NAB 2015: Winning the Next Generation of Viewers with OTT Services
In an NAB session called "Constant Cravings: Using OTT to Win the Next Generation of Viewers" on Monday, panelists pointed to three key elements for over-the-top success: a strong business model, seamless multiplatform access, and frequent innovation.
Start With Your Business Model
The ad-supported vs. subscription debate continues, but some services have decided to embrace both monetization strategies. For CBS, the question wasn't whether on not to go OTT, it was whether the broadcaster should offer live linear streaming.
CBS News is streaming news and some sports for free, while the live and on-demand service CBS All Access is available via a $5.99 per month subscription. "We mixed the Netflix model and the Hulu model," said Marc DeBevoise, EVP and GM of entertainment, news, and sports for CBS Interactive.
Not surprisingly, people who pay for OTT services watch more video than those who don't. "People who are willing to pay for video watch more, watch two times more on a computer, and four times more on mobile devices," said Brett Sappington, director of research at Parks Associates. "If you look at households that have kids, they spend 90% more on video, particularly online video."
More and more entertainment companies are going OTT in both the U.S. and Canada, including CBS All Access, HBO Now, Dish's Sling TV, Sony's Playstation Vue, Bell Media's Crave TV, and Shomi, a joint venture between Rogers and Shaw.
"International distribution makes OTT a must for reaching into certain countries and regions," said Sappington. "If you are a content producer and you want to distribute internationally, OTT gives you a way to distribute to places you might not be licensed for."
Deliver to Multiple Screens and Devices
"Everyone has an iPad and they want to watch content," said Kanaan Jemili, CEO, NeuLion. "Because there's so many options—Netflix, Hulu, and dozens of new services—I think we will see this go way beyond what people expect."
The challenge with multiscreen delivery, of course, is reaching every device. "It's an expensive proposition. Unless you can add scale and bring overall cost down, it's far too cumbersome," said Darcy Antonellis, CEO of Vubiquity. "We're hoping the barriers to entry will continue to drop."
While the costs for app development for multiple devices remains high, multiscreen viewing offers advertisers more granular data than ever before. "Data we are able to collect on people allows us to target advertising that much better," said DeBevoise. "We're seeing growth in all age segments. We can actually find people who have some money."
"For Asia and Latin America it has to be advertising. $7.99 a subscriber will only take you so far," said Sappington.
Experimentation in the user interface is one way OTT services can hook users, along with live DVR, social and other second screen features, but we're also seeing innovation in the types of packages being offered. "Skinny bundles are part of the experimentation," said Jemili. Some viewers will want to pick and choose from among a group of niche services, while others will continue to go all in on larger packages.
The 2015 OTT Superguide Is Now Available