online TV service across a large geographical area and various time zones for millions of customers. SPB co-founder Sebastian-Justus Schmidt says that technology is changing old distribution models, with “niches which couldn’t been addressed before now easy to access.” However, in Lebara’s case, he rejects the idea that the firm is even targeting a ‘niche’. “Lebara’s vision is to see the migrant community as a whole which is huge,” he says.

Reaching the diaspora While Lebara is a major new player for in the migrant-focused OTT field, it is not the

obviously all 100% licensed with the content providers, so we do it either by partnerships or directly doing content acquisition.” Beyond these initial two launches, VargasRacero, who was previously head of broadcast and IT at Current TV in the UK, says that Stream Republic is considering Chinese and Japanese content offerings, and is also looking at the Indian and Arabic markets. He says that the plan for Stream Republic is to launch brands for specific markets, with apps for smart TVs, smartphones and tablets running iOS and Android, and platform operator-provided set-top boxes. This approach is designed to give each Stream Republic-launched brand a unique identity and allow each service to operate in the language native to that market. “It’s easier for marketing as well – the message is clear,” says Vargas-Racero. “Cloudio is more like one

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Viewster has tapped into a global appetite for Japanese anime content.

app for everything, which is more difficult to market. I’m stepping away from that.” Describing Stream Republic’s over-thetop strategy, Vargas-Racero explains that this route to market is an increasingly sensible choice for smaller broadcasters looking to reach targeted audiences. “The OTT market is extremely good for reaching these communities, because right now the satellite delivery is becoming too expensive. There has also been a huge increase in piracy and the actual satellite providers are no longer able to compete in an affordable way,” he says. “We’re talking about content providers that normally have less than 40,000 subscribers, so the cost of satellite is not affordable. Satellite becomes a very good way for delivering communications once you are in a high volume of millions. But for this small volume, it becomes too expensive for companies to grow.” Operating in the same space is CaribBe TV, which launched last year in partnership with Cloudio. The latter provides the technical platform for the service, while CaribBe TV takes care of the content and marketing. The service was designed fill a gap in the market for Carribean programming in the UK market. However, Jo Spalding, CaribBe’s founder and the managing director of parent firm Caribbean Media Partners, says the company has broader aims. “According to the stats we have, the Caribbean diaspora in the UK is about one million. That’s just the UK, but we are planning to expand into other European countries as well,” says Spalding. “Ireland will be first, followed by the Netherlands, Scandinavia, Germany. We are first of all concentrating on the Northern European countries, but we will be looking at the rest of Europe as well.” Currently CaribBe TV offers 10 channels – some are pan-Caribbean like Caribvision, Tempo and One Caribbean TV, while others are from particular islands, such as Hype TV from Jamaica and Gayelle from Trinidad and

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Tobago. Spalding says the service also aims to reinforce its on-demand offering over the next six months. The firm’s international expansion plans will sees CaribBe launch formally in five European markets by the end of the year. This will mean providing different language versions of the service, and ideally having a company representative in each country to do the marketing. “Technically we’re already available all over Europe, but we haven’t announced the service; we haven’t made a formal launch in the other markets. Someone who finds the Cloudio app can download [it] and they can order a CaribBe.TV package from anywhere in Europe. As a matter a fact, we have subscribers from eastern Europe, Russia, Yugoslavia and Scandinavia already. It means that people have an interest,” says Spalding. He claims that CaribBe’s offers “the most comprehensive Caribbean package in the market so far”. However, he believes that the service has the potential to reach an even wider audience. “Caribbean content, in particular when it comes to travel, lifestyle, music and entertainment, obviously has an appeal which goes well beyond people of Caribbean descent – so this is what we want to capitalise on and reach a bigger audience,” says Spalding.

Exporting foreign content DramaFever is an OTT service that has, in a similar way, already outgrown its original intended niche. The US-based service was launched in 2009 by two college friends – Suk Park and Seung Bak –who came up with the idea of bringing Korean drama to the US market after noticing on a business trip to China that this content was already gaining popularity outside of its home market. DramaFever’s head of marketing, Yale Wang, says: “When they returned to the US they wanted to see what was available here. They went online, they found a bunch of sites that were offering lots of Korean content but it was all pirated – it wasn’t licensed. So they spent the first nine months of the business just basically going out to South Korea, knocking on doors and getting folks to license them their shows legally.” After starting the site with an initial offering


of roughly a dozen shows, DramaFever’s founders began to grow the service and soon made an unexpected discovery. “Originally the site was targeted towards Korean Americans or people that had emigrated from South Korea,” says Wang. “It very quickly became apparent that was not our audience base. Instead we had actually cultivated a base of young millennials, especially young women. If I was to give you a demographic breakdown, it’d be probably 45% Caucasian, 25% Latino, 20% African-American and 10% Asian-American.” With its audience demographic in mind, DramaFever has since expanded its drama remit to include telenovelas, shows from elsewhere in Asia and even English-language content. The firm recently signed a deal with BBC Worldwide North America to bring a number of period dramas to the service, including Pride and Prejudice and Tess of the d’Urbervilles. “We are region-agnostic,” says Wang. “Nowadays we care less about Asian content. We still try to get the best out of Asia, because that’s where our roots began. But what we want to get is the best from across the world. So we want content that first and foremost speaks to our existing core audience of young millennial females.” The success that DramaFever has achieved with its Asian catalogue – which currently still accounts for the majority of viewing on the site – has not been lost on industry-watchers. Last October it was acquired by Japanese telco SoftBank and the firm has also diversified its output by developing further on-demand sites in partnership with early investor AMC. DramaFever currently powers AMC’s Sundance-branded Doc Club site – an SVoD service focused around feature-length documentaries. It is also now in the beta testing phase for a new joint project with AMC – a subscription horror movie site called Shudder. Wang says DramaFever has plans to replicate this model and explore further niches in the future – provided there’s a business case for doing so and the right partner is involved. “I think AMC’s been a fantastic partner so far, so we don’t want to do this on our own. It’s the type of thing that we bring a lot of expertise to the table in terms of marketing, as well as product and technology. But we like working with other companies as well,” he says. Switzerland-based Viewster is another OTT business that has evolved over time.


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Originally starting out as business-to-business video aggregator for companies like Netflix and Hulu, the firm launched a consumer VoD platform in 2010, and has now started putting a strong focus on anime content. “The moment we opened up our own homepage we noticed that there is a huge potential for free, advertising-based video-ondemand,” says Viewster’s head of marketing, Tilman Eberle, describing a cosmopolitan, international audience eager to watch content that has not necessarily been produced in their home country or in their first language. Eberle says that Viewster’s decision to focus on Japanese-originated anime content – targeted at viewers outside of Japan – has opened it up to a very loyal and very strong target group. He claims that since the site shifted focus onto this, key performance indicators like time on site, videos watched and return rate have “jumped up by at least three times.” Anime provides a “large niche” for Viewster to tap into, according to Eberle. As a “wild guess” he estimates that there could easily be around “20-30 million real core, hardcore fans in the western countries like North America and Europe for that kind of content.” On top of this, Viewster retains a catalogue of movies and TV shows spanning different genres such as sci-fi, fantasy, action, adventure and comedy. Eberle says “we see a much larger potential in reaching a huge consumer audience beyond only anime fans. But there are a lot of people who are really fond of genre content and will get access to anime through adjacent content that they will find on our platform.” Viewster recently appointed former Bandai Namco Games executive Rob Pereyda as chief strategy officer and CEO of its US subsidiary, and the firm now has plans to launch a premium video offering in this market – diversifying its existing ad-supported model.

Eberle believes that while there is not much space for small OTT players to compete against heavyweight contenders like Netflix on a broad library offering, “we can give the audience a different experience that we are specialised in.”

Mining the niche Anime is just one of a wide range of niche topic areas that are now available in the OTT video space. In March this year, a new SVoD service from Discovery Channel founder John Hendricks, called CuriosityStream, went live in the US. The independent venture offers premium factual programmes on an ad-free, subscription basis, taking Hendricks’ “vision of accessible and curated factual programmes to the social media generation.” Hendricks’ daughter and CuriosityStream president Elizabeth Hendricks North says that her father had envisioned for more than a decade “a service that could be ad-free and allow people to see really great factual shows and documentaries without interruption of commercials. So it’s been a long time in the making in those terms.” Since he retired from Discovery last year, North says that CuriosityStream has been Hendricks’ “passion project” and that the service has now come to fruition with the right team members in place to drive it forwards. Steve Burns, who has spent more than 25 years in executive roles at National Geographic and Discovery Networks, is a notable addition to the firm as executive vicepresident of production and acquisition. North says that CuriosityStream has so far seen its subscriber numbers grow by 20% week-over-week and that it has doubled its content offering since launch. “We have about 300 hours [of content] on the site and we’re expanding right now. What we’re also going to try and do over this next year is refine our platform and make sure that we have content available in as many territories as possible internationally,” says North. CuriosityStream aims to expand into Canada “as soon as possible” and from there move into other English-speaking markets and territories, says North. It is also looking to expand in other areas, looking in particular Lebara is targeting migrant audiences worldwide.

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to add 4K, ultra high-definition content to the service. “We’re really excited about breaking into 4K and offering that to subscribers. It’s a small market right now, but we see it in the way that HD was back over a decade ago,” says North. “The difficult part is making sure that we can deliver it in a quality fashion. We’re working hard on creating smart TV apps that will help us stream 4K live to viewers, so that’s part of our mission this year – to get the technology down for delivery.” Currently CuriosityStream offers two subscription tiers – US$2.99 (e2.70) permonth for standard definition resolution content, or US$5.99 per-month for HD, with plans to add a third, 4K resolution option later this year priced at around US$10 per-month. The firm has also commissioned a 20-part series in 4K called Big Picture Earth. This feature scenes from some of the world’s most spectacular locations and will be produced by David Conover, the filmmaker behind Discovery series Sunrise Earth. Another notable original series that is due debut on CuriosityStream as part of its short-form library is Destination Pluto, which will feature footage from the New Horizon mission to the distant planet. The firm’s stated strategy is to mix a select number of commissioned shows with acquisitions and it has already signed content deals with nonfiction producers including the BBC, NHK, ZED, Terra Nova, and Flame Distribution. “We’ve created a different way for finding documentaries on CuriosityStream by topic, rather than by title or actor. So I don’t think we’re competing with anyone now. Some people are going to join this OTT revolution and, yeah, we’ll have competitors soon, but I think right now we’re still finding our platform and we’re really focusing on creating the best product possible,” says North. While the likes of Netflix and Amazon have captured the broad general interest OTT market, there appears to be a plenitude of rich avenues for online video players to specialise in and explore a range of subject areas – offering a depth of content unavailable elsewhere online. As Yale Wang at DramaFever says: “At the end of the day, the consumer doesn’t want to pay US$200 every month and watch maybe five channels and get 200 that they don’t care about. The internet’s great for letting consumers just search out what they want and pay for exactly what they want.” l


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Multiscreen & OTT 2015 > Advanced advertising


Ad and multiply:

OTT and multiscreen advertising Broadcasters and pay TV operators are increasingly looking to the web for models about how to make additional revenues from advertising. But TV is different in many ways and progress is likely to be patchy. Stuart Thomson reports.

As

any attendee at TV industry conferences must know by now, people increasingly are watching TV when, where and how they want. No longer penned in by the TV schedule and the set in the living room, technology is enabling them to timeand place-shift to their hearts’ content. While the pace of this shift has been exaggerated, the potential impact on what remains the principal mainstay of the TV business – advertising – is huge. While broadcasters have until now largely been able to keep the traditional advertising-funded show on the road, they know they need to change the way TV advertising works to secure their business for the future, before a tipping point is reached where linear viewing for most content falls out of favour. The matter is given an additional element of urgency because the people whose viewing habits are changing fastest – the 18-35 year-olds – are those that advertisers most want to reach. While traditional, schedule-bound viewing has in many ways proved to remarkably resilient, the popularity of OTT and multiscreen TV has grown alongside that of non-linear content consumption, with OTT providers primarily focused on delivering video-on-demand, and tablets and smartphones more typically being used to view on-demand than live content. Given the nature of the shift taking place, broadcasters might be expected to be changing their working practices significantly to ensure they don’t get left behind. However, mainstream broadcasters and pay TV content providers alike have struggled to identify ways to make money from non-linear, IP-based multiscreen delivery. On the contrary, the trend towards on-demand viewing has served

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to undermine the advertising business rather than enhance it. The advertising industry, including media buyers, have also proved to be conservative. While the way people view content is changing, the industry has by and large yet to make the necessary changes that will enable their clients to continue to reach the audiences they want to target and enable broadcasters to continue to make a viable living.

Pay TV advertising The advertising business varies hugely from market to market, even in the linear world. In the US, cable operators have long played a major role in advertising, which delivers multi-billion dollar revenues through cable’s ability to sell a fixed portion of hourly advertising inventory on channels carried over cable. In Europe, this business barely exists, except in a fragmentary form. However, even European operators are beginning to get involved in the advertising business in a small way, if not by selling ads directly, then by teaming up with broadcasters to deliver multiscreen, targeted and nonlinear advertising, as well as to exploit additional inventory that has appeared on the operator-branded guides that enable viewers to navigate the content on offer. “The main reason service providers need to get involved in advanced advertising strategies is not to compete with broadcasters, but rather to offer a solution that enables broadcasters to compete in a new ecosystem, whereby new video platforms are creating a fragmentation of audiences and capturing ad dollars that used to go to networks,” says Thomas

Bremond, European managing director of ad technology provider FreeWheel. The slowness of pay TV operators and broadcasters to address the shift taking place in advertising is surprising. While the relationship between broadcasters and pay TV operators is characterised by a degree of tension over one of the mainstay revenue sources of the pay TV business – distribution fees – advertising is an area where both potentially stand to benefit if they can agree terms of trade. For Bremond, the opportunity is linear ad insertion, where operators can substitute ads in linear streams – which still account for the bulk of viewing – and deliver advertising that is more relevant for the audience in a particular region, for example. However, for various reasons, operators have initially focused on on-demand advertising, says Bremond. “There has been a lot of discussion around linear ad-insertion, when in fact it is a complex equation to solve both legally and technically. In the US most operators have decided to focus on helping broadcasters create additional VoD inventories for programmers on their catch-up/replay platform,” he says, describing VoD as the “intersection” between premium linear content and the digital world of addressable advertising. “While linear is probably the biggest opportunity down the line, starting with enabling programmers to dynamically serve ads on an operator’s VoD platform is a very important short term milestone, as it will enable the ecosystem to find the right balance and business models,” says Bremond. For Jean Moonen, vice-president, product management and business development at SeaChange International, service providers’




Younger viewers’ taste for catch-up viewing could provide new advertising opportunities.

involvement in the advertising business is “always talked about” but has struggled to achieve momentum. “The big challenge in Europe is to create business agreements between content providers, broadcasters and service providers,” he says. “One of the key differences between the US and Europe is that in Europe there isn’t a legal framework and accepted measurement system for this.” While some initiatives are afoot in certain markets – Moonen cites the example of broadcasters granting network DVR rights to pay TV operators in exchange for being allowed to substitute ads – this is very much a patchwork affair, he says. Neerav Shah, vice-president of multiscreen video infrastructure, cloud business solutions at technology provider Arris, whose company has worked with a number of European broadcasters and service providers including RTL and Vodafone-owned Kabel Deutschland to enable enhanced advertising, agrees that the main obstacles to a service providersupported advertising business taking off in Europe are commercial and legal rather than


technical. Problems in the linear advertising sphere include how to verify that advertising is properly regionalised and that the correct ads are played out in the correct spots. Shah says things are “generally easier” in the digital world. In the case of OTT platforms with content rights that do not address settops, it is straightforward to insert advertising. The challenge, he says, is to ensure that the advertising sold maintains its currency and does not degrade the value of linear platforms.

Programmatic buying With traditional TV advertising struggling in a number of markets, broadcasters and pay TV operators who make money from advertising are increasingly looking to the web as the template for creating a way of working that will enable them to protect their business and increase its value as well as a potent competitive threat. Introducing ‘programmatic’ buying – and selling – of advertising inventory – meaning the kind of

automated buying and selling practiced on the web – is seen as a key part of what the TV world needs to do to keep up with the internet. In the case of programmatic buying, however, the industry is bedeviled by a lack of alignment of the technologies and working practices employed by buyers and sellers. Nevertheless, some industry observers see progress being made albeit slowly. “What is so fascinating now is I think we are finally seeing enough technological innovation not only on the selling side but on the buying side that is enabling this automation between buyers and sellers,” says Sarah Foss, VP/PLM, advertising management systems, Imagine Communications. However, she cautions that buyers are still very far behind in developing the kind of systems and practices that would enable programmatic buying to be done on a systematic basis. While “those with centralised ‘buy-side’ clearing houses have done programmatic buying for years”, this is far from universal, she says. Foss says that one issue is around transparency. Sellers can be reluctant to give

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too much away regarding pricing, while buyers may have more interest in transparency. If industry practice is characterised by closeddoor deals that obscure pricing to other potential buyers, changing this is likely to prove challenging. Programmatic buying and selling is related to automating data capture and providing the relevant data that will enable the buy side to make informed decisions. However, again there are major hurdles to cross before a perfect alignment of buyers and sellers is achievable. “Very few markets share data in near real time for TV and radio because buying systems and selling systems can’t share the data,” says Foss. Foss says that “the convergence of the business models of TV and digital” is becoming real, with the world moving towards a web-like ‘impressions’-based valuation of campaigns rather than a TVcentric ratings-based assessment. Advertisers want more than information about how many impressions their ad receives, according to Foss. “They want rich data and audience-based information,” she says. “The pay providers so far have done a good job of setting up the opportunities to deliver targeted ads to particular audiences but getting that data back to the agencies and buyers…is not happening.” It is likely to be some time before programmatic buying and selling of TV and premium video advertising becomes the dominant form of buying and selling video ads, for a number of reasons. According to an eMarketer report last year, US programmatic digital video ad spending is likely to grow from a US$710 million (e645 million) business in 2014 to US$3.84 billion by 2016, rising from 12% to 40% of the total, but with most of those choosing the programmatic route opting for a ‘programmatic direct’ approach

– that provides inventory pricing guarantees – rather than the ‘real-time bidding’ approach more common for display ads on the web. The TV growth, though impressive, pales beside expectations for digital display ad spend, which eMarketer projects to grow from US$10.06 billion in 2014 to US$20.41 billion by 2016, rising from 45% of the total in 2014 to 63% by next year. Foss predicts that the industry will continue to be characterised by a hybrid “dual currency” system, not only because inventory holders are keen to guard their property closely but because systems are not in place to enable universal programmatic trading. Australian cable operator MCN, which is using AOL TV’s programmatic ad system, has reported that it expects to generate 5% of its ad revenue via programmatic by the end of this year. The operator is selling inventory for a large number of TV channels, including premium sports and entertainment channels. While recent moves by MCN and – in the US – ESPN to move some of their inventory to programmatic platforms is ongoing, there are good reasons why the selling of TV ads is likely to remain set apart from the way display advertising is sold on the web. “TV advertising is traditionally bought months in advance, ensuring early revenue for broadcasters and pay TV operators, while programmatic selling relies on automated selling, usually in semi real-time. This means that broadcasters and pay TV operators may not be able to sell their entire inventory programmatically, which would


result in revenue loss,” says Andy Nobbs, chief commercial officer at Teletrax, which specialises primarily in enabling multiscreen advertising. “While programmatic has demonstrated its capacity to sell more inventory and fasten the pace of transactions online, broadcasters and pay TV operators can ensure that all their inventory is sold at the best price by combining traditional TV buying and programmatic, depending on the potential to raise the auction for each slot.” Arris’s Shah agrees that programmatic buying and selling will be applied only selectively in the case of TV advertising. “Everyone talks about programmatic but the majority of the inventory is still bought in upfronts in the US market,” he says, referring to the annual buying events where programmers put their wares on display for advertisers who then buy inventory for the year ahead. Where programmatic buying is making inroads in the TV world, he says, it is being applied in the form of private rather than public buying, where buyers have to meet a reserve threshold that ensures the value of the spots remains high. FreeWheel’s Bremond argues that “programmatic selling needs to be put back in the right context”. For premium video inventory owners, the key benefit is automation – i.e. a reduction of costs and streamlined processes – alongside ensuring compliance with rules that apply to TV content and enabling operators and broadcasters to increase the value of their inventory by enabling more targeted buying. “The main challenges are to ensure that any programmer or operator that wishes to enable programmatic access to its supply follows the rules. In a nutshell, access to safe demand is the number one concern of anyone with premium inventory,” he says.

On-demand insertion It may therefore make sense for industry players to focus first on implementing technologies such as programmatic buying Anvato is supporting the delivery of multiscreen OTT services by pay TV providers.

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and selling in an area that is currently underexploited, where there is room to experiment without any danger of bringing down the existing advertising business. “It is extremely important for operators and programmers to start with environments that can be assimilated into the TV viewing experience without threatening the whole ecosystem,” says Bremond. “Catch-up, VoD or replay environments provide a fertile ground as they are rapidly increasing in viewership; programmers are increasingly bundling linear with VoD sales and measurement is starting to come up with metrics that enable better measurement of non-linear activity. From a systems perspective, the key aspect is to ensure that any rules and user experience are maintained across the board and across all inventory.”

“Viewer attention is continuously shifting between the TV screen, and secondary devices such as mobile, tablet, or even apps and social media,” says Teletrax’s Nobbs. “This rise in device proliferation makes it increasingly difficult to predict the viewability of a TV advert as viewers switch between TV and online. This leads to concerns for service providers who aim to make additional revenue from enhanced advertising. In a world with multiple content sources and devices, service providers need to reconnect with viewers by creating immersive experiences that span the primary screen and social media via the second screen.” According to Nobbs, service providers need to combine social data via platforms including Twitter and Facebook with TV’s scale to reach their targets on whichever screen they’re

“I think we are finally seeing enough technological innovation...that is enabling this automation between buyers and sellers.” Sarah Foss, Imagine Communications

For Matt Smith, chief evangelist at advertising and streaming technology specialist Anvato, however, OTT and nonlinear distribution is underexploited because it still in many ways at a very early stage. He argues that broadcasters and service providers are currently focusing on the deployment of OTT services with an eye on making money from advertising at a later date. However, one key area that Anvato is involved in is enabling broadcasters to turn live streams into VoD assets in near real-time. Ad breaks are marked in the broadcast stream and can be re-employed to deliver in-VoD advertising, still within the C3 ratings window as defined by ratings agency Nielsen in the US. If viewing is shifting to on-demand platforms on the one hand, it is, in parallel, also being fragmented through viewing on multiple screens including tablets and smartphones, taking eyeballs away from the TV where most advertising money continues to be made. This shift causes complications for the advertising business as audience measurement in the multiscreen world is more difficult than installing a people-meter in a representative panel of TV households.

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currently using and create additional revenue. Teletrax is focused on providing technology that enables the synchronising of ads on multiscreen devices such as tablets with what is happening on the big TV screen. Nobbs describes the targeting enabled by multiscreen advertising as “the first step towards true programmatic selling for TV”. Arris’s Shah maintains that exploitation of catch-up or network DVR makes sense because younger viewers are moving to nonlinear and because this inventory is currently very underused. “Right now there is no money coming from this – there is no revenue from that [catch-up] window,” he says. Potentially, however, operators can sell this inventory at a higher CPM than even linear spots because it provides the ability to target adverts down to the individual level, says Shah. A UK operator is currently working with Arris to provide targeted advertising in this area.

Targeted potential As viewing fragments, targeting has for a long time been held up as the potential saviour of


the TV advertising industry. Imagine’s Foss says that automating targeted campaigns can deliver a significant premium in pricing that justifies the investment. “Advertisers agreed that when they saw how effective targeting was [at generating] actionable behaviour, it made sense to decrease the number of ads [placed] and increase consumer satisfaction and mind share and avoid viewers tuning out. That is all possible because of deep data that the pay TV operator could share with the agency,” she says. However, one of the key challenges is communicating the benefits of targeting to ad buyers and explaining what is technically feasible. “I think that there still is a certain disconnect between the advertising world, and the technology world and the broadcast and cable sector,” says Smith. “Broadcasters and service providers understand that with OTT services you can target down to the device. Each [device] maintains a unique connection with the cloud and you can target, for example, to a postal code. The ad world doesn’t yet understand how specifically you can target. The fact is that we can deliver an ad in real time for live content or for a VoD file and divide London say into districts or deliver to groups of users based on certain data.” For SeaChange’s Moonen, targeting “increases the total pie” for everyone involved – broadcasters and operators alike. “I don’t think you even need a measurable action from the viewer,” he says. “If you can prove you are targeting according to demographic group or income group that gives value and increases the CPM you can ask for the inventory.” Targeting is now beginning to be taken seriously in TV, with what happens on the web again providing the template. However, the full potential of targeting is unlikely to be achieved without greater adoption of automation by the industry. Currently the whole TV advertising ecosystem is extremely fragmented. There is a lack of agreed standards to represent inventory. Arris’s Shah points out that advertisers are still buying linear and non-linear ad spots separately. The industry is justifiably concerned about destroying the value of linear advertising, so it seems likely that on-demand and OTT must lead the way in pioneering new models of how ads can more efficiently be bought, sold and delivered to viewers. l


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