OTT services are taking off with increased rates of growth driven by more content, more devices, more subscribers and more advertisers. In the last 12 months alone, OTT has grown to $9-12 billion in global revenues, with $1.9 billion of those revenues coming from emerging markets, according to a report from PWC.
Viewers are slowly but steadily cutting the cord on traditional cable services in favor of broadband connections and OTT services, driving a new living room plus mobile experience.
In the past 6 months the industry has seen the launches of several new OTT services from significant players, including HBO, DishTV, CBS, NBC, and Sony, joining an OTT market that’s been dominated by SVOD services, Netflix, Amazon, and Hulu. This week Comcast, the biggest pay TV operator, announced the beta version of their standalone OTT service, offered initially at $15/month for a small set of broadcast channels.
True TV Everywhere – Live Linear Simulcast Channels
These new operator OTT services are making an impact and MVPD-authenticated viewing is quickly picking up pace. However, simply offering a VOD library will not cut it in a world where subscribers have a variety of OTT services to choose from. Pay TV operators need to work with the top national broadcasters and content owners to arrive at a true TV everywhere experience, delivering on viewer expectations for all content, on all devices, all the time.
Live Local Programming
In this next-gen TV world geographic boundaries aren’t drawn by physical infrastructure but they are still an important point of differentiation. Local programming is the missing piece of a full-featured OTT service that competes with both VOD services and traditional broadcast. In order for an OTT service to fully meet viewer needs for all content, on all screens, all the time, local programming has to be brought into the content mix. Underlining this point, Apple is rumored to be delaying the launch of the next version of Apple TV in order to secure local programming.
Major broadcasters have a big stake in local programming via owned and operated stations, affiliates and regional sports networks. Pulling that local content into the OTT bundle increases the value of that content, both the brand value as the local face of a national provider, and in actual revenue potential. Local TV ad revenues are expected to grow 8% to $20.7 billion, according to a new forecast from BIA/Kelsey.
“Additionally, we’re seeing the ability of local stations to maintain their loyal advertiser base, which means they consistently receive recurring ad revenue that boosts their profitability. For stations, the top client categories included auto dealers ($3.5 billion), wireless telecommunications ($722 million), hospitals ($652 million) and full service restaurants ($558.3 million).”
Mark Fratrik, senior vice president and chief economist, BIA/Kelsey
Increasingly Complex Workflows
The business and technical hurdles in delivering live linear national and local channels via OTT services revolve around content acquisition and content replacement. Significant metadata integration is required throughout the live video workflow in order to respect live broadcast business rules and ensure that viewers are accessing only what they have rights to view. The complexity of marrying rights and business rules with live streams and delivering it seamlessly to the viewer can be head spinning.
A viewer connected to an OTT service offering a live linear channel hits the point in the schedule for a locally broadcast baseball game. The viewer may or may not match the required profile to access that game based on where they are physically watching, their home address, whether the OTT provider has the streaming rights, or if they’re accessing the stream from a supported device.
Let’s assume that the viewer has met the requirements for accessing the stream for the live game. The ads they see during the OTT broadcast are likely replacement ads, inserted during the broadcast ad breaks. Those ad breaks carry their own set of metadata that determine when and how long the ad break is, where to go to find the ads to play based on varying levels of targeting such as geographic and demographic viewer data, local versus national ads, etc. And once the ad is delivered there’s another set of metadata that tracks the ad play to provide valuable data back to the content owner and advertiser.
All of these rights and business rules that govern access, advertising, and tracking have to be accounted for when architecting the live streaming workflow. Marrying the metadata to the stream, delivering appropriate alternate content, and managing the complex workflow, from content acquisition to analytics is the challenge in successfully delivering a high quality, differentiated OTT service.
Open, Cloud-based Solutions
Moving to cloud-based solutions with open API sets is the right path forward to integrating different systems within the workflow to deliver on these complex OTT scenarios. iStreamPlanet’s cloud-based solution, Aventus, provides live video encoding and multiscreen packaging as a service, versus traditional, on-premises hardware-based products. Aventus not only decreases the capital costs associated with launching an OTT service, more importantly it provides an open platform via APIs for integration and innovation, enabling our customers to keep pace with changing technologies, business requirements and consumer demands, pulling together disparate systems within the live video workflow to manage increasingly complex OTT scenarios.