How Can National Broadcasters Survive OTT?

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By Paul Macklin

 

What springs to mind when you hear the names Nokia and Kodak? For most people it’s the truth that even immovable industry titans, whose names almost become eponymous within their industry, can and do fall. In the early 1990s the thought of Kodak not being a household name, let alone no longer being at the forefront of someone's mind when thinking about personal photography, was preposterous. In 2000s the idea that, in ten years time, the mobile phone would be associated with the company that had just released a portable MP3 player and another that was one of many internet search engines, would be ludicrous. Yet in 2010 and, certainly, 2018 the truth is Apple and Google's dominance in the phone and personal camera market is absolute with no way back for companies that got lost in their wake.

 

Could we live in a world without public service broadcasters or big commercial broadcasters - where content comes from Google, Amazon, Disney or ComCast directly, world wide?

 

Yeah, probably.

 

The encroachment from Silicon Valley 'disruptors' into the world of Broadcasting has been underway for many years. In many countries the number of ‘connected’ households has gone up, each with increased bandwidth and an increasing number of connected devices. This has enabled the tech sectors expansion into the sector without the need to look at traditional, single purpose, and expensive distribution platforms.

 

This year at IBC, the number of C-Level executives in Hall 14, the ‘Content everywhere’ big tent, suggests that the Broadcasters have finally realised these FAANG’s are devouring their market share, both in terms of distribution and content creation. Action needs to be taken, although it’s understandable why they hesitate. Linear TV is not dead yet. In fact, traditional linear TV daily viewership in the US only peaked in 2010, at 9 hours a day, as well as what recent reports into the World Cup viewing figures showed. However, that doesn’t mean the platforms used to watch it won’t be different come 2022. Yes, viewers online saw issues with streams on many platforms during the World Cup's ultra load test, but four years is a lifetime in tech; lessons will be learned with corrective action taken. Look at the recent increase in OTT viewers for the 2018 Ryder Cup -11.1 million viewers - a 58% increase from 2016. So, would it be preposterous to suggest that the World Cup would be watched on a Roku box with an Amazon Prime account?

 

What to do? For many the answer seems to be get an online presence first and then develop the online video platform with all the bells and whistles of Netflix or Amazon. Those features are typically Live-to-VOD workflows, smart recommendation engines, intelligent churn management, the elusive personalised VOD-to-Live playlist, a slick multi device front end, and hopefully some good content and UHD footage too.

 

Is that the solution for the traditional broadcasters, though? Certainly, at Vimond, we would like nothing more than every commercial and public broadcaster wanting their own OVP - but is that what the audience want? More subscriptions? In the UK in 2017 the average household spend on subscription services was £56 per month. Getting them to sign up to even more SVOD services could be a challenge. Netflix and Amazon have already penetrated the OTT market with 64.5% of households having Netflix in the US, 62.4% in Norway, and 56.3% in Canada. Arguably, they are the market leaders setting the bar from which other are measured.

 

Articles, like this one from Vice, support theories going on within forums on the internet stating people aren’t going to easily give up a $76 a month cable subscription and replace it with 8x $10 month subscriptions. They will choose one or two they want, then find other means of getting that one show they want from your service without going through your paywall.

 

National broadcasters need to consider if they counter this shift by going it alone? In the UK, if you pay your TV license you can watch iPlayer online but you can’t watch cultural cornerstones originally produced for or by the BBC such as Blue Planet, Dr Who, Alan Partridge or The Office - you can on Netflix, however. You can watch Peepshow or the Inbetweeners on Channel 4’s All 4 app, but why do that and watch adverts when you can watch the whole thing without interruptions on Netflix?

 

How to do it? Come together and utilize your back catalogue - offer the customers something more than they already have on an online space. Again using the UK as an example, Sky, Freeview and Freesat became the default platform for watching TV after the analogue switch off completed in 2012. Virgin Media? Maybe, if your house had cable. Freeview and Freesat are platforms funded by broadcasters in the UK. They created Freesat to combat Sky and Virgin Media - why not do the same again online. Sky and Virgin Media both understand that they can sell a service, including their own channels (and content) and that people would rather have a single UI and UX to navigate the mass of applications than switch inputs between boxes. If traditional broadcasters can build a unified OTT platform, a single click app to access their linear channels online and back catalogue, people will want it. Once they are in, use smart recommendation engines to give them a personal experience with a fair share of content across the different services. Better this than ask them to choose and lose.

 

Initiatives such as moving Freeview Play to a hybrid platform is a great start, but making linear streams with catch up online is not enough. So, for the proposed £125 million investment; that OVP better be the best in the world. People like non-linear and soon enough smart recommendations powered by AI and ML, with seamless live event stitching on OVPs will challenge the linear experience. At Vimond we’re working on just that - our customers demand it.

 

It doesn’t have to be just another SVOD service that the broadcasters build either, as one of our latest Vimond blogs discussed - dual AVOD and SVOD revenue models can work.  In fact, this is exactly the kind of business model deployed in the music industry with Spotify, in particular, as a great example. Give it away with adverts with an option to buy - if the content is appealing and it’s more a convenient platform than its predecessor - you’ll get the customers. Broadcasters have the advantage with years of experience entertaining and informing people. They have libraries of content and customers know they have that content. We know that in some regions the idea of old competitors coming together to launch an OTT platform is being discussed, we also understand that politically that is difficult. But with the FAANGs biting away, and titanic mergers and acquisitions streamlining the big content factories, the old guard of broadcasting need to consider who their real competition is.  



Link: FAANG https://www.investopedia.com/terms/f/faang-stocks.asp  

Link: Viewing figures in the US, peak TV https://www.theatlantic.com/technology/archive/2018/05/when-did-tv-watching-peak/561464/  

Link: World Cup 2018 viewing figures: https://www.ibc.org/consumption/the-tv-set-triumphs-at-the-world-cup/2948.article  

Link: Ryder Cup 2018 streaming figures: http://www.sportspromedia.com/news/ryder-cup-streaming-figures-europe?utm_source=ActiveCampaign&utm_medium=email&utm_content=Inside+the+FIVB+s+digital+reinvention+and+more&utm_campaign=SportsPro+SmartSeries+2018-02-10

Link: Roku adds Amazon Prime in Ireland - https://www.broadbandtvnews.com/2018/10/02/roku-adds-amazon-prime-video-in-ireland/  

Link: UK subscription spend 2017 - https://www.computerweekly.com/news/450427025/UK-spending-on-subscription-services-triples-in-a-year  

Link: Netflix user penetration - https://www.emarketer.com/content/emarketer-releases-new-worldwide-ott-figures  

Link: Bit torrent use increasing in 2018 https://motherboard.vice.com/en_us/article/d3q45v/bittorrent-usage-increases-netflix-streaming-sites?utm_source=reddit.com

Link: Freeview play hybrid platform - https://www.broadbandtvnews.com/2018/06/11/broadcasters-agree-to-accelerate-freeview-move-to-hybrid-platform/

Link: Vimond dual revenue blog post - https://blog.vimond.com/is-a-dual-revenue-stream-the-ideal-stream?_ga=2.182423907.597696951.1538478023-654719219.1533717378&_gac=1.149736962.1536152137.EAIaIQobChMI_rny0fSj3QIVCdiyCh3gLQweEAAYASAAEgKDcPD_BwE



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