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Video On Demand And Its Impact On Television As Over the Top (OTT) video platforms revolutionise the way the world seeks entertainment, conventional broadcast mediums are losing steam. Whether it is typical television formats like broadcast and pay TV or its erstwhile premium alternatives like cable, satellite and telco, OTT television, spangled with big-ticket players like YouTube, Amazon and Netflix, are fast replacing traditional televised content. With a $25 billion industry being spun by these OTT kingpins, filmed content production, aggregation and distribution as we know it, is about to face a difficult road ahead.
Definition of Over the Top Content OTT content essentially refers to content that is transmitted to viewers over the top of traditional technologies via fixed or mobile broadband internet, as opposed to broadcast spectrum or exclusive cable, fibre and satellite mediums.
Impact of Over the Top Content on Traditional Audiences Content ecosystems around the world are being affected in several ways. Let’s look at how film production is changing.
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Financial Shift If you examine the global OTT landscape, you’ll find over 500 broadcasters attempting to capture a share of the market. Most of these brands are local, providing relevant regional content to viewers. However, the top 5 spots in the OTT market are occupied by well-known names in the technology space: HBO, Netflix, Amazon, Hulu and YouTube. About half the revenues generated by the global OTT market are ploughed in by these five brands alone. With their financial heft, scale, and technology, the big five are predicted to expand astronomically in the years to come.
Media Shift Through OTT, media can proliferate to new markets and audiences. With economic, strategic and geographic barriers axed, everyone has access to everything. On-demand content also liberates media broadcasters from the shackles of time and location-based viewing. And broadcast houses can now
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bolster and personalise their relationships with viewers, something that content houses were unable to do through the television age. Cultural Shift Though this shift is largely intangible, the advent of large OTT players is making it more challenging for small entry-level broadcasters to make their presence felt. That said, amateur content is burgeoning on platforms such as YouTube. Vlogging, a portmanteau of the words video and logging, is sensationalising ad-hoc captures of day-to-day living.
New-Age Content Creators in the Over the Top Market OTT reflects content offerings in the television kitty, plus a little more. Price points, variety of content, location-agnostic viewing and flexibility differentiate OTT from traditional television. But that’s not all.  Because of the limitations of production and distribution that OTT demolishes, there
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are now more content creators in the fray. Meet the newest kids on the block.
Amateurs Amateurs form the fabric of social media, providing a stream of steady content to platforms like Facebook, Instagram and Twitter. Amateurs don’t follow a publishing timeline, instead uploading snippets and stories at regular intervals. They are the newest members of the content ecosystem.
Professional Amateurs Imagine a hybrid model of amateurs and professionals, and you have professional amateurs. Otherwise known as pro-ams, these creative sparks pump regular content into circulation on digital platforms such as YouTube and The Young Turks. Pro-ams aren’t backed by studios or media houses, and create content independently, driven by profit. They publish content in accordance with a self-determined timeline, to garner as many followers as possible. Many pro-ams set out as amateurs and become more accomplished with time. There are several enablers in the online market today, that help pro-ams set up their own OTT platform. Streamhash, a cutting-edge framework that has made a name for itself in tech circles, is an ideal addition to any pro-am’s roster. The technology allows a user to set up an OTT website within just two days, and its fabulous interface holds a candle to the likes of Netflix and Amazon Prime!
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Media Houses Media houses have fuelled television content for decades now, and have remained largely unchanged in their approach over the years. The content they produce is superlative, costly and underpinned by a network of studios, distribution networks and production houses. Not surprisingly, media houses are the only content creators that were around in the television age.
Revenue Models in the Over the Top Sector When Video on Demand saw its first wave of monetisation models, broadcasters sought to employ one of three strategies, namely, advertisingbased VOD (AVOD), transaction-based VOD (TVOD) and subscription-based VOD. However, as the sector matures, and new broadcast models emerge, VOD is branching out. With live streaming now a firm inclusion on many digital and social media platforms such as Facebook and Twitter, the term VOD, has become redundant. Here are some revenue models in OTT that are relevant in the present scenario.
Advertising-Led Content An advertising-led platform is one whose content library is open to users at zero subscription and no hidden charges. The service may offer a vast archive of shows, movies and clips created by amateurs, pro-ams and media houses. Such a service monetises its platform through external advertisers, who pay the service in exchange for on-demand air time for
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their advertisements. Advertising-led content platforms differ in the content they provide to customers. While some may broadcast professionally produced television shows and movies, others may be a showcase for content created by pro-am and amateur talent. However, a growing number of advertisers are directing marketing budgets to OTT platforms, in a bid to spread their marketing presence and to capitalise on the on-demand nature of the business. MyVideo and Hulu are classic examples of advertising-led content platforms.
Transaction-Led Services You’ve likely been a buyer of a product on a transaction-led platform in the past. iTunes is an apt example of this. A transaction-led service allows a user to purchase or rent content in exchange for a one-time payment. On completion of the transaction, the content can be downloaded or streamed to a user’s device, often enabling offline viewing. Interestingly, the rise of transaction-led services, which primarily includes long-form content such as movies and television shows, is inversely proportional to the decline of physical home videos.
Subscription-Led Services OTT services are typically typecast as subscription-led, although there are an array of revenue models a firm may resort to. Subscription-led services open doors to a collection of professionally-produced content including movies and television shows, for a monthly or annual fee. The consumption
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mode is usually streaming, and access to the internet is critical for the sustenance of this format. This league of OTT content providers seeks to directly compete with cable operators, offering value-added programmes. Netflix, Amazon Prime and Hulu Plus are examples of subscription-led services.
Digital Multichannel Video Programming Distributors Digital Multichannel Video Programming Distributors (DMVPDs) are a marriage of subscription-led services and traditional cable networks. This class of OTT services offers pay TV services on a digital platform at essentially the same price points as television. Many of the players in this category have a foothold in television already and are entering the OTT space by duplicating their television offerings online. Customers find this helpful, because it means that they have access to traditional content, on an on-demand basis. Sling TV, owned by Dish Network is an extension of its parent’s television offering.
The Trickle-Down Effect of OTT on Consumers Television has been toppled from its long-standing pedestal by OTT content, and naturally, the transformation has been catalysed by the changing face of the consumer market. There have been three significant shifts in content production and consumption.
Space Transformation
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As recently as five years ago, you would have probably walked into a Walmart to pick out the latest chartbuster. With OTT platforms, brick-andmortar formats aren’t the only means to quality content. Consumers can now reach beyond cable and satellite networks to obtain content on demand, without having to worry about physical logistics. Space transformation encapsulates the lack of physical warehouse space needed to stock content, indicating that indicative shelf space is now infinite. Think of iTunes or Spotify. The platforms aren’t limited by inventory, and have the capacity to grow their library to millions of tracks. Translate this concept to OTT, and you’ll see that facilities-based distribution is now obsolete. The internet has annihilated physical media distribution, ensuring that consumers have quick and easy access to a vast labyrinth of content.
Time Transformation Television introduced a linear approach to content consumption. A viewer was forced to be a subject of time-based viewing, turning on the television set at an exact time to catch a specific feature or show. With OTT, nonlinear content viewing has promoted flexibility amongst consumers, giving rise to new trends. Today, a quarter of worldwide content consumption is nonlinear, and it is projected that by 2018, the US will lead the way in nonlinear consumption with non-linear consumption contributing to half of total content viewership. By choosing when to watch what, viewers have devised new approaches to nonlinear consumption. Binge-watching, a new
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phenomenon indicating back-to-back viewership of television shows or movies is popular amongst millennials. This has prompted OTT platforms to acquire and upload seasons at one go, providing users with content en masse.
Device Transformation Television consumption is device-specific. Content broadcasted for television can only be received on a television. With OTT, however, the rapid multiplication of devices has laid the foundation for users to receive content on any device, anytime, anywhere. As devices advance and resolutions become sharper, device fluidity will only become more relevant. Facebook, for instance, tracks 90% of its membership through mobile devices, and statistics show that viewership through mediums other than television has increased by three hours per week, since 2009. Two interesting trends have emerged from this shift. One, increased video consumption has broadened the video industry because OTT players aren’t yet clawing into conventional video broadcasts. Two, mobiles and smallscreens are ideal facilitators of short-form video consumption, like short videos, trailers and stories. Television shows and movies are still favoured on larger screens. The good news is that small screen penetration is possible even for small players with reasonably priced frameworks, such as Streamhash.
Revenue Strategies of Large OTT Players
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We mentioned the reigning OTT players earlier. And not without reason. The top OTT players in the market have sealed their spots through unique strategies for both revenue and cost. Their revenue strategies are highlighted below.
Globally Relevant Content OTT bigwigs have the machinery to tweak content to suit local markets. They also ensure that content is globally relevant as they close new deals and collaborations.
Clever Acquisition Tools With more experience and new markets, large OTT players leverage economies of scale, and learn how to minimise acquisition cost, increase retention and develop better tools to attract and onboard customers. Netflix has been a shining example of excellent growth, having reduced customer churn by 0.9% between 2008 and 2014, and scaling its base to 75 million users.
Audience Breadth and Depth Specially for an advertising-led platform, the quality of its audience is imperative. This provides advertisers tools for micro-segmentation and
micro targeting of users, while building a promotional campaign. By building a diverse audience, an OTT player can offer value to advertisers across the board.
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Cost Strategies of Large OTT Players Cost strategies go hand in hand with revenue optimisation methods. Here are some ways the biggies of OTT manage their costs effectively:
Global Content Acquisition The main challenge for OTT players is to acquire content for as many markets as possible. A large OTT player, however, can easily weave in extra markets into a multimillion dollar deal.
Reduced Costs with Larger Audiences As an OTT platform acquires more viewers, it develops wherewithal to write off its fixed costs over a smaller tenure. In turn, this means that the player can invest money into relevant business areas, such as original content, new partnerships and marketing and promotion.
The Dawn of an On-Demand Age As content preferences and viewing patterns change, the existing content environment is being upheaved to accommodate more. This shift brings with it greater hope for content creators, broadcasters and viewers. OTT is a brilliant take on traditional viewership. And finally, everybody has a forum to showcase their creativity.
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