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Articles by: "Dana Ghavami, CEO—Spotible"

Innovation | Video

OTT distribution channels are changing. Be ready

OTT players and channels are changing faster than the seasons. The spring will bring a crop of new streaming entrants, joining an already crowded market. Still dominated by Netflix, a growing number of major players are drawing video viewers.

In the publishing industry, a remarkable level of transformation is happening by way of mergers that are driven, in part, by capacity to produce video. Recently, Vox Media and New York Media joined forces. This followed close on the heels of the recent tie ups of Group Nine Media and PopSugar along with Vice Media and Refinery29. An underlying theme is upping the production of quality video programming for seeking OTT platforms and rising streaming channels battling for subscribers. So, the question is: How will consumers be watching?

Get SmartTV

The answer is on a Smart TV—whether a Vizio with WatchFree powered by Pluto TV or an LG with LG Channels powered by Xumo—the CTV universe is made up of a growing number of streaming channels (or so-called FAST services). Now, major OTT platforms are following suit with Fire TV’s IMDb TV and Roku’s The Roku Channel.

In this dynamic, programming from media companies is produced in a seller’s market as FAST services look to differentiate with new and, if possible, exclusive content. The goal is to set themselves apart from aggregated CTV ad budgets. The result is that programming is starting to be distributed on 24/7 streaming channels (like the advent of cable news). The end game is to develop an audience that can be channeled to an owned and operated network/app.

Streaming channels that take form of the lean back TV world are also coming over-the-top via leading cable/MVPD companies. For example, Spectrum recently released a skinny bundle that allows viewers to choose what they actually want to watch. And that’s for approximately the same price as an SVOD service like Netflix. The skinny bundle is trending.

Netflix vs. niche

So, here we are. We find ourselves at an interesting intersection of an on-demand world (with active content discovery and viewing) and a programmed channel world with passive watching of round-the-clock streaming content. The king of OTT and SVOD, Netflix, is ad-free. It also set a high bar with premium content licensing and quality original shows as it outspends the competition.

However, we see an emerging universe fueled by advertising/AVOD and channels that run 24/7 content of essentially any genre of choice as an expanding orbit of media publishers become producers of OTT programming. On the sidelines, streaming sports and leagues are expanding their own OTT plus channels. This delivers their content straight to fans or through digital upstarts that make sports the core of their offerings, like Fubo and DAZN.

The best of the bunch

The pendulum is going to swing in a direction that improves the TV experience the most. At the heart of it all is content discovery and recommendation. The next show you’re going to watch is still the biggest unknown. According to the State of Viewing and Streaming study released by Horowitz Research last year, just over one-third (36%) of viewers consider personalized recommendation algorithms helpful in discovering shows. Whereas TV ads, word-of-mouth, and social media are attributed with 35%, 34% and 26%, respectively in frequency of new discovery. The better the content recommendation, the more that will be watched on-demand.

From there, the more “connected” your TV experience, the more it will look like a digital network versus a TV network. It will become a more social and shareable experience. The advertising that puts the A in AVOD will increase in value as it becomes more data driven complying with user privacy and better in targeting viewers. The better the social integration, the more that will be watched on constant programmed channels.

The lessons have been learned by media companies is that they must maintain their own brand and operated environments in the world of platforms. However, they must continue to experiment with publishing channels to direct audiences and own distribution (and monetization). In the grand experiment of OTT programming, content is being produced and distributed in 24/7 streams to start up on platforms that garner the greatest audience for the brand. The future of OTT is here, flipping your favorite channel.

Innovation | Video

The OTT superhighway: What to expect as everyone goes OTT

Digital video in 2019 looks like digital content at the dawn of the information superhighway when it started to be commercialized in formative ways. With booming audiences for streaming video, new OTT video services are gearing up to ‘party like it’s 1999’. While the industry has been overshadowed by Netflix for quite some time, a slew of new “Princes” is making their presence known, including Disney, WarnerMedia, and NBCUniversal.

The OTT service establishment today—spearheaded by Netflix along with Amazon, Hulu, and Apple—spend a staggering $20 Billion plus dollars annually on original content. At the same time, up and comers like Pluto TV are trying to replicate the success of traditional TV over the Internet. And, under the ownership of Viacom, they’ve started to stream premium original content in a channel lineup that now includes BET, Comedy Central, MTV, and Nick.

On the other hand, YouTube is attempting to crossover from being a user-generated network to a general entertainment content destination. And numerous video services have emerged that cater to more niche audiences or content segments. These range from Vimeo’s traction with small business organizations like yoga studios to offerings like Lifetime Movie Club for original drama fans and Britbox for domestic fans of British programming.

The point of saturation will inevitably arrive and the number and mix of AVOD and SVOD will eventually play out. If this concerns you, remember that cable boasts thousands of channels. The digital tuner on a TiVo can access over 1,300 of them. Nationwide, without duplication, there are tens of thousands of channels and over 500 premium scripted shows.

History is a reliable predictor of the future. Looking back, linear TV grew five-fold in channels and shows during the golden age between the 90s and early 2010s. Even so, total viewing time increased by just 15% as monitored by TV measurement companies like Nielsen. Ultimately, free time and content consumption are on an X-and-Y axis.

The heaviest TV viewership comes from a core of the total TV viewing population, which is comprised of those over 55 years old in age. However, the median age of a viewers for newer and more tech savvy OTT platforms is just over 30 years old. Clearly, the preferences and expectations of younger audiences are going to shape plans for premium content offerings in the future.

Keep in mind that the proprietary premium content offerings of services like this will be a clear differentiator. Consider the much hyped Disney+ OTT service. In addition to boasting its deep well of animated and family programing, Disney is also the owner of the Star Wars franchise, which provides an intergalactic bridge to the post-millennial generation. And let’s not forget that WarnerMedia will soon distribute the Star Wars of our time: Game of Thrones. That franchise alone could provide the foundation for a significant OTT presence.

So, what will happen next in OTT as established and upcoming services prepare to battle? Most likely, the future will not belong to a handful of OTT services alone. Rather, we’ll see the proliferation of OTT brands that cater to niches of interest and genres, as well as those providing general TV style content offerings. These services will range widely in terms of content and tactics and the growing OTT audience will allow them to propagate on the Internet like TV channels did on cable.

It is less about who is going to take over OTT and more about who is going to take their audience for a great ride on the TV superhighway.

Advertising | Perspectives | Revenue

To maximize OTT performance, should we think lean back or lean forward?

Given that OTT is the new TV, how should audience interaction be considered? TV is conventionally viewed on a large screen ten or so feet away and described as a “lean back” viewing experience. However, the new capabilities that come with OTT are associated with “leaning forward” – similar to browsing the Internet. In the digital age, people navigate content by swipes on mobile touch screens or clicks on portable laptops and desktops. In other words: They lean forward.

From a media perspective, it has proved optimal to follow traditional TV practices in order to maximize viewer time with OTT video content. This starts with playing video the moment the app opens just like tuning into a TV channel. These days, the practice is becoming standard particularly across OTT apps for broadcasters with linear establishments. (AKA, leaning back.)

By the numbers

The metrics behind the lean-back practice are particularly compelling when comparing average view time for media companies that have transitioned from on-demand menu starts to starting with video streams. Average viewer times have increased between 80-120%— more than doubling from less than a half hour to over an hour per session.

Moreover, Pluto TV, the leading free streaming service with more than 15 million monthly users, takes it a step further with 24 hours of programming on OTT channels. Pluto recently announced a view time of two hours per session, which already represents half the average daily view time of TV in the U.S. of nearly four hours. And consider Hulu (with 28 million customers), which recently announced binge watching on the service as a new ad targeting metric. So, length of viewing time is now a metric of significance in OTT viewership and even advertising.

Ad engagement

From an advertising perspective, lean-forward ad engagement can be far more impactful. This means capturing consumer attention with interaction of any kind, whether a game of sort for brand recall or data capture for direct response. In digital, user interaction is the driving force behind premium and higher value ad opportunities. 

However, when we consider OTT as the new TV — where leaning back is the status quo on a connected TV versus the underwhelming amount of time spent watching OTT on mobile phones — a new balance must be struck with the level of interactivity and added value that is possible. Compare this to the lean-back paradigm of TV in OTT, where the remote is purely a means of turning the stream on or off or tuning the volume up or down.

With lean-back, media companies and marketers will need to capture the most meaningful signals from viewers through their viewing behaviors and activity along their content journey. They will also need to break the mold with interactivity in simple and beneficial ways to the viewer, such as skip or continue to watch a certain commercial like done with simplicity in digital.

For OTT, we’ll need to take a hybrid view to maximize consumer understanding and ad performance. As a medium, OTT must be evaluated in the context of “lean back” in terms of programming presentation, and a “lean forward” opportunity in the presentation of commercials through viewership behavior.

Perspectives

People are watching OTT—but not how you think

You’re a cord cutter. You’re a cord never. You’ve extended the cord with your choice of OTT beyond cable TV.

You commute to work. You’re out of home more than you’re home during the week. So, your mobile phone has become life’s remote control for productivity and connectivity with family and friends and media, and social network(s).

As you pass fellow citizens on the go, you see them watching live sports, movies, binging shows, or catching the latest episode of a series. You can get your coffee to go. You can get your tapas to go. And now you can get your TV to go. It is easy to assume that this is the likely way that most OTT is consumed.

The Comfort of Home

However, most OTT is actually watched from a TV turned Connected TV through a smart app or OTT dongle made by one of the big four: Fire TV, Chromecast, Apple TV, or Roku. The big screen is still the preferred screen to watch TV video content. You want to be home. You want to have surround sound. You want to snack.

We consistently see this trend in OTT media from analytics revealed by the largest content streaming service provider; over 70% of the time, Netflix is viewed on Connected TVs. A majority of YouTube TV is also viewed on Connected TVs, although the service is positioned as a mobile-first viewing platform. We also see viewing of direct to consumer (DTC) OTT brands of all genres – whether business, entertainment, or family –  primarily take place on Connected TV, in some cases as high as 80% of the time.

Screen Time

In contrast, just 15-20% of OTT is viewed on mobile devices. Of those views, an interesting and often overlooked statistic “casting,” in which viewers are mirroring or remote controlling OTT to their smart TV wirelessly from their phone. The remainder of OTT streams are being watched on computers.

With the majority of OTT being watched on a Connected TV, the medium is taking the shape and the form of the TV industry. vMVPDs are the new MVPDs. NewFronts are the new Upfronts. Even co-viewing is now a thing in OTT discussions with buyers. In this case, the number of viewers in the room watching an ad on a Connected TV is being considered, as with TV.

All in all, the trend of watching TV over the top compared to traditionally now accounts for a third of total daily TV time globally. The adoption rate will likely continue to grow as access and content proliferate over the top. Although we live our lives on the go and do most things on our smartphone, the preference and actual predominance of watching TV over the top is on a Connected TV, at home. OTT is really the new TV.

Revenue

A new hybrid revenue model for OTT

New times call for new hybrids. In the fragmented, highly competitive, and fast-paced world of content, publishers cannot rely on a single source for anything. Social media and network monetization are barely bearing their weight as one of the three legs on the revenue stool. Subscriptions are gathering steam and have serious potential as a second leg (given the emergence of OTT). But this leg is still a bit wobbly. Remember that there’s only one content company that rhymes with Get Trix that relies solely on subscription revenue. Advertising in all its forms, especially sold direct, sponsored and native, is the third leg. Right now it bears 20%, 40% or more of the revenue load for top tier subscription-based content companies.

Ad Experiments Emerge

As advertising is coupled with subscription in the business of content, it will become increasingly important to identify and maximize what I refer to as the consumer tolerable revenue threshold (CTRT). This requires entirely new ways of thinking and advertising. A total ad payload optimizing revenue needs to be defined and delivered across total content consumption time that is tolerable to each type of viewer (subscriber or free viewer).

Today, the predominate form of video advertising is instream. This takes the form of programmed commercial breaks during live streams or pre/mid/post rolls in video on-demand (VOD) content. Compare this to the traditional TV ad model, which averages 8 minutes of commercials for every 30 minutes of content watched.

Viewer’s attention dwindles as content and screens proliferate. Going forward, the digital model will need to adapt and evolve. As a result, new ad models and formats are being invented to maximize CTRT beyond instream. In order to create a new hybrid in OTT, CTRT requires more flexibility in ad load and controls for ad exposure for a viewer’s content journey in the totality of their time spent with subscribed content. The methods of optimizing CTRT today will need to evolve beyond ad selection and rotation instream to managing user experience across different ad forms and sponsors throughout the interaction with content.

Adapt to Survive

As new formats emerge, content companies will need to be flexible in order to experiment and manage CTRT to maximize ad revenue with subscription revenue. Every moment a viewer spends with content needs to be seen as an opportunity, including when the content is paused. For example, displaying commercial messaging in between viewers pausing streams for their own breaks while an increasing amount of video content is being watched on demand (VOD).

Every ad a viewer sees needs to be seen as a prospect to create engagement with a brand, including interactive ads that drive user action. For example, content providers need to come up with ways to input data from interested viewers or distribute information / coupons to the personal devices of the viewer.

Every member of a household and targetable data parameter needs to be factored in each ad experience, including viewer sentiments. Essentially, every exposure and interaction with an ad needs to be managed as part of the total user experience to formulate a new hybrid for success.

In the prevailing world order, it is not the biggest or the smartest who will prevail but those that are most able to adapt. In the emerging opportunity of OTT, along with diversifying revenue sources with subscription and advertising, the publishers that prevail will be the best and most nimble in experimenting and adapting new models with viewer experience in mind. The optimal CTRT will create the most profitability, for all.

Advertising | Perspectives | Revenue | Video

How OTT will be sold in 2019 and beyond

OTT content is now viewed more on TV screens (connected TVs or CTVs) than smartphones. From an advertising perspective, that means larger and more valuable video. Large digital video (greater than 400 pixels wide) has always translated to higher value. However, the biggest determining factor of worth is determined by how its sold: direct or programmatic.

By and large, connected TV (CTV) inventory is sold at a higher value than digital video. In the world of video advertising, the television screen represents the pinnacle of value. With it comes the notion of a captivated audience in their living room, and true scarcity of time and inventory.

Like Cable TV, the OTT video landscape viewed on CTV and other connected devices is highly concentrated across the “Big 4.”  The largest amount of monetizable minutes reside on Hulu and YouTube, along with Netflix (which remains ad free together with Amazon Prime Video—for now). The remaining three out of ten minutes in OTT are spent with high quality publishers and broadcasters, such as TV network brands. These create a direct sale value of twenty-something CPMs. These prices are in close proximity to traditional/linear TV rates.

The price of programmatic

As of now, publishers and virtual Multichannel Video Programming Distributor (vMVPDs), including established providers like Dish and startup vMVPDs, sell a predominate amount of OTT ad inventory programmatically, most often through private marketplaces (PMPs). Here, the average price point is in the teens, with CPMs maxing out in the mid-range of around $15.

There are a few reasons media brands are leaning toward programmatic rather than direct sales. For starters, many organizations lack direct sales teams. Furthermore, OTT is nascent. Thus, the industry needs to contend with tracking on a household level where it is getting harder to obtain IP addresses to map out connected devices. Then there’s the international reality of GDPR, which classifies IP addresses as personally-identifiable information (PII).

All in all, it’s harder to correlate traffic from OTT ads. It is also difficult to measure viewability with server-side ad insertion (SSAI), which stitches ads into content streams, especially when sold programmatically. And then there’s the issue of fraud. A quarter of all CTV impressions this year were fraudulent (never seen) according to Pixalate.

The contentious issue of fraud among broader tracking issues are keeping programmatic pricing weighed down. Where, with the employment of programmatic monetization the most a publisher can expect to optimize CPM rates is by 10-15% above the current average programmatic video price point keeping overall value in the teens CPM.

Direct sales proposition

However, by selling directly, a publisher can more than double ROI to 30-40% or higher price points above $20 CPM. These price points are well above the possible rate optimization that can be made accessible through programmatic means.

So, looking ahead to 2019 with the continuing expansion of OTT traffic and monetization opportunity, it is a good time to reconsider selling directly. This means assembling or training existing digital sales teams to sell your emerging OTT inventory, which is worth its weight in video gold. In a premium video medium with true scarcity, the future will be directly sold.

Innovation

What is OTT?

Are you down with OTT?  Yeah, you know me.

O is for ‘Over’.  T is for ‘the’.  The last T? Well, it’s not that simple.

What exactly is the ‘Top’?  You probably haven’t heard two people define OTT alike. In fact, lately it has come to mean everything Other Than Traditional.

So, let’s start from the top, with a multiple-choice question:

What is OTT?

(a) STB: the set top box with your cable subscription and remote control using a private cable network also known as an MVPD (multichannel video programming distributor). These days, consumers can also stream their favorite content like Netflix via apps integrated with their STB. A lot of streaming content can also be accessed via Xbox and PlayStation gaming consoles that increasingly take centerstage in living rooms.

(b) STV: the smart TV.  No longer just a screen, these televisions are equipped with an operating system (e.g. Android TV) so that they can connect to the public Internet network and directly stream content.  Moreover, CTV (connected TV) streaming devices like Fire TV, Apple TV, Chromecast, and Roku, connect TVs to the Internet to stream consumers’ favorite content onto any TV no matter its IQ.

(c) iOS, Apple mobile Apps, and Android Apps on Google Play. These apps allow consumers to stream content on mobile phones anytime, anywhere. Users can also directly “cast” or project from a smartphone to televisions, which allows the mobile to serve as the new universal remote.  And let’s not forget how many people stream video over the Internet onto laptop, desktops, and tablet.

(d) All of the above.  Or, DTC- Direct to Consumer.  This is the right choice and what it’s all about.  Essentially, it’s all about the direct distribution of video content to consumers over the Internet, no matter how its accessed whether by streaming device, gaming console, Smart TV, mobile device, computer or STB. No cable company/private network required.

What’s not OTT

Often, there is confusion about PTV (Programmatic TV) — which is the enablement of digital data capabilities for greater audience insights than GRP (Gross Rating Points) and reports in real-time instead of months. There’s also its subset ATV (Addressable TV), which accomplishes one-to-one digital targeting capability.  PTV and ATV improve the targeting and reporting capabilities of both OTT and traditional linear TV.

For broadcasters and video creators, OTT offers a direct relationship (and possibly content subscriptions) with consumers outside of the cable TV universe.  But like OTT itself, the Internet-delivered video market is acronym-riddled and complex. A good grasp of the basics will help you understand the many opportunities ahead when viewership of various OTT video services will overtake traditional broadcast TV. This is predicted to happen within the next 5 years, according to a recent OTT Video Services Study.

In addition, revenues in the Global OTT market will increase to $18 billion in 2019, more than doubling the market from just three years ago.  This has massive implications not only for those who produce content, but for agencies, advertisers, and technology providers as well.  As companies in this space begin to assess how they will address this massive paradigm shift, it’s a good time to get familiar with the OTT opportunity.

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