After years of talk, the industry is finally at the point of TV Anywhere where efficiencies in IP technology are enabling broadcasters to get the content consumers want into their hands.
Delegates at day one of TV Connect made it clear, though, that wrinkles in technology and monetization strategies still needed careful thought.
“OTT is not future. It is the present,” declared Nicolas d’Hueppe, CEO and Founder, SVOD service Alchimie. “The game has started.”
The broadcast industry globally is reckoned to be worth $300 billion and OTT is pegged at $20-25bn yet the shift to IP is well underway.
“Arguably we are already there with addressable TV,” said Ed Haslam, CMO, Conviva. “Certainly an ‘all IP’ media world will happen at some point.”
Bill Martens, MD at streaming services provider BamTech, agreed, but warned that brakes will be applied while internet capacity builds to support scale.
“If you want to support multiple languages this effects audio and video consumption,” he said. “If you want to support text languages this impact UI design. How much granularity do you want in payment options? Do you want to enable local marketing campaigns? For sports you have to cater for every league having different distribution partners and each has their obligation to protect that content. Such product complexity is a huge issue.”
“In the short term the industry will remain a hybrid OTT and linear delivery model but in 10-15 years IP will definitely takeover,” predicted Viacom senior digital director Namrata Sarmah.
From a consumer’s point of view the lines between linear and OTT have already blurred, concluded analyst Colin Dixon, Founder, nScreenMedia.
Part of this is attributable to the rise in views to connected TV via Roku, Chromecast, Amazon Fire and other streaming devices, and a correlated decline of viewing to the PC. “Video consumption in the living room has switched to using the TV as a streaming experience,” noted Haslam.
The facilitation of streaming to the living room led Allan McLennan, CEO / founder PADEM Group to declare that “consumer take up and demand for OTT services is only just starting in Europe.”
Whereas initial IP services were on-demand, like Hulu, increasingly OTT players are addressing live content. The problem remains that delivering live in a packet-based delivery network is problematic particularly when it comes to reducing latency and building scale.
“We are seeing half of all video viewing of OTT on mobile which puts huge constraints on bandwidth,” said Guido Meardi, CEO at compression specialist V-Nova. Some 3 billion viewing hours are lost to rebuffering a year, according to nScreenMedia figures revealed at TV Connect. “On the other hand, people are buying 55-inch and 80-inch UHD TVs seeking immersive experiences at very high resolution. These are polar opposites but it’s not an either or for broadcasters. It’s important to service both.”
Delegates also spoke of challenges en route to growth.
“There is no question that audience fragmentation is the number one thing the industry is dealing with,” said Steve Reynolds, President, Imagine Communications. “We must cater for different connections to reach the audience and even different sources of advertiser content. It is a hugely complex area but if we can come up with solutions for that then there is a lot of opportunity.”
Reynolds was also concerned by the expectation among millennial audiences to receive content for free.
“There are two ways to make money in TV: you can sell content or sell the audience,” he said. “In 75 years that’s all we have come up with as an industry. The pendulum swings back and forth and right now its back toward ad supported video [AVOD]. The issue is that [younger generations] don’t generally pay for content.”
The problem is particularly acute at Viacom which is a largely ad-driven business. “No one wants to pay for content or to look at ads. That is the biggest challenge we face as an industry,” said Viacom’s Sarmah. “No one want to see ads more than 10 seconds. That’s a huge bottleneck for us. We are trying to reduce the ad time, but that not something advertisers want.”
Despite its audience comprising kids and millennials, she said the majority of Viacom’s business is still linear. “We can’t call ourselves leaders in digital yet.”
For pure play streamer though, like content aggregation service Pluto TV, the legacy model presents nothing but opportunity to exploit.
“Ad supported TV needs to have huge ratings and huge audiences to monetise the channels and consequently this mean a lot of niche content disappears or is programmed late at night,” said Olivier Jollet, MD. “This creates new business opportunities. For example, you can have aggregate massive amounts of thematic content and deliver a curated section of that to just 5000 users.”