When the Dust Settles OTT TV Could be Good for Everyone
“We’re more like treasure protectors.” – Ben Gates, “National Treasure,” 2004, Disney
While cable, telco, wireless, even social sites fight over the “ownership” of the choke points of the internet (infrastructure/spectrum), the M&E industry is running hard to learn exactly how they monetize the stuff they put on your screen. The one thing they all seemed to agree on at the recent Broadband TV conference is … it’s complicated. Everyone, including cable/network companies, can see the writing on the wall that people want their own entertainment schedule; they just can’t agree what they’re going to watch it on … a 65-inch UHD TV, computer, tablet, phablet or smartphone. The TV set continues to be the primary way folks watch video content but 2nd screens are intriguing because they offer an option as well as a way to augment, enrich and immerse viewers in their entertainment.
Roy Sekoff, president and co-creator of Huffpost Live, told the Broadband TV audience that the industry has passed the tipping point of people watching linear TV (whatever is on is what you watch). Sighting the success of his own organization, he said consumers are increasingly tailoring their own Internet-based programming over the top (OTT) and adding other features/interaction with their 2nd screen. Sekoff emphasized that the flush years of home entertainment are gone forever where the pipe owners controlled what was available and studios/digital upstarts needed to learn more about their new opportunities to make a buck. The amount of money they are making per transaction may not be the same, but it is cheaper to distribute things digitally. Ben Gates observed, “You handled that well.” Attendees all wanted the answer to the same question… While the movie industry is in a state of flux, ticket sales have continued to rise 15.9 percent from $10.8B to $12.5B.
PwC (PricewaterhouseCooper) recently reported people still want to go to the movies, especially tentpole films; but the industry also sees a shift in made-for-television to the broader spectrum of options–especially OTT.
The situation/opportunity has arisen because people no longer have to “TiVo” their favorites. They simply download/stream it.
Connected – While homeowners increasingly evaluate whether or not they can/should “cut the cord,” most only shave back to the more basic services and then add to their information/entertainment choices with OTT viewing. With 4K smart TVs becoming affordable more rapidly than originally projected, analysts estimate the connected TV viewing will increase … rapidly. While there’s a wishful story circulating that people are cutting the cord and saving huge sums of money to switch to OTT, researchers like Accenture and ABI Research note that folks are simply shifting their spending from the cable bill to IPTV services and often spend even more for their entertainment. ABI reported that globally, more than a billion folks now sit at home watching their content of choice – free, fermium, premium – and interacting in ways that aren’t possible with linear TV. As the Butcher Lady said, “I see why you left him.” During his session, Aaron Taylor, of NanoTech Entertainment, which already has a wide array of entertainment and games ready for the new sets, said there were two key reasons for the dramatic shift:
- Every major manufacturer is offering smart TVs that make it easier for watching OTT content as well as surfing the web, interacting with shows, visiting social media sites and more
- 4K UHD (Ultra High Definition) smart TVs will be the sets of choice by the end of the year
Taylor noted that every time market analysts turn around they are increasing their forecasts for 4K UHD smart sets because the prices of all of the majors sets — Sony, Samsung, LG, Vizio, Seiki –have dropped so rapidly.
New Sets, New Options
And the new sets offer viewers a broader range of entertainment/involvement opportunities they are demanding. Ben Gates observed, “It was cool. You should try it some time.” The upgrading of sets and services in China and Europe is faster than in the U.S. because those countries don’t have to contend with the stranglehold last century’s infrastructure owners have over the channel spectrum.
Global 4K Growth – Early on, many analysts were pessimistic as to the volume of 4K UHD smart TVs that will be sold over the next few years. But with the growth of meaningful content, lack of prior infrastructure in emerging countries and dissatisfaction over services in mature countries, all of the analysts are projecting a record holiday season for the OTT/IPTV sets. NPD DisplaySearch emphasized more than 71 percent of consumers in emerging markets – Brazil, China, India, others – are buying internet-enabled Smart TVs, compared to 40 percent of the consumers in mature markets. NPD’s research director Riddhi Patel said that the sale of next-generation of TVs will grow more rapidly because of the ability to search for online content, web browsing, VOD services, entertainment/news and online content as well as a broader range of online games, shopping and interactivity with brands and social media groups.
That’s was all good for the folks at Broadband TV but it raised serious questions for the attendees:
- How do we manage, monetize, measure everything
- What in the heck do we do with the 2nd screen
Helping people hear what is working, what is failing, what has been tried/discarded and what is on the horizon is the foundation of the BroadbandTV Conference. It’s interesting to see the M&E industry change from a CPM (cost per thousand) formula to one that understands precisely who is watching, when and what they are doing. PwC noted the amount of money that they’re making per transaction may not be the same, but it is cheaper to distribute things digitally and monetize other opportunities. It’s also a helluva’ challenge for the industry because it’s a brave new territory … there’s a new challenge/opportunity everywhere!
Working Tools – Content owners/producers and service providers realize that with Internet-based OTT, everyone in the entertainment ecosystem (including the consumer) will be able to accelerate their move to the Internet-enabled smart TV platform. While the consumer doesn’t care – unless viewing is interrupted, the industry has already ironed out the key underbelly features that will encourage content owners to move to OTT by establishing independent ISO/SMPTE (International Organization of Standardization/Society of Motion Picture & Television Engineers) standards of codecs (encoder/decode), DRM (Digital Rights Management), 4K/UHD video, streaming and ad insertion.
Akamai, one of the leading global CDNs (Content Delivery Networks), notes that ironing out all of the behind-the-scenes stuff ensures the viewer will have a great OTT experience and participants will be able to more fully monetize their content, improve business decisions, deliver a more immersive user experience and do a better job of retaining customers. Content has always been king but more data – and more effective use of the data – will enable folks to find their movies/shows more quickly, keep them informed on programs and promotions, ensure greater ad relevance and actually increase content consumption. What does that mean? You’ll probably end up with a bigger bill every month because you actually find stuff you want to watch! The other key issue that was hotly discussed was the “trend” of anytime, anywhere, any screen viewing causing more people to abandon their new 4K UHD set for their tablet, phablet, smartphone. The World Cup in Brazil provided an interesting way for folks to enjoy the excitement in 4K on whatever device they had with them. What most people don’t really consider is that the content is digital (and 4K = 4X HD content) and that translates into data minutes … jeezz!!! DoCoMo, AT&T, Verizon, NTT, China Mobile and the others are forecasting a great quarter.
There is some video viewing on mobile devices. Mary Meeker, of KPBC (Kleiner Perkins Caufield & Byers), recently reported it’s not an either/or but a more immersive/interactive use of devices while watching TV.
Immersion, Interaction – Analysts are now finding that the 2nd/3rd screens are increasingly being used to provide more information to the viewer and a greater interaction with the shows and advertisers. She, and others who don’t have a phone to sell you, note that the connected device (2nd screen) is really good for everyone (content/ad deliverer and consumer). Our kids have their devices going all the time talking to friends and posting on sites about shows, actors, scenes, clothes, food, just about everything on the show. MediaCT also found that people were “talking” about ads, interacting with advertisers, drilling down online to find out more about products/services and actually buying products/services. Of course, some people will always complain like Riley Poole, “I have to settle with 1%. One stinkin’ percent. Half of one percent, actually.”