BCA Show Preview - 16

16

SUNTEC SINGAPORE

A part of

SHOW PREVIEW | 26-28 June 2018

MARINA BAY SANDS * SUNTEC SINGAPORE

Three Predictions for
OTT Video in 2018
We are in the midst of the largest shift to the television industry in decades, writes Anant Khanolkar,
Channel Sales, Verizon Digital Media Services...

T

hat shift seems to call for the death
of video advertising and the rise of
subscription revenue, but the problem is that
actual numbers don't really back that up.
New research published by Parks Associates
found that users are actually dropping
their OTT video streaming services at an
unprecedented rate: 50% of OTT subscribers
end up cancelling. In the long term, that's an
unsustainable level of churn.
As the production costs of content continue
to rise, content owners must increase
revenue and reduce the endless cycle of
signing up and cancelling. Otherwise, they
won't be able to grow and stay profitable.
Luckily, a solution is already in sight.
By connecting with their users directly,
OTT service providers have the ability to
unlock a treasure trove of data beyond oldschool broadcasters' wildest dreams. That
data is key to building sticky, massively
monetisable streaming video that solves the
churn problem for good. Here are my three
predictions for how this transformation will
shape OTT video in 2018.

Ads Will Get More Valuable
In a way, it's no surprise that OTT service
providers are facing high levels of churn.
Satellite and cable TV providers have
infrastructure literally wired into each
customer's house, which makes it much
harder to shift between services, if the
consumer even has choice at all in their area.
By contrast, unsubscribing from a streaming
service takes a mere click of a button. The
landscape of OTT video solutions is also
incredibly fragmented, so that users might
need to subscribe to five or six different

streaming services to see all their favourite
shows. Who wants to keep track of all those
different subscription fees?
In this climate, a return to ad-supported
content seems likely. There's no question that
advertising will have a big play here as online
video ad values rise due to their dynamically
targeted nature. Right now, prime time
broadcast TV ads command prices in the
hundreds of thousands, dwarfing OTT ad
spend by comparison. But as audiences
continue to migrate to OTT video, so will the
money - it just has to. Advertisers want to be
where the audiences are, and content owners
want to earn the highest revenue per ad spot
for bringing that audience to the advertiser.
Ad revenues at major cable networks are
already declining as of 2017, while video ad
spend has grown 67% since 2015. I predict
that we'll be seeing a major rise toward parity
for OTT and broadcast ad prices in 2018,
with actual parity being reached within a few
years.

Data Will Drive New Shows
It's no secret that the OTT video content
pipeline today is highly fragmented, and
no one is taking full advantage of the data
at their fingertips. However, that especially
goes for players on the production side of the
video ecosystem.
At least on the distribution side,
broadcasters and OTT service providers
mine rich user data to target advertising
and optimise video delivery, among other
things. But data on content performance
and user engagement usually remains siloed
away from content creators, who rarely
know where their content is being used,

Data on user engagement will
become more prevalent

A return to ad-supported
content seems likely

how it's performing or what ad revenue it's
generating.
In 2018, that's about to change. Aided by
end-to-end content intelligence platforms,
content creators will start to utilise that data
to create "stickier", more engaging OTT
video content. For example, if a film editor
knew that a particular clip from a trailer
performed extremely well on social media,
they could edit more of that particular scene
into the movie itself. Video content optimised
in this way will in turn generate more stable
and predictable content creation, lowering the
risk inherent in creating new content.

A Return to Scheduling
In today's age of ubiquitous video-ondemand (VOD), actually waiting for a show
to come on might seem archaic. But believe
it or not, linear TV has never gone away. It
is, however, changing and being updated in
an agile, streamlined way. In the near future,
we'll see OTT service providers start to
use data and artificial intelligence to create

schedules of linear content personalised to
each user, incorporating both live video and
VOD. This never-ending stream of OTT video
would be optimised to prolong viewing.
Whether its end goal is to serve more ads or
to drive more subscriptions, scheduling will
help alleviate the effects of churn by grabbing
and keeping viewer attention.
In 2018, the OTT solutions industry is
due for a reckoning. Given that 50% churn
rate, streaming video services won't be
able to survive off subscription-based
models much longer. However, by tapping
into the power of data, the savviest content
creators, broadcasters and OTT service
providers will be able to turn this transition
into an opportunity to improve their OTT
video programming and bolster ad revenue.
And, with stickier, more engaging, highly
personalised content streaming to their living
rooms, viewers will benefit too.
Visit us at booth 4B3-08 to learn more
about our fully integrated platform.
www.verizondigitalmedia.com

Linear TV has never
gone away
https://www.verizondigitalmedia.com/ https://www.verizondigitalmedia.com/ http://www.verizondigitalmedia.com https://www.verizondigitalmedia.com/
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