Brightcove White paper - 5 smart tactics for ott success by IABM

FIVE SMART TACTICS FOR OTT SUCCESS: Launch and Build Your Internet TV Brand

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FIVE SMART TACTICS FOR OTT SUCCESS

The OTT video market is still nascent and can seem complex and competitive. But it is also the largest global media opportunity in decades, so taking a waitand-see approach is not a viable option for content brands. Traditional broadcast and cable have proven that TV is the most influential medium for building brands and driving commerce. Today, OTT technologies are delivering the power of TV with the agility and scale of the global internet.

Diving deep into the highly competitive OTT landscape without the right planning risks wasting time and money. This whitepaper outlines five smart tactics that will give brand owners the confidence and authority to prepare a successful OTT offering:

From entertainment studios with compelling films for a targeted audience; to a radio broadcast station with a stable of digital talent; to a regional newsroom looking to launch a mobile-first video destination, this new era of video offers a twofold promise. First, media companies can extend existing content to new audiences; and second, they can deepen audience engagement with new content and video experiences.

3. Design a distribution roadmap across platforms and screen sizes.

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1. Clearly define a unique content strategy. 2. Build toward maximum business model agility.

4. Adapt TV marketing tactics to find, nurture, and build your OTT audience. 5. Design, launch and refine your video offering and technology solution in a single, iterative effort.

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The OTT Era of Television RealNetworks released one of the first streaming platforms in 1997 1. A decade later, in 2008, Netflix announced Watch Instantly and launched the service with about 1,000 titles2. Soon, the rapid growth of iTunes and Netflix made it clear that a successful video service could be delivered ‘over-the-top’ of the public internet, rather than through the expensive, closed networks of broadcasters, telecom and satellite providers and cable operators. Today, OTT innovation is powering the third era of TV. Video platform advances, adaptive formats, delivery network enhancements, connected streaming devices, and monetization technology have brought IP video closer to its explosive potential, both as a consumer experience and as a business model. Prescient media brands have been investing in OTT for well over a decade. MLB.tv launched in the spring of 2003, offering a full season of streaming for $79.95 and signing up over 100,000 subscribers3. In the United Kingdom, the BBC’s iPlayer launched in December of 20074. Hulu followed suit in 2008, differentiating itself from Netflix by

its ad-supported business model5. In 2011, Amazon rebranded its streaming offer as Amazon Instant Video. Since then, they have bundled tens of thousands of titles into the Amazon Prime subscription offer, creating a juggernaut in the subscription video-ondemand market6. Today, there are hundreds of mass market and special interest OTT services in all categories. Parks Associates tracked 33 OTT service launches in 2015 alone. In addition to major launches like HBO Now, SlingTV and Go90, niche services like VidAngel (family-friendly versions of movies and TV) and XiveTV (high-quality documentaries) leveraged clever programming strategies to gain beachheads in OTT. OTT service usage has increased as well. By the end of 2015, 58% of U.S. broadband households used at least one OTT video service on a monthly basis. More than 25% used two or more OTT services monthly. While definitive usage numbers for each service do not exist, market research provides some insight into take rates7.

A recent survey conducted by Altman, Vilandrie & Company details the percentage of respondents who use the major services on a weekly basis.

PERCENTAGE OF RESPONDENTS WATCHING EACH SERVICE ON A WEEKLY BASIS:

Netflix (streaming only)

36%

My cable TV provider’s online video service

13%

Amazon Instant Video

11%

Hulu Plus

11%

HBO Go

Online premium sports package (MLB.TV, NFL Mobile)

HBO Now

iTunes

CBS All Access

Vudu

Google Play

Sling TV

Altman, Vilandrie & Co online survey of 3,461 respondents. Percentage of respondents watching that service on a weekly basis.

A Crowded Space: Is There a Bullish Case? Given the potential for OTT, it is not surprising to find a flurry of activity in the market. The OTT market is expected to generate an estimated consumer paid revenue of $15.6 billion globally through 2018. Yet, this represents just 4% of worldwide pay TV revenue, suggesting plenty of room for growth9. Ad-based revenue for OTT services will also grow. Magna Global tracked a 38% YOY increase in 2015 global digital video ad spend to $15.4 billion10. These factors contribute to the positive business case for launching an OTT service. However, it is clear that diligent execution against a strong plan is also critical. You can increase your odds of carving out a successful position in the OTT market by implementing these five tactics:

1 Clearly define a unique content strategy. 2 Build toward maximum business model agility. 3 Design a distribution roadmap across platforms and screen sizes.

4 Adapt TV marketing tactics to find, nurture, and build your OTT audience. 5 Design, launch and refine your video offering and technology solution in a single, iterative effort.

Letâ&#x20AC;&#x2122;s walk through each one.

1: CLEARLY DEFINE A UNIQUE CONTENT STRATEGY

Great content makes the medium of video even more powerful. Thus, it is essential to have a focused, compelling programming strategy as the foundation for an OTT launch. Here are some questions to consider: •

Which genre(s) of content do you plan to offer?

•

Describe your target audience in detail. When and why do they watch your videos?

•

How much content will you offer? How frequently will it be refreshed?

•

What is your budget? What is your targeted production value?

•

Will you offer a catalog of licensed shows? Originals? Will you offer live and/or video-on-demand content?

A hallmark of the pay TV era was the dramatic increase in the number of channels and genres that could appeal more deeply to smaller audiences. Digital video has amplified that trend. Today, content creators are producing shows of all stripes, each one with a creative vision that appeals to a specific audience.

While some shows may broaden their appeal and grow a diversified following over time, others can find success as coveted niche offerings. This speaks to a key advantage of OTT over broadcast TV. It is possible, or perhaps necessary, for your content to appeal more deeply to a narrower audience than is economically viable in the traditional TV model. Also, note that your OTT content strategy does not need to be constrained to a linear schedule or a single device. Indeed, one compelling aspect of OTT is that your content strategy may provide opportunities to attract audiences across two or three diverse viewing behaviors. For example, if you have a catalog of dramas worthy of binge-viewing on a big screen TV, your OTT service might also offer viewers the opportunity to snack on short-form mobile videos in a promotional run-up to a new release.

Executing Your Content Strategy Capturing and retaining audience engagement is no small feat. Here are three tips: 1. NURTURE A HEALTHY PROGRAMMING LIFECYCLE. Utilize “tent pole content” (i.e. compelling, high-production value content that will appeal to mass audiences) as audience growth driver; seasonal shows to build momentum; and more frequently produced, everyday content to maintain relevance with fickle attention spans. 2. ESTABLISH GOOD PRODUCTION HABITS. Get good at multi-purposing and versioning of content. Whether this pertains to content rights or original productions, videos of different lengths and formats are powerful assets in multi-platform media. Some content may translate well across platforms, other assets may require a comprehensive reinvention for specific platforms. 3. LEVERAGE THE LONG-TAIL OF TALENT. Due to advances in camera technology and content creation tools, it is easier than ever to produce great content. Thousands of talented video creators globally can help you create content. For example, the Tastemade OTT service has scaled with contributions from over 5,000 creators around the globe.

CASE EXAMPLE:

How Acorn TV Leveraged a Focused Content Strategy. Brightcove customer RLJ Entertainment is a premier independent entertainment studio offering niche SVOD channels, including Acorn TV. From its launch in 2011, Acorn TV has been laser focused on viewers that love British TV mysteries and dramas, curating some of the most popular titles in the genre, including Poirot, Foyle’s War, Doc Martin, and Miss Fisher’s Murder Mysteries. In 2015, Acorn TV premiered the final three episodes of its franchise, Poirot, starring David Suchet, including the Emmynominated finale ‘Curtain,’ resulting in a major boost to subscriber growth. In March 2016, Acorn TV revealed it had reached over 240,000 paid subscribers, a 100% increase in yearover-year subscribers11.

“INSTEAD OF TRYING TO BE ALL THINGS TO ALL PEOPLE, WE CAREFULLY CURATE RICH AND DEEP CONTENT OFFERINGS THAT SERVE DEDICATED NICHE AUDIENCES. OUR ACQUISITION AND PROGRAMMING STRATEGY KEEPS CHURN LOW AND CUSTOMER REFERRALS CONTRIBUTE TO OUR HIGH CONVERSION RATE.” -Titus Bicknell, CDO & EVP, Operations for RLJ Entertainment on Acorn’s content strategy

2: BUILD TOWARD MAXIMUM BUSINESS MODEL AGILITY

Media businesses have thrived using a mixture of free, ad-based subscription and transactional business models. Business model flexibility is also critical in the OTT ecosystem. Netflix, Hulu and Amazon all used distinct, innovative consumer models that drove adoption of their multiscreen TV services. Hulu launched as a free, ad-supported service available on the PC. The ability to stream to connected TVs was one of their first upgrades. A choose-your-own ad format improved user experience and changed the ad sales process. More recently,

MODEL

a “No Commercials” tier was added to give viewers even more control and choice on their ad exposure. As media companies have done throughout history, OTT services will likely need to experiment with a blend of business models. The following table provides an overview of the different pricing strategies for consideration:

DRIVERS

QUESTIONS

FREE, BRANDED CONTENT.

Brands fund unique content opportunities in order to earn mindshare.

Is there a sufficient amount of compelling content endemic to the sponsoring brand?

FREE, AD-BASED BUSINESS.

TV ad budgets shifting to online. Ability to programmatically buy a targeted TV audience. Broadcast quality ad delivery using server-side insertion.

Will the service have sufficient audience scale to attract sufficiently large media buyers?

TRANSACTION, LIVE PPV OR DOWNLOAD.

Unique, exclusive VOD or live event content can command up to $60+ on a per-view basis in the pay TV ecosystem. The convenience of portability for premium long-form content is also a driver.

Is there a sufficient amount of purchase urgency on the content itself? Is the purchase process friction free?

FREEMIUM AND SUBSCRIPTION VIDEO-ONDEMAND SERVICES.

Draw in subscribers with great content, and package a subset of that content for free in order to get viewers hooked.

Is there a sufficiently sized catalog of content? Do titles have sufficient production value?

CASE EXAMPLE:

DramaFever, Leveraging Business Model Flexibility DramaFever, a leading online network for primetime shows from around the world, started in 2009 with 10 Korean drama series. Today, over 70 international content suppliers provide tens of thousands of content hours for their subscribers. DramaFever has mastered two critical skills in digital media. 1. The ability to balance content syndication with its own channel-building effort. 2. The ability to balance ad-supported revenue with paid-subscriber fees. When the service first launched, the company focused on syndicating content to platforms like Hulu, YouTube and iTunes. Those efforts have helped accumulate a monthly viewership of 21 million12.

At the same time, DramaFever has also established its own platform with a paid subscription model12. In June 2015, they rolled out an advanced subscription back end which enabled the company to create innovative offers13. There is still a free, ad-supported version available on the PC. But there is also a $0.99 per month option, billed annually at a rate of $11.88, that is viewable on TVs with ads and grants access to exclusive titles. At the $4.99 tier, ads are removed and subscribers can also “cast” programs from a mobile phone to Chromecast and Airplay devices. Finally, for $9.99 a month, subscribers can download and watch titles offline, a great option for fans of DramaFever who may have active air travel schedules, for example.

“AS THE NUMBER OF NICHE CHANNELS GROWS IN OUR ECOSYSTEM, OUR PRIMARY GOAL IS TO TRANSITION FROM A CONTENT DISTRIBUTION PLATFORM TO A CONTENT MARKETING PLATFORM, WHERE OUR BRAND, ALONG WITH OUR CONTENT, TRANSCEND TECHNOLOGY AND MEAN SOMETHING SPECIAL TO OUR USERS.” Suk Park, DramaFever Co-Founder and President

3: DESIGN A DISTRIBUTION ROADMAP ACROSS PLATFORMS AND SCREEN SIZES

For the past decade, video and TV insiders have been speculating about how many different screen sizes viewers would regularly watch. While the biggest screen is still where a majority of traditional TV viewing hours takes place, in the OTT landscape, there are three additional screens that require attention. Each screen presents users with a different viewing environment. While all types of content are watched on every device, each screen also has a special role in the consumer’s overall video experience. Media owners need to expose their content assets in creative ways across this four screen canvas to drive loyalty and engagement and should aim to find a way to program these experiences efficiently and scalably.

The Four Screen Experiences Defined: TV - THE BIG SCREEN Notwithstanding the rapid uptake of desktop and mobile video viewing, the original, and biggest screen (the TV) is still the source of the largest pool of revenue and value in the video market. While not every OTT service has enough compelling content to drive premium, immersive and “lean-back” viewing experiences, this traditional TV watching experience will continue to be a core driver of value for OTT offers. 95% of ad views on TV connected OTT devices are within TV-style live or longform content, indicating the lean-back value of the big screen14.

SMARTPHONE - THE FIRST SCREEN While smartphones are often used for viewing long-form content, they generate 63% of their ad views on top of short-form content14. But smartphones are also critical for finding content, sharing it, even creating it. Tune-in notifications and social sharing targeted at mobile devices are an accepted best practice at media companies. From there, one more click on the smartphone remote and compelling content can be cast to the nearest connected screen.

TABLET - THE PORTABLE SCREEN The tablet has proven to be exceptionally attractive for “lean-back,” TV-style experiences. 69% of ad views on tablets are within live or long-form content14. That gives the tablet a powerful position within the four-screen landscape. While the tablet is ideal for personalized viewing experiences, it can also be watched with a friend or family member. And while the tablet has smartphone features that make it ideal for finding, buying and sharing content, it also enables a more relaxed, lean back viewing experience that can draw audiences into premium, immersive TV content. A recent Digitalsmiths report revealed that among respondents who own an iPad or tablet, 37.1% watch video on their device, and 90% of those do so on a weekly basis. The top content genres they watch are premium movies, TV shows, and previews/trailers of movies and TV shows15.

PC - THE VERSATILE SCREEN Notwithstanding its reputation as a more “lean-forward,” active usage environment, the desktop/laptop still drives significant video viewing. 40% of all ads viewed within video content were seen on a desktop or laptop computer, according to Freewheel14. Notably, the PC environment is well suited to all content lengths, with 26% of ad views within live content, 38% within content longer than 20 minutes, and 36% within content shorter than 20 minutes14. Most leading web video brands with OTT service platforms, including YouTube, started out with strong browser-based video experiences that they continue to nurture. Mapping out a comprehensive four-screen distribution strategy that takes advantage of the particular strengths of each screen will provide your OTT brand with additional spark at launch.

4: ADAPT TV MARKETING TACTICS TO FIND, NURTURE, AND BUILD YOUR OTT AUDIENCE

Pay TV distribution provides programmers a level of “built-in” audience. In the OTT model, viewers need to be engaged by marketing across a range of channels and messaging touchpoints. Digital, mobile and TV platforms will help build awareness. However, alternative outlets, including eCommerce, catalog and other physical channels can also be instrumental in driving growth.

Here are five tactics from traditional TV marketing operations that have been embraced by OTT providers: ON-AIR PROMOTION For linear TV, on-air promos remain one of the most valuable tactics for driving viewership. Many local broadcasters have successfully utilized onscreen talent callouts to drive App downloads. Similarly, successful YouTube channels often utilize in-video clickable links to cross-promote other videos and channels. And some OTT services have established YouTube barker channels to promote new services.

PUBLICITY AND PERIODICALS Promotional partnerships with entertainment publications can help generate buzz. For example, Crackle has partnered with Entertainment Weekly on

multiple promotional tactics. Subscribers to Crackle are offered four free issues in connection with registration; and Entertainment Weekly has promoted Crackle on its digital platforms, including Facebook.

SOCIAL Social networks like YouTube and Twitter are playing an increasing role in building buzz and driving tune-in for major media brands like the NBA. Social apps and push notifications on smartphones provide compelling tune-in tactics for OTT services as well, especially those with programming strategies for debuting VOD content and streaming live events.

TARGETED ADVERTISING As addressable and programmatic TV advertising systems mature, not only will they help you monetize your service, but they also should be seen as an effective channel for driving viewership as well. Buying ads via these new platforms can enable you to drive awareness and tune in among specific audiences. One important promotional channel for OTT services is on streaming platforms themselves. For example, Roku provides a rich set of advertising and promotional capabilities, building these tools directly into its OS. Content providers on the Roku platform can promote their services to users during new user signup, in the channel store, on the device’s home page, and through video ads. The Roku Ad Framework (RAF)

enables cross-promotion of channels and shows – content providers can target their audience with ads promoting new programming or channels, allowing users to click through and follow the promoted show through Roku’s MyFeed feature or download their channel from the Channel Store.

ECOMMERCE Top media brands today, including the new rising stars of OTT, often have a merchandise or retail extension to their marketing plans. Tying content with merchandise boosts top-line revenue, and also has a positive spillover effect for brand awareness and affinity. A good example of this is the DailyBurn online store, where vitamins and other health-oriented merchandise are sold.

CASE EXAMPLE:

DailyBurn: TV Ads, Digital, and eCommerce Together The DailyBurn streaming service was launched in 2011 with a strong value proposition: DailyBurn is a low-cost video alternative to private training at the local gym. They have executed smart retail partnerships, including participation in Amazon’s marketing launch of the Fire TV and the Apple launch of their brand new operating system for TV, tvOS. DailyBurn has also executed a targeted ad campaign on local cable TV, hitting key demographics, including exercise fans who are likely to pay for private training at the local gym.

The DailyBurn online store enables them to mesh eCommerce with their content operation. The results of these tactics working together are impressive. DailyBurn is one of the most successful OTT services, ranking #1 in Health & Fitness and #93 Overall on Apple TV in downloads, and #12 Overall in gross revenue. DailyBurn is also the #1 app within Roku’s Fitness category. Most impressive, DailyBurn increased subscribers by 56% in 2015 to end the year at 105,000 subscribers16.

5: DESIGN, LAUNCH AND REFINE YOUR VIDEO OFFERING AND TECHNOLOGY SOLUTION IN A SINGLE ITERATIVE EFFORT

In the past, OTT services have taken quarters or years to design, build and launch. First, a market-facing team outlines a vision for the consumer offer. That drives product requirements for a solution architect, who then defines the functional blocks needed to complete an end-to-end platform. For each functional block, there are multiple vendors that can fulfill the specified requirements. It is rare for a tool to provide all possible functionality, so custom code may be needed, resulting in multiple integration and engineering efforts. The entire solution needs to be well-documented, and typically specialized resources need to be trained to maintain and support it. Unfortunately, these complexities make it especially difficult to articulate roadmaps, translating to a low level of flexibility and business agility. Brightcove pioneered the OVP category and over the years we have partnered with some of the world’s leading media companies to launch successful OTT services. We have seen up close the pressure-filled challenges that organizations face to get to market quickly or else risk losing out to competitors.

As a result, we are pleased to introduce Brightcove OTT Flow™ - powered by Accedo, an innovative new solution designed to help media and content companies quickly and seamlessly launch new OTT services. Brightcove OTT Flow is a joint offering with Accedo, the leader in multi-platform application design and development. Accedo’s App Grid app management console powers apps for many of the world’s leading media brands and we have tightly integrated Brightcove Video Cloud with the App Grid framework to create one easy workflow for our customers. We have combined our industry-leading video ingest, processing, storage, playout and monetization with Accedo’s bestin-class client app development so our customers can launch world-class OTT services quickly — and with the confidence of both their product and finance teams. That’s the formula for success in fast-moving markets: launch a viable consumer offer and solution together, and update both of them over time as markets change.

Now, media companies can leverage best-in-breed technology and deep industry expertise from video platform leader Brightcove and UX pioneer Accedo to ensure OTT success. Get to market faster with an out-of-the box solution Unlock new revenue streams and monetize content via advertising or subscription models Extend audience reach and a consistent UX across multiple platforms including desktop, iOS, Android, Apple TV, and Google Cast

Reduce costs by eliminating the need for developer time and resources while still delivering beautiful and performant cross-platform video experiences Leverage cloud technology for smooth and seamless app updates Receive ongoing customer support from our global team

BRIGHTCOVE OTT FLOW POWERED BY ACCEDO: BOLD, SMART AND FAST

Brightcove’s new OTT Solution enables brands to launch OTT services fast and with an affordable model that is redefining the commercial playbook for bringing OTT services to market. Brightcove OTT Flow solves the most pressing obstacle for media brands today: executing a compelling, differentiated OTT service offering without compromising ROI or missing out on the wave of growth driven by changes in viewing behaviors. To learn more about Brightcove OTT Flow, visit brightcove.com/media.

ABOUT BRIGHTCOVE BRIGHTCOVE INC. (NASDAQ: BCOV), is a leading global provider of powerful cloud solutions for delivering and monetizing video across connected devices. © 2016 Brightcove Inc. All rights reserved.

END NOTES 1. Wikipedia entry for RealNetworks states streaming video technology was announced in 1997. Taken from the Web March 20, 2016.

9. Deloitte Touche Tohmatsu Limited, “Television’s Business Model: Fit for a Digital World”, IBC Leader’s Summit September 2014

2. The New York Times, Jan 16, 2007, “Netflix to Deliver Movies to the PC”

10. Magna Global, June 22, 2015, “Magna Global Forecasts Global Advertising Revenues”

3. The Verge, August 4, 2015, “The Changeup: How Baseball’s Tech Team Built the Future of Television” 4. Total Telecom Online, October 20, 2008, “BBC and BSkyB announce iPlayer deal” 5. USA Today, March 11, 2008, “Hulu goes live with free TV shows, movies online” 6. Wikipedia entry for Amazon Video states that the service was renamed to Amazon Video-on-Demand on September 4, 2008.

11. RLJ Entertainment, Presentation at ROTH Conference, March 2016 12. Digiday.com, January 28, 2016, “DramaFever finds Latin America loves Korean soap operas” 13. Digiday.com, September 11, 2015, “How DramaFever gets people to pay for Korean soap operas” 14. Freewheel, Q4 2015, Freewheel Video Monetization Report

7. ParksAssociates.com, November 17, 2015, “Parks Associates Announces Top 10 Subscription OTT Video Services in the U.S. Market”

15. Digitalsmiths, Q4 2015, Video Trends Report: Consumer Behavior Across PayTV, VOD, PPV, OTT, Connected Devices, and Content Discovery

8. Altman, Vilandrie & Company, October 15, 2015, “AV&Co Consumer Video Research,” online survey of 3,461 respondents

16. PR Newswire, Feb 2, 2016, “IAC Reports Q4 2015”