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SME '17: OTT Needs to Offer Higher Quality Than TVE, Says BAMTech
Churn rate is the most important indicator of a streaming service's health, and over-the-top video providers can't take risks with the user experience.

If a TV Everywhere (TVE) user experiences a streaming problem, they're probably not going to cancel their cable subscription because of it, explained Joe Inzerillo, executive vice president and CTO for BAMTech. But over-the-top (OTT) providers don't have that luxury. TVE providers can take risks with ads, for example, that might create a slight defect for a small number of viewers. OTT providers can't take those risks because any defect in the user experience will lead to churn, and churn mitigation is critical for OTT. In fact, churn rate is the best indication of a service's health.

"OTT products tend to be cared for more than TVE products," Inzerillo said.

Inzerillo delivered the second-day keynote address at the 2017 Streaming Media East conference, answering questions posed by StreamingMedia.com editor Eric Schumacher-Rasmussen.

Looking at issues impacting streaming video adoption, Inzerillo noted that broadband speeds are rising, but they tend to be rising for people who already enjoy fast speeds, while people with slow connections aren't seeing improvements. Much of the divide is rural and urban, but there are problems even in urban setting with limited competition. "We're starting to get a have and have-nots situation, which is not ideal," Inzerillo said.

BAMTech grew out of MLB Advanced Media, which traces its origins to 2000 when MLB owners saw the future of the internet and believed they could monetize rights they had online. The organization streamed its first baseball game in 2002. BAMTech was spun out of the company in late 2015, and Disney made a $1 billion investment in it in August 2016. The team is now focusing on Europe, as BAMTech Europe is working with Discovery Communications to build a Eurosport player that will launch shortly. Eurosport has the rights to the 2018 Olympics, so BAMTech Europe is planning for that now.

While cannibalization is happening in the video world, Inzerillo sees cord-nevers as playing a much bigger role in shaping the industry. Young adults simply don't buy pay TV in the same way: They're price sensitive and have options that previous generations didn't. They live in a device world and want options that support that. The future isn't about cannibalization, he said, but segmentation. He sees linear viewing as important for streaming, as many viewers like the instant-on constant companion experience, where they can turn on a channel and have something playing in the background.

The conversation touched on 4K and HDR (Inzerillo sees HDR as far more impactful to the future of video), codecs (fragmentation is slowing the industry's growth), and viewing devices (all areas are growing, but living room viewing is growing the fastest). Looking at the number of OTT services the industry can support, he said, "I don't think there's an infinite demand curve…but I think it might be bigger than people think it is."

BAMTech provides an end-to-end solution for partners, but Inzerillo noted that it has begun offering a more modular approach for partners that want that. The modular approach is not an ideal solution though, he cautioned, as picking best-of-breed elements and getting them to work together is easier said than done. BAMTech is careful not to take a "race to the bottom" approach on commoditization and quality. Rather than being known as a price leader, Inzerillo wants partners to know one thing about his company: "If you go with BAMTech, we're going to make you the most money."

Streaming Media editor Eric Schumacher-Rasmussen interviews BAMTech executive vice-president and CTO Joe Inzerillo.

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