Over The Top (OTT): a delivery platform to stay?
Comments and analysis
With the Millennials, more and more of them are choosing OTT as their preferred choice of consuming long form content. OTT companies like Netflix, Hulu, Amazon’s Fire TV and Crackle are leading the way. OTT services are normally accessed through smart TVs, computers, tablets and mobile. Sony and Microsoft are now providing an option to OTT providers to provide their service through game consoles, like the PS4 and the Xbox One. Smart TV manufacturers are also building in OTT services in their TVs prior to shipping it out to the consumers.
It is very costly to become a true multi-platform broadcaster because acquiring the rights to broadcast for all platforms is very expensive. This presents a natural barrier for traditional broadcasters to enter into the space of OTTs. Short form video providers like YouTube and social media services like Facebook, have embarked to offer OTT like services to their subscribers but have not been very successful yet. The industry is beginning to believe, for service providers who are experts of and rely on technology to deliver their services, must obtain the “broadcasters” DNA to successfully deliver long form content. This can be done by hiring people from broadcasting or partnering with broadcasters themselves. This has been proven as most of the OTT providers have senior management who are from the broadcasting industry.
In conclusion, OTT is here to stay which is a good opportunity as now content developers have another avenue to distribute and monetize their content. Relationships need to be built with the OTT providers just as relationships have been built with traditional broadcasters and buyers. Needless to say understanding what type of content OTT providers want is key and may differ from what traditional broadcasters want.
1. Definition: OTT (Over-The-Top) refers to deliver of audio, video and other media over the internet without multiple-system operators being involved in the control or distribution of the content.
2. Examples of OTT service providers includes Netflix, Hulu, Amazon’s Fire TV and Crackle.
3. OTT content can be accessed via PC, set-top boxes and smart phones and smart TVs.
4. Currently, game consoles namely, PS4 and XboxOne are becoming another platform OTT can be accessed from. Netflix and Hulu are some of the services offered by these game consoles.
5. Amazon Fire TV are looking at using games to drive people to adopt their OTT http://www.cnet.com/news/amazon-fire-tv-world-domination-through-video-games/
6. Cable and traditional TV are resistant to move into providing OTT services because to become a true multi-platform broadcaster is very expensive. This is mainly due to the licenses they have to acquire. If you are a global player, once you buy the rights, you will have difficulty in splitting the rights with different customers in different countries.
7. BRIEF ON INDUSTRY PLAYER: NETFLIX (http://www.foxbusiness.com/economy-policy/2013/08/19/why-netflix-works/)
a. They have 50 million members worldwide in 40 countries
b. They were credited to
i. killing the video stores.
ii. revolutionizing the TV industry with new form of consumption. People are accessing Netflix on many second screen devices.
iii. Developing original programming, whereby like in the series house of cards, all 16 episodes were launched in the same day.
iv. attacking the old windows system, by funding their own movie content so that they can launch both the cinema release and on their own Netflix platform on the same day. Original Netflix production includes House of Cards, Orange is the new black, Hemlock Grove, Lily Hammer, and Marco Polo.
v. Globalizing content by making content from a specific locale available around the world.
c. They are basically a tech company, using technology to deliver content.
d. For Netflix content, 70% are TV content and 30% are movies, which is also reflective of the consumption of Netflix users.
e. In a new country, Netflix launches with half the content for the year. The rest of the content are slowly acquired and introduced based on user consumption.
f. Netflix also co-produces with countries they are launching in.
g. Netflix uses the analytics to decide on the quantum to invest but never to change the creative content of the show. Analytics is based on
i. the take rate for the recommended movies suggested by Netflix
ii. how frequently a movie is completed
iii. how people rate the movie.