Apr 10, 2013 - 4.5 Targeting content and advertising to individual subscribers. 9 .... end-to-end quality for OTT delive
OTT MONETIZATION STRATEGIES An insight into the challenges and opportunities for providers of over-the-top (OTT) video distribution services
WHITEPAPER
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TABLE OF CONTENTS
TABLE OF CONTENTS 1.
Executive summary
3
2.
OTT has come of age4
2.1.
Increasing bandwidth
4
2.2.
Falling costs
4
2.3. Shifting release windows
3.
In-house vs. managed services 5
3.1. Acquire OTT distribution rights
5
3.2. Enable scalability without impeding quality
6
3.3
6
4.
Opportunities for OTT monetization
4.1. Combating churn
8
4.2. Driving business to the main linear service
8
4.3
Expanding range to reach new subscribers
8
4.4
Providing a new entry level service tier to attract pay TV “first timers”
9
4.5
Targeting content and advertising to individual subscribers
9
4.6
Generating new revenue for Telcos and mobile operators
9
4.7
Reducing dependence on advertising revenue
12
4.8
Exploiting micro-payments
12
5.
The reality of OTT today 14
5.1
Free-to-air broadcasters and content owners
14
5.2
Pay TV operators
14
5.3 Telcos
15
5.4
Pure Play OTT operators
15
5.5
Niche players
15
6.
Conclusion: the way ahead for OTT
18
7.
References
18
7
Recognize the importance of analytics
8
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1. EXECUTIVE OVERVIEW The global market for over-thetop (OTT) video distribution is expected to exceed $20 billion by 2015 and whether it poses a threat or an opportunity to your core business, it is now impossible to ignore. This strategy paper explains the complex issues surrounding how to turn an OTT service into a source of profit (or business advantage). For any organization planning to launch or develop an OTT service, Piksel provides an insightful overview of the challenges and opportunities ahead, together with encouraging stories of success.
A REALISTIC GOAL
EXECUTIVE OVERVIEW
From the outset, it is essential to understand that the term OTT monetization doesn’t necessarily always relate to generating a brand new revenue stream directly from OTT. Organizations can equally use OTT to reduce churn or deliver enhanced customer services that subsequently increase the profitability of their core business. OTT monetization comes in many formats, and the right strategy will depend on a wide range of factors, covered in this paper.
The good news is that 2014 may be the tipping point, when OTT monetization becomes a more realistic goal for many. For the first time, OTT is starting to become recognized as a serious contender for competing with cable, satellite and IPTV. This is due, in part, to decreasing costs, improvements in bandwidth and changing patterns in movie release windows (see section two). These influences and others like them are beginning to make OTT a far more attractive business opportunity for organizations across different sectors. Some obstacles to OTT monetization still remain including notably the need to deliver a good user experience, ensure scalability, acquire digital rights and facilitate effective customer analytics (see section three). Nevertheless, these challenges can be overcome, with support from industry experts, meticulous planning and innovative thinking.
SUCCESSFUL STRATEGIES Within the video distribution industry as a whole, there are three widely accepted business models for OTT monetization: •
Subscription-based
•
Pay-per-view
•
Advertising funded
However, this strategy paper probes far deeper, presenting eight distinct avenues for OTT monetization (see section four). In reality, the most successful organizations will be those that mix and match from these eight opportunities and pursue a plan that combines two or more strategies in tandem.
Different sectors within the industry will inevitably have different opportunities, shaped by their existing business models and competitive pressures. This paper looks at five sectors in detail: broadcasters and content owners, pay TV operators, Telcos, pure play OTT providers and emerging niche players. Organizations in each of these categories can make OTT profitable (or strategically advantageous) by addressing challenges such as distribution, rights acquisition and scalability (see section five). Throughout this paper, there are several ‘success stories’ about organizations that have achieved their OTT goals – or are on route to doing so. While these businesses have each pursued different approaches to monetization, they have all benefited from expert guidance from Piksel, a specialist OTT services provider. This paper concludes by not only summarizing why OTT monetization is possible, but also by explaining how systems integrators like Piksel can help organizations make it happen. The businesses profiled as ‘success stories’ in this paper are enjoying the levels of achievement that many other organizations aspire to. Their stories should therefore be a source of inspiration and encouragement – yet also a warning. OTT monetization is a realistic and maturing opportunity; if you don’t deliver on your own OTT strategy and win market share now, you could get left behind.
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2. OTT HAS COME OF AGE OTT is no longer the poor relation among pay TV distribution platforms. Since the first OTT services were launched in around 2006, the landscape has changed utterly. Falling costs, improvements in bandwidth and changing patterns in movie release windows have all contributed to a shift in the industry and greatly improved the prospects for OTT service providers.
2.1 INCREASING BANDWIDTH
OTT HAS COME OF AGE
Initially, OTT was, much like its close relation IPTV, severely constrained by bandwidth. While that is still sometimes the case, significant strides have been taken in the last six years. It is becoming increasingly possible to control end-to-end quality for OTT delivery with the extension of content delivery networks (CDNs) into ISP networks and the deployment of adaptive bit rate streaming (ABRS), along with techniques for monitoring and controlling the experience in the end device. In addition, the arrival of 4G networks delivers added broadband to mobile devices. There are still significant regional variations in the ability of OTT to deliver broadcast quality services and this will remain the case for a few years. In some areas, such as the Nordics and South Korea, the public background infrastructure is already capable of delivering OTT services in full HD quality to a high proportion of the population. Elsewhere, further fiber deployment is needed to enable adequate quality of service (QoS) over broadband services.
2.2 FALLING COSTS
2.3 SHIFTING RELEASE WINDOWS
OTT distribution is gradually becoming less expensive, whether it is measured per user, per stream, or per data unit, and costs will continue to decrease as fiber capacity in the ground expands and technologies such as multicast and peer-to-peer (P2P) evolve and become more extensively deployed.
Movie release windows have evolved greatly over recent years. In 1999 there were three windows: theatrical, DVD and general TV availability. Now there are sometimes as many as eight windows, with traditional chronological orders becoming blurred – and this can only benefit OTT providers.
With the cost of CDN capacity falling fast, it is already cheaper in 2014 to unicast live TV via OTT than over satellite for smaller deployments, typically up to just over one million subscribers. Within a few years, assuming current high definition TV (HDTV) bit rates, it will become cheaper for ever larger deployments extending up to 10 million subscribers and beyond to go OTT. Looking further ahead, OTT may be the first, rather than the last, platform to deliver ultra-high definition TV (UHDTV) services, at any rate ahead of traditional multicast cable or IPTV platforms.
The time is right for launching new OTT services because: • Bandwidth is increasing • Costs are falling • Movie release windows are becoming more flexible
Having originally been confined to the bottom two windows, OTT is now disrupting the whole model, especially as leading OTT service providers become involved in original productions. An increasing number of lower budget movies, as well as TV shows, are becoming available to online audiences at the earliest opportunity, in some cases before distribution via other channels. Meanwhile leading pay TV operators are unraveling their rights deals as they attempt to include OTT distribution within earlier windows, as Sky has achieved with its Now TV service in the UK.
IN SUMMARY: These three trends are good news for current and prospective providers of OTT services. Some challenges still remain, but many of the early constraints that impeded OTT monetization a few years ago are now diminishing. At the same time, consumer expectations are changing and young people in particular want more video on-demand, on any device; OTT is well placed to meet this need. Simply put, OTT has come of age and now is the time to make it pay.
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3. IN-HOUSE VS. MANAGED SERVICES Turning an OTT strategy into a profitable service is certainly not straightforward. There are four key challenges that all organizations will have to overcome if they are to achieve their monetization goals.
3.1 ACQUIRE OTT DISTRIBUTION RIGHTS
IN-HOUSE VS MANAGED
Initially, OTT was perceived as a new avenue for piracy, posing a direct risk to the whole business model that has sustained rights holders for decades. Consequently, rights to OTT distribution were often withheld. The threat was considered to be particularly great for US made movies and TV shows, which retain a dominant position in entertainment, especially in the English speaking world. But it also applies to other content, notably premium sports, which are even more pivotal to pay TV success than movies and TV shows in a number of European markets such as the UK, Italy, Spain and Germany.
Another major issue that has held back development of OTT rights for blockbuster content is that, despite exponential growth in volumes, online distribution of film entertainment through OTT services has not, so far, made up for the ongoing decline in revenues from physical media (DVDs and Blu-ray disks). Average prices for downloaded movies are 5 to 10 times lower than those for DVDs. As a result monetizing video-ondemand (VoD) involves finding a balance between stimulating volume sales and creating new sources of revenue around the content.
Quality of experience (QoE) is becoming a major competitive issue that operators must address; consumers are simply no longer satisfied with poor OTT quality. Whereas in the past, they may have been content to wait a minute for buffering to take place, today these same viewers are very intolerant of delays and unlikely to remain loyal to such services. Video optimization vendor Conviva claims that “without a shift to higher quality, content brands will miss out on an additional $20 billion through 2017 due to poor quality video streams that directly impact viewer engagement.”
User Experience and Quality of Experience (QoE) are becoming important competitive differentiators. User Experience is heavily influenced by multiple factors such as; access to premium content, the ability to use any device, powerful intuitive search capabilities, relevant recommendations and integration with social media. Second screens figure here, since they will often be the conduit between the content and social media, as well as the platform for applications that boost the experience.
Deliver a high quality user experience Page 5
3.2 ENABLE SCALABILITY WITHOUT IMPEDING QUALITY
3.3 RECOGNIZE THE IMPORTANCE OF ANALYTICS
Scaling problems can be the price paid for success in OTT. As an OTT service becomes more popular and usage grows, it becomes harder to maintain QoE in the face of rising traffic levels, without suitable investment in CDN capability.
Many revenue opportunities around OTT depend on knowing not just how many people are watching online, but also their breakdown by demographic factors and location. For operators and broadcasters this will require investment in technologies for capturing and analyzing information about users, both for real-time decision making and historical analysis to aid in content strategy and marketing.
The main challenge is that OTT video, unlike IPTV, is usually unicast, which becomes an issue when large numbers of people are consuming the same data streams, especially when each stream is quite big, as in the case of HD video. IP multicast is a good solution for scalability because each link of a network only carries one copy of a given stream in the event that there is somebody further downstream in the network viewing it. The advantages of multicast can also be achieved with the help of caching in a CDN without use of formal IP multicast protocols. This does though require cooperation with broadband service providers for true OTT delivery in cases where the operator does not own any network infrastructure of its own.
The ability to obtain useful data in the first place is now influencing the decisions taken by broadcasters and operators over which device platforms to support, or at any rate to determine their priorities. Ultimately, the ability to obtain valuable data will depend on subscribers and the relationships established with them by the broadcaster or service provider.
IN SUMMARY: Expert help from a specialist partner can be the key that unlocks these four challenges. An experienced OTT services provider will be able to build a robust technology platform, capable of delivering a consistently high user experience and scaling up to meet demand (both planned and unexpected). The right partner will also be able to integrate analysis capabilities and provide in-depth technical security information to help reassure content owners that their rights will be protected. It is important to remember that all four of the obstacles described above must be overcome, because each one plays a fundamental role in determining the success of OTT. Having great content (rights) attracts customers; delivering a scalable, high quality service retains customers; and being able to perform analysis helps organizations to improve their services (and therefore attract and retain even more customers).
To maximize their earning potential, existing and prospective OTT service providers must: • Overcome rights issues IN-HOUSE VS MANAGED
• Ensure a high quality experience for users • Plan for scalability • Enable analytics
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SUCCESS STORY: CHANNEL 4 In the UK, Channel 4 enhanced its user experience by promoting the Xbox 360 console as one of the options for accessing its 4oD online service. Piksel helped Channel 4 harness the game console’s functionality, letting users control the 4oD interface with gesture or voice through the XBox’s Kinect Sensor.
IN-HOUSE VS MANAGED
The project was an immediate success with over 653,000 4oD Xbox applications downloaded in the first 10 days, and paid advertising sold out in only two days. In September 2012, Piksel received an IBC Innovation Award for its role as a technical partner to Channel 4 on this 4oD project.
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4. OPPORTUNITIES FOR OTT MONETIZATION Piksel has identified eight different ways in which new and established OTT service providers can seek to secure a financial return from their investment in OTT. Some of the benefits listed below, like combating churn, will be business objectives for almost all organizations; others, however, will have specific appeal for certain sectors alone. OTT service providers can achieve their monetization goals by pursuing one or, perhaps more likely, several of these avenues.
There are eight ways in which businesses can (and already do) achieve OTT monetization: • Combating churn • Driving business to the main linear service • Expanding range to reach new subscribers • Providing a new tier entry level service to attract pay TV “first timers • Targeting content and advertising to individual subscribers • Generating new revenue • Reducing dependence on advertising revenue
4.1 COMBATING CHURN The first deployments of multiscreen services by pay TV operators from 2006 onwards were almost entirely aimed at combating churn by canceling out any advantage offered by fledgling pure play OTT providers. In the UK, BSkyB (Sky) launched its multi-screen service for existing direct-to-home (DTH) subscribers, now known as Sky Go, in January 2006, allowing users to watch live and on demand video content on Macs, PCs, mobile phone or Xbox 360 game consoles via a broadband or Wi-Fi internet connection. Content available now includes sports highlights, news, movies and TV shows. Since that launch Sky has continued to gain customers, so much so that the company reported 3.3 million Sky Go customers in June 2013.
4.2 DRIVING BUSINESS TO THE MAIN LINEAR SERVICE While multi-screen can help retain customers by adding value to the pay TV package as a whole, it can also increase use of the linear service directly. It can do this by making it convenient for subscribers to view content, either via catch up or when away from home, and then lure them back to the big screen for the next episode as they become hooked. If viewers become fans of a new show that they first discovered online, they will then want to watch future episodes as soon as they become available, leading to a rise in appointment-based viewing.
This has already been demonstrated by several surveys showing that the percentage of viewers making sure they are in front of the TV increases during a series after they have seen an episode online. Promoting online access is therefore becoming an important aspect of content marketing to drive growth in linear audiences. By adopting an integrated approach to content marketing, combining their linear and multi-screen services, broadcasters and operators can enhance the overall audience experience, and move viewers to the linear platform that achieves the greatest revenues.
4.3 EXPANDING RANGE TO REACH NEW SUBSCRIBERS For IPTV and cable operators, OTT has the potential to facilitate expansion beyond the footprint of their existing physical infrastructure. For example, satellite operators can use OTT to overcome restrictions over the installation of satellite dishes in some regions to reach subscribers previously unable to receive their service. Equally, service providers can use OTT to deliver ‘TV Everywhere’ and potentially reach new subscribers who wish to watch TV on their computers, tablets, mobile devices and games consoles.
• Exploiting the fast growing world of micro-payments Page 8
4.4 PROVIDING A NEW ENTRY LEVEL SERVICE TIER TO ATTRACT PAY TV “FIRST TIMERS” In some regions broadband networks may not be good enough for full multi-channel services but quite adequate for an entry level offering designed to entice customers who could not or would not pay for the full package. There is the danger this could backfire and cannibalize the main service, but if designed properly the OTT offering can serve as a teaser for the full blown package.
OTT MONETIZATION
Sky UK launched its Now TV service with this end in mind, plus the additional objective of experimenting with a partial payas-you-go model. Unlike some offerings, Now TV provides access to all of the company’s premium movie and sports content, at a lower price than via satellite because the quality would not be good enough for a big screen connected TV.
4.5 TARGETING CONTENT AND ADVERTISING TO INDIVIDUAL SUBSCRIBERS
4.6 GENERATING NEW REVENUE FOR TELCOS AND MOBILE OPERATORS
Targeting of both advertising and content recommendations will be a big growth area associated with OTT, since all parties stand to benefit. Advertisers and brands are enthusiastic about targeting because it helps them reach the people really interested in their products, who are then more likely to watch and engage with the commercials. Broadcasters and pay TV operators are also keen, since targeted ads can make more money because of their higher hit rate. Consumers welcome them to an extent if they are shown relevant offers, or if the ad content is entertaining or amusing. To be effective an advert must not just target the right people but must then engage with them.
Many Telcos are finding it increasingly hard to grow revenues in saturated markets for both fixed broadband and mobile services. They are seeking new services both to make their packages more attractive and also open up new revenue streams. OTT video is at the center of such strategies not just for Telcos but also cable operators and even some DTH providers, which are increasingly positioning TV to promote their broadband offering and attract subscribers to it. Owning the access pipe to the subscriber will become increasingly important in the emerging market for smart home services, while also serving content from a variety of sources.
Second screens can play a big role in targeting adverts associated with content broadcast on primary TV services. While several people may be watching the big screen they may each have their own smartphone, tablet or laptop open, presenting opportunities for targeting on the basis of each user’s individual preferences combined with the actual content showing. Users can also be invited on an individual basis to extend their engagement with a linear spot ad showing in the program, for example by opening a longer form version that they might be interested in, or even clicking to purchase.
BT in the UK has taken this line by giving its valuable premium sports content away free to broadband subscribers, in the hope this will help poach some from rival broadband suppliers such as Sky and Liberty Global’s Virgin Media. There is also the potential for partnerships with broadcasters or content providers to enable them to reach customers with a high quality of service.
Second screens can play a big role in targeting adverts associated with content broadcast on primary TV services. Page 9
SUCCESS STORY: SKY DEUTSCHLAND Sky Deutschland launched Sky Go, the leading over the top service in Germany and Austria in April 2011 and selected Piksel to help it meet this deadline. Piksel built a single content and asset management platform for Sky Go using the Piksel Video Content Management System (VCMS) platform. The solution features full social media integration, allowing users to recommend the latest video content to their friends.
OTT MONETIZATION
Sky Deutschland also uses the Piksel VCMS player toolkit that allows the development of smart video player applications to create revenue opportunities. The framework has the capacity to support innovative business models through the addition of plug-in business applications, like dynamic and interactive advertising, product placement, video driven e-commerce and home shopping.
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SUCCESS STORY: OSN
The leading pay TV network in the Middle East, OSN embarked on a TV Everywhere strategy to both improve customer loyalty and aid expansion to new subscribers. Piksel designed and delivered OSN Play, a multi-platform OTT service, based on the Piksel VoD solution. Phase one went live in March 2012 after just 12 weeks and, by July 2012, OSN was streaming live coverage of the Olympics to PCs, Macs and iPads.
OTT MONETIZATION
OSN Play was awarded “Best Online Technology” at the Arab Satellite Channels Festival in Egypt in January 2014, just months after winning “Best Multi-platform Project” at the ASBU BroadcastPro Middle East Awards in Dubai.
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4.7 REDUCING DEPENDENCE ON ADVERTISING REVENUE A number of free-to-air (FTA) broadcasters in various markets face a dilemma. They would like to reduce their dependence on volatile advertising revenue by starting to charge for access to their content away from the main TV, via OTT. But at the same time advertising revenue itself is migrating to the online platforms, making broadcasters reluctant to cut off the hand that is feeding them. The danger is that charging for services will turn viewers, and therefore advertisers away without gaining sufficient revenue from subscriptions or pay-per-view in compensation. Nevertheless some broadcasters are actively pursuing paid online delivery, including ITV in the UK.
OTT MONETIZATION
4.8 EXPLOITING MICRO-PAYMENTS Micro-payments are a fast growing opportunity for online and mobile services of all kinds, including video and TV. In emerging markets it can monetize services in association with pre-payments to serve customers who may not have credit cards or bank accounts. It is also more generally an opportunity for selling content or services for small amounts of money that cumulatively can amount to a significant source of revenue. This has already been exploited in the apps market associated with mobile services, extending increasingly to video.
IN SUMMARY: As mentioned in the executive overview (section one), OTT monetization is typically discussed in three categories: subscription; pay-per-view and advertising. However, what this paper shows is that there are in fact eight monetization opportunities. While these eight approaches can be shuffled under the three ‘umbrella’ headings above, they nevertheless present distinct and viable business models. If organizations just take a simplistic three-sided view of the market they could miss subtler and potentially more lucrative opportunities. For some organizations, just one of the eight models above will be enough to secure market share and financial returns. For others, however, success will be best derived from a complementary mix of two or more of these monetization models. The question is which ones? Support from an expert OTT services provider – at the strategic planning stage – could help you scrutinize different business models, optimize your mix of services and maximize your return on investment.
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SUCCESS STORY: SKY UK Success story: Sky UK In July 2012 Sky launched Now TV, a new OTT service allowing consumers, who are not Sky subscribers, to access content on a monthly contract basis. It provides instant access to Sky Sports, hundreds of films from Sky Movies, and is available across multiple devices including Windows and Mac computers, Xbox and PS3 games consoles, Youview, Android and iOS mobile devices.
OTT MONETIZATION
The service runs on the same versatile and robust platform that Piksel developed for Sky six years earlier for the launch of Sky Go in the UK. Piksel continues to provide development services to the Now TV delivery team to add new services and supported devices.
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5. THE REALITY OF OTT TODAY
REALITY OF OTT TODAY
OTT monetization is a realistic goal for five distinct categories of service provider: broadcasters or content owners; pay TV operators; Telcos; pure play OTT providers; and emerging niche players. Some of these organizations are already capitalizing on the potential for OTT, while others are grappling with challenges unique to their sector. The reality is too diverse to cover in full in this paper, but below is an overview of what are perhaps the most defining issues, sector by sector.
5.1 FREE-TO-AIR BROADCASTERS AND CONTENT OWNERS Many broadcasters today distribute their content via a combination of FTA terrestrial networks and third party pay TV platforms. OTT presents both an additional route to the audience and source of revenue, either via advertising, pay, or both. There can be a delicate balance to be struck between pursuing advertising and pay revenue, especially for commercial FTA broadcasters that have never charged for access to content before and initially launched their online service on that same basis. In that case there is the danger of “throwing out the baby with the bathwater” in the sense that by starting to charge in some way for even part of a previously free service, customers may be driven away and advertising revenue fall as a consequence. In the UK, two of the leading commercial FTA broadcasters, Channel 4 and ITV, have addressed this conundrum in rather different ways. ITV has launched a pay platform, based on online payment and subscription technology from micro-payment specialist Pay Wizard. This OTT service gives subscribers access to ITV’s massive catalogue of archived programs dating back to its foundation in 1955. In contrast, Channel 4 has been focusing strongly on interactive and targeted advertising as sources of revenue around online viewing. Both organizations want to end up in the same place, maximizing their revenues.
5.2 PAY TV OPERATORS For pay TV operators, OTT can be viewed in terms of their TV Everywhere strategies. However, it is generally easier to acquire rights for premium multi-screen distribution inside the home than outside it, particularly for US material. Consequently, some pay TV operators have pursued separate, parallel strategies for OTT at home and OTT on the move. In the US in particular, the authentication of users accessing pay TV multi-screen services outside the home is become a major issue. This is because US networks determine the charge for the carriage rights pay TV operators have to pay by the number of authenticated users watching. So if pay TV operators cannot authenticate, this model breaks down and rights are harder to acquire. There is therefore strong interest in OTT authentication, with the challenge being to keep it as transparent as possible for the user while being secure and robust enough to satisfy content owners.
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5.3 TELCOS
5.4 PURE PLAY OTT OPERATORS
5.5 NICHE PLAYERS
For Telcos, IPTV has been the predominant medium for TV services and a way of exploiting their platform to gain extra revenues from digital entertainment. OTT is a natural extension of that to reach new customers as well as provide TV Everywhere extensions to existing customers, just as for cable operators. Indeed, the distinction between OTT and IPTV may blur as Telcos build out their broadband infrastructures.
OTT operators such as Netflix, Hulu and, in Europe, Amazon’s LoveFilm, created demand for and familiarity with online video, aided or even pre-empted in some countries by broadcaster catch-up portals like BBC iPlayer. These OTT pioneers created the disruption that pay TV providers especially have had to respond to. However, they now face increased competition, as more and more established players counter by launching their own TV Everywhere platforms.
OTT is enabling niche players in a wide range of categories to reach target audiences for the first time. This could be for special interest groups or ethnic minorities for example, which are often fragmented and dispersed around the world. There is also increasing video distribution from community websites and for many different smaller scale events, such as technical and scientific conferences, that are now routinely streamed.
Success is likely to depend on factors such as the Telco’s broadband penetration, with former incumbents often in a stronger position than emerging operators. Smaller Telcos may eventually migrate completely from IPTV to OTT if they fail to gain sufficient broadband customers to make IPTV a viable proposition.
In response, OTT operators are starting to move up the content value chain beyond old movies and rerun TV series, while also improving Quality of Service and scalability. Leading pure play OTT operators are also planning the introduction of live or linear TV services at some point in the future, even if VoD remains the sweet spot for OTT today.
In many of these cases there is not the same issue over rights as there is for premium content and sometimes QoS is not such a primary consideration either. In these cases the Internet as it now stands is quite adequate in many localities to deliver the content. Monetization may not often be the primary motive for many of these services, but they could play indirect roles in attracting new business and hence new revenues. Indeed there is growing use of OTT video in marketing by hotels, resorts, and travel companies among many sectors.
IN SUMMARY: Broadcasters and content owners, Telcos, pay TV operators, pure play OTT companies and niche players all have distinct opportunities to use OTT for business advantage, whether this ‘advantage’ is increased profitability or greater market share. The different sectors have specific challenges
to contend with, yet some common themes emerge. Notably, most organizations face the twin imperatives of delivering premium video quality and a high quality user experience. One thing is certain: consumers’ expectations are changing and there is a
huge and growing appetite for OTT services, such as TV Everywhere. All organizations in the video distribution market need to be looking ahead five or more years, future-proofing their IT platforms and starting to grab market share – before it is too late.
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SUCCESS STORY: LIBERTY GLOBAL Liberty Global plc is the world largest international cable company with operations in 14 countries. Liberty decided to develop a multi-country OTT platform to allow customers to view their content across the TV, computer, tablet and smartphone. A key aspect was to ensure the platform was smart enough to determine whether the customer is home or away and adapt its behavior accordingly.
REALITY OF OTT TODAY
Piksel was the lead systems integrator for this project and achieved success, despite the added complexity of multiple business models, devices, languages and currencies. Piksel was presented with an award for Best Technical Innovation, at the LGI technical summit in Amsterdam, in September 2012 for its work on this project.
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6. CONCLUSION: THE WAY AHEAD FOR OTT IS OTT MONETIZATION POSSIBLE? The monetization potential of OTT is fairly obvious when talking about dedicated OTT players and certain niche service providers with global appeal, making up two of the categories discussed in this paper. For them OTT is a distribution medium that provides a new route to market in competition with existing operators, or that enables them to reach their potential audience cost effectively.
REALITY OF OTT TODAY
For established players, that is broadcasters, traditional pay TV operators and Telcos, revenues will emerge by exploiting the unique capabilities of the OTT platform. These can be summed up as reach, personalization and synergy with the primary screen. Reach, meaning the ability to offer TV Everywhere, is essential in the first instance for combating churn and then as the enabler for services that exploit the other two categories. Subscribers can be served personalized content on the move and can also resume watching what they started on the main screen. Then in the home there are all the synergistic opportunities around second screen operation, which present the ability to target subscribers on a one-to-one basis. This also increases the scope for the application of big data analytics to exploit information about subscribers, for example in targeting content or advertising. It’s not all theory. This paper includes examples of organizations, including Sky, Liberty Global, Channel 4 and OSN, all of whom are already exploiting OTT and benefiting as a result. OTT monetization opportunities are real and will grow in the future.
HOW CAN OTT MONETIZATION BE ACHIEVED? OTT monetization is a highly complex field, and OTT specialists such as Piksel can play an important role in helping broadcasters and service providers to plot their OTT strategies and extract maximum benefit from their investment. Systems integrators can help organizations to achieve their OTT monetization goals by: •
Advising them of the best OTT strategy (or mix of strategies) to achieve monetization
•
Saving them time and enabling them to go to market with new OTT services more quickly
•
Reducing the cost of developing an OTT platform, by supplying ready-made, purpose-built technology solutions
Getting the technology platform right is absolutely essential to ensure a high quality user experience and scalable service, as discussed previously in this paper. Piksel is highly experienced in deploying advanced media technologies, integrating disparate systems, developing bespoke solutions and building robust platforms for digital asset management and video content delivery. With our experience, we can help you build a cost effective and extendable platform that will not only deliver what you want to deliver today, but also the services that you might want to offer in the future.
An important challenge for many operators and broadcasters lies in how to balance their new OTT investment against existing services and decide how aggressively to pursue new revenues without disrupting existing business models. Piksel has been helping some of the world’s largest media groups consider quandaries just like this for over 15 years. It has worked with clients including LGI, AT&T, BSkyB, Axiata, OSN and Channel 4, helping them to launch pioneering video services that transform their businesses and monetize their assets.
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IN SUMMARY:
OTT monetization is realistic goal and there are many options available to help you achieve success. There are, as discussed in this paper, plenty of different opportunities, alongside several complex challenges, and every organization will need to find its own path to OTT monetization.
Piksel can help you both plan your way ahead and launch your desired services, as quickly as possible, at the lowest cost, to maximize both your market impact and your profitability.
7. REFERENCES i ABI Research; figure taken from press release, ‘Over 60% growth in worldwide over-the-top video revenue in 2012’, published 10 April 2013 ii Conviva; quote taken from press release, ‘Conviva releases 2012 Viewer Experience Report’, published 13 February 2013 http://www.conviva.com/conviva-releases-2012-viewer-experiencereport/ iii BRITISH SKY BROADCASTING GROUP PLC; figure taken from press release, ‘Results for the twelve months ended 30 June 2013’, (no publication date) http://corporate.sky.com/documents/pdf/latest_results/fy1213_press_release.pdf
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