How the Online Video Industry Can Prepare for 5G and Win Viewers
OTT video services have benefited greatly from the growth of high-speed data services in the U.S. The democracy of IP has removed large barriers of entry to gain subscribers at a rapid pace. High-speed internet over wireless networks with 5G is certainly going to add fuel to the growth of OTT content services. These services find themselves asking if and how they should use broadband service providers as marketing distribution channels.
The number of people consuming video from OTT sources is increasing, as are the number of OTT services, making it easy to put forward the argument that what matters most to users is choice and flexibility. While people find a lot of freedom and power in these choices, the challenge of discovery, app fatigue, and content confusion looms as a threat to overall OTT growth. While “bundling” has negative connotations from the traditional pay TV world where viewers have felt abused by channel bundling tactics for decades, bundled services are not an inherently bad thing. In fact, limiting choices and maximizing value can be a profitable endeavor and a user experience win. Which brings us back to the question of whether OTT services should use broadband providers as distribution channels.
There is value in broadband distribution for OTT services but, from my perspective, the main thing content providers will need to focus on to leverage the broadband and 5G opportunity and to build value is to provide a great user experience, including with regard to bundling.
Traditional pay TV distribution relies upon large bundles of expensive content all fighting for precious delivery bandwidth. With this model, the consumer only has access to content contained within the bundle and has a difficult time understanding the overall value proposition for each individual channel of content (“I don’t watch 90% of the channels I pay for”). OTT services don’t fight for inclusion in bundles, but struggle with the opposite challenge, finding a way to be discovered. At the same time, broadband providers that want to offer a TV service struggle with the costs of the pay TV ecosystem and look for compelling content without the legacy cost structure around traditional cable channels.
This creates an opportunity for OTT service providers to join arms with ISPs to provide a new type of TV subscription powered by a great user experience. Think of it in terms of a grocery or department store. The trend with the dominant content providers is to break the grocery store (traditional TV bundle) into specialized stores. Netflix is the butcher. Disney+, is the baker. Hulu is the deli. How many trips do I need to take to fill my shopping list? Too many—and I still can’t get my fresh vegetables! Making access to content easy for subscribers will win hearts, minds, and eyeballs.
Operators could use a low or no cost alternative as a TV package. 5G simply adds the TV Everywhere aspect of this experience. Put together, curated OTT services through broadband and 5G offer TV Everywhere. And when thoughtfully presented through an outstanding user experience, curated OTT services provide all of the right products on the store shelf.
The timing for this type of change isn’t a day too early. Broadband providers offering TV as part of a triple play are facing spiraling costs (such as retransmission agreements, and notorious content cost increases) and take the brunt of the negative user perception.
The User Experience
Each user has different tastes and therefore knows that their ideal mix of content services may be different from their neighbor’s. Allowing users to build their own bundle with discount incentives as the user adds more services in their bundle checks the box on giving the user the benefits of flexibility and value.
5G will only expand the content service choices, which can feel exciting but overwhelming for users and so a combination of predictive recommendations, expert curation, and social influence should be used to help the user know which services they should try and which services they should consider removing from their bundle.
Simply put, the best user experience is delivering the right content at the right time on the right device for the best possible price.
Companies that have invested heavily in user experience see up to double the results in both revenue growth and return to shareholders as compared to companies that don’t properly invest in user experience (McKinsey, 2018). User experience includes both the user interface and the menu of content available within that interface. The interface part of this equation is important and must be thoughtful and effective, but is completely moot until the business development necessary to get a reasonably comprehensive list of content services onto the same menu has been settled.
Under what circumstances will Prime Video, HBO Max, Disney+, Netflix, or Hulu allow themselves to be presented in a list to users to add to their shopping cart? Who gets the first spot in the list? If placement becomes contractually determined, then we are back to the bad habits of the cable bundle. Placement has to be algorithmic. So the question is whether an unbiased algorithm that optimizes user satisfaction will be acceptable to the dominant OTT services on the market. It will be incumbent on them to win subscriptions and eyeballs by creating and marketing great content, not through crafty contract clauses.
There is no playbook for how to win in the new 5G world aside from having a confident, passionate, and adaptable culture around user experience. Make hard tradeoffs. Fearlessly invest in user experience. Win 5G.
[Editor's Note: This is a contributed article from MobiTV. Streaming Media accepts vendor bylines based solely on their value to our readers.]
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