The Four Problems Facing OTT Services—and How to Solve Them
Although the growth of over-the-top (OTT) is nothing to shake a stick at, it pales in comparison with the amount of viewership garnered by broadcast television. In fact, according to Nielsen, it’s a 5-to-1 consumption ratio: For every single hour of OTT viewed each day, the average consumer also views 5 hours of broadcast television. And with all the revenue tied up in broadcast, it’s no wonder that OTT services are hemorrhaging money as they try to grow their subscriber bases.
So, why is this the case? Why haven’t more people cut the cord and started to use OTT services (like PlayStation Vue, DirecTV Now, Sling TV, Hulu, YouTube TV, etc.) to get their content? Let’s face it, the value proposition of OTT far exceeds that of regular TV. Anytime, anywhere access. Multidevice consumption. Cloud-based DVR and replay features. Personalized content discovery. The list goes on and on.
Answering the “Why aren’t more people subscribing?” question, though, isn’t that easy.
At the September face-to-face meeting of the Streaming Video Alliance in Amsterdam, Chris van der Linden, the director of quality & product operations at Liberty Global, presented four pillars of any OTT service: awareness, usability, relevance, and quality. As I thought about these four pillars, and how Liberty Global had, according to van der Linden, addressed them in the latest version of its Horizon TV OTT service, I began to think that these four pillars represent the fundamental challenges facing the adoption of OTT as a whole.
The first, awareness, is obvious. If people don’t know an OTT service exists, they aren’t going to subscribe to it. This is especially difficult for niche content players that may not have the marketing dollars to continually bombard consumers with messaging in specific geographies. Liberty Global, in fact, experiences this directly—the company acknowledges having a different reach (percent of active subscribers divided by the total available population of subscribers) in individual geographic areas. In some cases, a country may have 5 percent reach, while in another it might have 30 percent. Unless consumers know about a service, they will never consider adoption and replacement of broadcast TV.
The second is usability. Right now, many OTT providers are trying to figure out the best way to showcase content in order to help users navigate their services. Although we don’t want to acknowledge it, presentation counts for a lot in our attitudes toward a service. For example, picture two gas stations across the street from each other. One is dimly lit, has trash scattered around, peeling paint, etc. The other is bright and shiny with lots of lighting. Which would you choose?
The third challenge is relevance. Whether you want to agree with it or not, content is king. Just look at the recent AT&T announcement to acquire Time Warner (following in the footsteps of Comcast’s acquisition of NBCUniversal and Verizon’s acquisition of Yahoo). Having the right content that appeals to users is critical because, without that, why would consumers frequent the service? Although Netflix is at the top of the OTT heap, it, too, suffers from content woes. People often complain that, once they’ve binged-watched their favorite shows, there’s not much left to watch.
Finally, there’s quality. In order for OTT services to truly rival broadcast television, they must “just work.” Consumers want the same, consistent experience they get from linear broadcast TV in their OTT services. No buffer. No jitter. No artifacting. But in order to do that, OTT providers must invest heavily in the experience, which is a combination of quality of service (network metrics and key performance indicators) and human perception. Just because operations may say, “Hey, we are 99.999 percent up,” doesn’t mean that the experience meets consumer expectations. The rift between perception and operation must be bridged.
If the people who manage OTT services truly want to displace broadcast TV and drive subscriber growth, they must embrace these four challenges and work toward resolving them. Failing against any of them is certain to relegate a service to the mediocrity in which OTT exists today.
[This article appears in the October 2017 issue of Streaming Media Magazine as "The Four Problems Facing OTT."]
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