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APOS 2015,Online Video,Technology Suppliers

Different Ways To Monetize OTT

Fear of cannibalization has tended to limit OTT deployments by pay-TV platforms to authenticated TV Everywhere services.

Today, however, more operators are looking at standalone services, as a way to reach people that have so far resisted traditional pay-TV subscriptions.

“If you look at most TV Everywhere offerings, they're built around the legacy business issues,” said Tony McGinn, CEO of online video tech provider Movideo, speaking at APOS 2015.

“If you want to be successful online, it doesn't matter what business you’re in. Start with the consumer, finish with the consumer. It's got to be built around the consumer.”

Sticking with legacy pay-TV business models in this environment can limit loyalty and growth.

Catch-up TVE services typically bring in only 10 percent of an operator’s subs, McGinn pointed out, although content based on live sports, breaking news and kids trends a little higher.

“If you really want to empower a subscriber who’s paying you top dollar for a package, give them what they want, to-go,” McGinn said.

“Offer them boxed sets and let them binge. They’re paying you a subscription, so you’re not actually losing money,” he added.

Ad-supported online video is also undervalued, McGinn argued, with agencies focused on short-term trading, buying airtime in bulk at low CPMs.

A different approach could see a dramatic rise in ad rates for online video.

“Until we go back to what the consumer wants, get the agencies out of the trading trough and start dealing with the advertisers about the value of that data we can deliver, you will not drive CPMs that will support a decent AVOD model,” he said.

Consumer expectations

Some platforms are also starting to incorporate access to alternative video destinations, from Netflix to YouTube, alongside traditional broadcast services.

“You cannot today exclude that some of your users will access different applications depending on their need,” said Stephane Le Dreau, sales VP for content security specialist Nagra, also speaking at APOS.

“It has to be very flexible and completely adapted to the end-users.”

Nagra is building its own Netflix application for example, after inking a deal with the streaming giant last year.

“When our customers are deploying our solution, they will be able to bring Netflix as an app integrated with our security solution inside our box,” Le Dreau said.

Search and recommendation capabilities can also enhance pay-TV as well as OTT services, although a lot of Asian content lacks the data tags, or metadata, needed for these services to work well.

“One challenge that we're addressing is to expand the metadata," said Atul Phadnis, APAC GM for Gracenote, a company specializing in tagging music and video content.

“EPG is a good place to start, but one of the very interesting elements on the OTT side is that OTT devices are data guzzlers,” Phadnis added.  

“They require tremendous amounts of metadata and intelligence about content, about the usage of content, about search patterns to give you effective recommendations.”

This technology can be deployed to promote additional packs and services, as well as drive consumption within existing services, provided the information is there to support it.

Apple’s recommendation service for iTunes, Genius, relies on substantial volumes of metadata by track, album and artist, for example. The same needs to happen for video catalogs in Asia-Pacific, Phadnis said.

“It requires not only a very good index of those catalogs but also rich media in terms of inspiring viewers to click on a particular show or movie posters, and also a lot of intelligence and most importantly localization,” he explained.

New audiences

Pay-TV operators in Europe and the US and Europe were among the first to launch OTT services that targeted people outside traditional pay-TV ecosystems.

Dish in the US introduced DishWorld as an app in 2012, initially as a means to serve consumers from abroad seeking content from their home country.

“We launched mainly with Southeast Asian and Arabic channels to start, and with Roku as our first big streaming partner,” recounted Chris Kuelling, Dish’s SVP for International Business.

“With immediate access to now 10 million-plus users of the Roku device, it gave us much broader and easy access to a demographic that was not necessarily inclined to buy our satellite product.”

The ambition expanded to include other non-pay-TV subscribers such as college students, fostering the launch of another OTT service with domestic content, called Sling TV. In April, DishWorld was incorporated into Sling TV, and rebranded Sling International.

While Sling International subs are unlikely to have much reason to upgrade to Dish’s core satellite pay-TV service, there may be upsell opportunities for Sling TV’s domestic service. How that happens, however, is another matter.

“This millennial market is a whole new market for us, which was not easy to access with satellite,” Kuelling said.  

“Our strategy right now is to get as many of those millennials to subscribe to our service as we can,” he added. “That'll be down the road, as to how we start targeting them to upgrade to satellite.”

There were also fears of cannibalization when Sky in the UK launched its OTT service called Now TV, which offers popular content such as movies and sports from Sky’s main DTH service.

“Sports is Sky’s crown jewel, and putting that onto an OTT service was the big thing for them,” explained Paul Johnson, CEO of MPP Global, which provides ecommerce modules behind Now TV.

“They worked very hard to figure out the best package,” he added.

Sky split the content into packs that were accessible by day and by week, but chose to exclude monthly passes.

“If you did that too many times in a month, you’re going to end up spending more than a DTH Sky Sports subscription, so it’s priced very carefully on a pay-to-go basis so that for low usage, it’s worthwhile and it's not too expensive,” Johnson said.

“Those are the kinds of customers that the DTH packs would never attract, so you are targeting a new demographic.” 

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