No OTT Service Has Figured Out How To Achieve Service & Monetization Parity Across Traditional & Online Broadcasts
It’s no secret that TV by appointment is giving way to OTT-centric preferences. Frost & Sullivan’s research numbers corroborate this trend at many levels such as growing rates of OTT viewership, falling STB sales, soaring connected device and smart device usage, and thriving growth in multi-screen video transcoding and protection solutions. We also see continued expansion of online video offerings from websites and via apps, both by pay TV service providers and directly by broadcasters.
Against this backdrop, we see recent service offerings available in the market, such as Hulu Live, YouTube Live and FOX making all of their primetime programming available live to all US markets. Hulu is now nearly a decade old and broadcasters like CBS, NBC and ABC have offered OTT streaming for some time now, as have HBO and ESPN. Content is often free for pay TV subscribers after username and password authentication; monthly fees for standalone consumption are nominal. And yet, no OTT provider has yet to figure out how to achieve service and monetization parity across traditional broadcasts.
FOX has showed some success because they allow local affiliates to control advertising and branding of channels. All of FOX’s primetime entertainment is streamed live, rather than select shows. 210 regional U.S. markets are covered, as opposed to more select coverage with other broadcasters. Consequently, FOX boasts that nearly all pay TV households in the US can now view FOX channels online via their streaming media devices, smart TVs, and tablets. The reason FOX was able to achieve ubiquity of coverage in the U.S. where other broadcasters had so far failed is by its ability to allow local affiliates to control the advertising and branding of the channels being offered.
This is in stark contrast to the ongoing trend of disintermediation where broadcasters seek to go directly to end consumers, bypassing the pay TV service providers. This second difference, in terms of monetization and branding, holds the promise of solving one of the most vexing challenges with OTT today, which is monetization. Targeted ads and usage fees have thus far fallen short of their promise. Programmers, service providers and broadcasters have all been challenged to maintain their business brands in a market where consumers often confer loyalty to specific shows, specific talent, or select social media destinations more than channels or service providers. By managing to cooperatively partner with affiliates on advertising and branding and thereby avoiding conflict and competition, FOX may perhaps have found a win-win middle ground.
This is of course easier said than done, and much will depend on the quality of experience and inventory of ads that will be delivered. The initial statistics are certainly promising. The third difference appears to be that this will truly be live-streamed content, in contrast to other offerings where episodes are made available for on-demand viewing concurrently with or at a short delay after the conventional broadcast goes live. While this technological difference is significant and noteworthy to infrastructure vendors, I’m also of the opinion that everyday users should neither care about this distinction nor become aware of it.
Which brings us to the flip side of these services, which is that it sheds light on the many shortcomings of the OTT ecosystem today. FOX is not currently providing sports content through this framework. Sports continue to be provided through a separate app and presumably a separate set of agreements. Viewers, even pay TV subscribers, continue to be subject to the disparity and lack of consistency in content access across types of content, channels, resolutions, regions and in some cases device support. Service levels can vary dramatically by location, even for the same user. Service provider apps and destinations offer overlapping content with broadcaster apps and destinations, with online video services often joining in the same fray. Users are left to figure out the nuances of true live streaming, catch-up TV, cloud DVR and video on demand, all of which should “ideally” simply be “TV on any screen”.
Content services are most beloved when they offer delightful, consistent, cross-device OTT experiences, which are at par with conventional live linear managed experiences. While tier-1 services such as Comcast and others are coming closer to this idea in the U.S., the overall problem is far from solved. Even a decade after Netflix and Hulu first began to stream content, no one has fully figured out how to achieve service and monetization parity across traditional and online broadcasts.