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

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

® FIVE SMART TACTICS FOR OTT SUCCESS

The OTT video market is still nascent Diving deep into the highly competitive OTT and can seem complex and competitive. landscape without the right planning risks But it is also the largest global media wasting time and money. This whitepaper opportunity in decades, so taking a wait- outlines five smart tactics that will give and-see approach is not a viable option brand owners the confidence and authority for content brands. Traditional broadcast to prepare a successful OTT offering: and cable have proven that TV is the most influential medium for building brands and 1. Clearly define a unique content strategy. driving commerce. Today, OTT technologies 2. Build toward maximum business model are delivering the power of TV with the agility. agility and scale of the global internet.

From entertainment studios with compelling 3. Design a distribution roadmap across platforms and screen sizes. films for a targeted audience; to a radio broadcast station with a stable of digital 4. Adapt TV marketing tactics to find, talent; to a regional newsroom looking to nurture, and build your OTT audience. launch a mobile-first video destination, this new era of video offers a twofold promise. 5. Design, launch and refine your video First, media companies can extend existing offering and technology solution in a content to new audiences; and second, single, iterative effort. they can deepen audience engagement with new content and video experiences.

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RealNetworks released one of the first its ad-supported business model5. In 2011, streaming platforms in 19971. A decade later, Amazon rebranded its streaming offer as in 2008, Netflix announced Watch Instantly Amazon Instant Video. Since then, they have and launched the service with about 1,000 bundled tens of thousands of titles into the titles2. Soon, the rapid growth of iTunes and Amazon Prime subscription offer, creating Netflix made it clear that a successful video a juggernaut in the subscription video-on- service could be delivered ‘over-the-top’ of demand market6. the public internet, rather than through the Today, there are hundreds of mass market expensive, closed networks of broadcasters, and special interest OTT services in all telecom and satellite providers and cable categories. Parks Associates tracked 33 OTT operators. service launches in 2015 alone. In addition Today, OTT innovation is powering to major launches like HBO Now, SlingTV the third era of TV. Video platform advances, and Go90, niche services like VidAngel adaptive formats, delivery network (family-friendly versions of movies and TV) enhancements, connected streaming devices, and XiveTV (high-quality documentaries) and monetization technology have brought leveraged clever programming strategies to IP video closer to its explosive potential, both gain beachheads in OTT. as a consumer experience and as a business OTT service usage has increased as well. model. By the end of 2015, 58% of U.S. broadband Prescient media brands have been investing households used at least one OTT video in OTT for well over a decade. MLB.tv service on a monthly basis. More than 25% launched in the spring of 2003, offering used two or more OTT services monthly. a full season of streaming for $79.95 and While definitive usage numbers for each signing up over 100,000 subscribers3. In the service do not exist, market research United Kingdom, the BBC’s iPlayer launched provides some insight into take rates7. in December of 20074. Hulu followed suit in 2008, differentiating itself from Netflix by

PERCENTAGE OF RESPONDENTS WATCHING EACH SERVICE ON A WEEKLY BASIS:

Netﬂix 36% (streaming only)

My cable TV provider’s 13% online video service

Amazon Instant Video 11%

Hulu Plus 11%

HBO Go 7%

Online premium sports package 6% (MLB.TV, NFL Mobile)

HBO Now 6%

iTunes 4%

CBS All Access 4%

Vudu 3%

Google Play 3%

Sling TV 3%

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

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 4 Adapt TV marketing tactics content strategy. to find, nurture, and build your OTT audience. 2 Build toward maximum business model agility. 5 Design, launch and refine your video offering and 3 Design a distribution technology solution in a roadmap across platforms single, iterative effort. and screen sizes.

Let’s walk through each one.

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: While some shows may broaden their appeal and grow a diversiﬁed following over time, • Which genre(s) of content others can ﬁnd success as coveted niche do you plan to offer? offerings. This speaks to a key advantage • Describe your target audience of OTT over broadcast TV. It is possible, in detail. When and why do or perhaps necessary, for your content to they watch your videos? appeal more deeply to a narrower audience • How much content will you offer? than is economically viable in the traditional How frequently will it be refreshed? TV model.

• What is your budget? What is your Also, note that your OTT content strategy targeted production value? does not need to be constrained to a linear • Will you offer a catalog of licensed schedule or a single device. Indeed, one shows? Originals? Will you offer live compelling aspect of OTT is that your and/or video-on-demand content? content strategy may provide opportunities to attract audiences across two or three A hallmark of the pay TV era was the diverse viewing behaviors. For example, dramatic increase in the number of channels if you have a catalog of dramas worthy of and genres that could appeal more deeply binge-viewing on a big screen TV, your to smaller audiences. Digital video has OTT service might also offer viewers the ampliﬁed that trend. Today, content creators opportunity to snack on short-form mobile are producing shows of all stripes, each videos in a promotional run-up to a new one with a creative vision that appeals to a release. speciﬁc audience.

Capturing and retaining audience engagement is no small feat. Here are three tips: How Acorn TV Leveraged a 1. NURTURE A HEALTHY PROGRAMMING Focused Content Strategy. LIFECYCLE. Utilize “tent pole content” (i.e. compelling, Brightcove customer RLJ high-production value content that will appeal Entertainment is a premier to mass audiences) as audience growth driver; seasonal shows to build momentum; and more independent entertainment studio frequently produced, everyday content to offering niche SVOD channels, maintain relevance with fickle attention spans. including Acorn TV. From its launch in 2011, Acorn TV has been laser 2. ESTABLISH GOOD PRODUCTION HABITS. focused on viewers that love British Get good at multi-purposing and versioning TV mysteries and dramas, curating of content. Whether this pertains to content rights or original productions, videos of some of the most popular titles in different lengths and formats are powerful the genre, including Poirot, Foyle’s assets in multi-platform media. Some War, Doc Martin, and Miss Fisher’s content may translate well across platforms, Murder Mysteries. In 2015, Acorn TV other assets may require a comprehensive premiered the final three episodes reinvention for specific platforms. of its franchise, Poirot, starring

3. LEVERAGE THE LONG-TAIL OF TALENT. David Suchet, including the Emmy- Due to advances in camera technology and nominated ﬁnale ‘Curtain,’ resulting in content creation tools, it is easier than ever to a major boost to subscriber growth. produce great content. Thousands of talented In March 2016, Acorn TV revealed video creators globally can help it had reached over 240,000 paid you create content. For example, the subscribers, a 100% increase in year- Tastemade OTT service has scaled with over-year subscribers11. contributions from over 5,000 creators around the globe.

“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

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, a “No Commercials” tier was added to give innovative consumer models that drove viewers even more control and choice on adoption of their multiscreen TV services. their ad exposure. Hulu launched as a free, ad-supported As media companies have done throughout service available on the PC. The ability history, OTT services will likely need to to stream to connected TVs was one of experiment with a blend of business models. their ﬁrst upgrades. A choose-your-own The following table provides an overview of the ad format improved user experience and different pricing strategies for consideration: changed the ad sales process. More recently,

MODEL DRIVERS QUESTIONS

FREE, BRANDED Brands fund unique content opportunities in Is there a sufﬁcient amount of CONTENT. order to earn mindshare. compelling content endemic to the sponsoring brand?

FREE, AD-BASED TV ad budgets shifting to online. Ability Will the service have sufﬁcient BUSINESS. to programmatically buy a targeted TV audience scale to attract audience. Broadcast quality ad delivery using sufﬁciently large media buyers? server-side insertion.

TRANSACTION, Unique, exclusive VOD or live event content Is there a sufﬁcient amount LIVE PPV OR can command up to $60+ on a per-view basis of purchase urgency on the DOWNLOAD. in the pay TV ecosystem. The convenience of content itself? Is the purchase portability for premium long-form content is process friction free? also a driver.

FREEMIUM AND Draw in subscribers with great content, and Is there a sufﬁciently sized SUBSCRIPTION package a subset of that content for free in catalog of content? Do titles VIDEO-ON- order to get viewers hooked. have sufﬁcient production DEMAND SERVICES. value?

DramaFever, Leveraging Business Model Flexibility

DramaFever, a leading online network At the same time, DramaFever has also for primetime shows from around established its own platform with a paid the world, started in 2009 with 10 subscription model12. In June 2015, they Korean drama series. Today, over rolled out an advanced subscription 70 international content suppliers back end which enabled the company provide tens of thousands of content to create innovative offers13. hours for their subscribers. There is still a free, ad-supported DramaFever has mastered two version available on the PC. But there critical skills in digital media. is also a $0.99 per month option, billed annually at a rate of $11.88, 1. The ability to balance content that is viewable on TVs with ads and syndication with its own grants access to exclusive titles. At channel-building effort. the $4.99 tier, ads are removed and 2. The ability to balance ad-supported subscribers can also “cast” programs revenue with paid-subscriber fees. from a mobile phone to Chromecast and Airplay devices. Finally, for $9.99 When the service ﬁrst launched, the a month, subscribers can download company focused on syndicating and watch titles ofﬂine, a great option content to platforms like Hulu, for fans of DramaFever who may have YouTube and iTunes. Those efforts active air travel schedules, for example. have helped accumulate a monthly viewership of 21 million12.

“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

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 SMARTPHONE - THE FIRST SCREEN Notwithstanding the rapid uptake of While smartphones are often used for desktop and mobile video viewing, the viewing long-form content, they generate original, and biggest screen (the TV) is still 63% of their ad views on top of short-form the source of the largest pool of revenue content14. But smartphones are also critical and value in the video market. While not for ﬁnding content, sharing it, even creating every OTT service has enough compelling it. Tune-in notiﬁcations and social sharing content to drive premium, immersive and targeted at mobile devices are an accepted “lean-back” viewing experiences, this best practice at media companies. From traditional TV watching experience will there, one more click on the smartphone continue to be a core driver of value for OTT remote and compelling content can be cast offers. 95% of ad views on TV connected to the nearest connected screen. OTT devices are within TV-style live or long- form content, indicating the lean-back value of the big screen14.

©2016 Brightcove, Inc. All Rights Reserved. 10 TABLET - THE PORTABLE SCREEN PC - THE VERSATILE SCREEN The tablet has proven to be exceptionally Notwithstanding its reputation as a more attractive for “lean-back,” TV-style “lean-forward,” active usage environment, experiences. 69% of ad views on tablets are the desktop/laptop still drives signiﬁcant within live or long-form content14. That gives video viewing. 40% of all ads viewed within the tablet a powerful position within the video content were seen on a desktop or four-screen landscape. While the tablet is laptop computer, according to Freewheel14. ideal for personalized viewing experiences, Notably, the PC environment is well suited it can also be watched with a friend or to all content lengths, with 26% of ad views family member. And while the tablet has within live content, 38% within content smartphone features that make it ideal for longer than 20 minutes, and 36% within ﬁnding, buying and sharing content, it also content shorter than 20 minutes14. Most enables a more relaxed, lean back viewing leading web video brands with OTT service experience that can draw audiences into platforms, including YouTube, started premium, immersive TV content. A recent out with strong browser-based video Digitalsmiths report revealed that among experiences that they continue to nurture. respondents who own an iPad or tablet, 37.1% watch video on their device, and 90% Mapping out a comprehensive four-screen of those do so on a weekly basis. The top distribution strategy that takes advantage content genres they watch are premium of the particular strengths of each movies, TV shows, and previews/trailers of screen will provide your OTT brand with movies and TV shows15. additional spark at launch.

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 multiple promotional tactics. Subscribers For linear TV, on-air promos remain one to Crackle are offered four free issues of the most valuable tactics for driving in connection with registration; and viewership. Many local broadcasters have Entertainment Weekly has promoted Crackle successfully utilized onscreen talent call- on its digital platforms, including Facebook. outs to drive App downloads. Similarly, successful YouTube channels often utilize SOCIAL in-video clickable links to cross-promote Social networks like YouTube and Twitter other videos and channels. And some OTT are playing an increasing role in building services have established YouTube barker buzz and driving tune-in for major media channels to promote new services. brands like the NBA. Social apps and push notiﬁcations on smartphones provide PUBLICITY AND PERIODICALS compelling tune-in tactics for OTT services Promotional partnerships with as well, especially those with programming entertainment publications can help strategies for debuting VOD content and generate buzz. For example, Crackle has streaming live events. partnered with Entertainment Weekly on

©2016 Brightcove, Inc. All Rights Reserved. 12 TARGETED ADVERTISING enables cross-promotion of channels and As addressable and programmatic TV shows – content providers can target advertising systems mature, not only will their audience with ads promoting new they help you monetize your service, but programming or channels, allowing users to they also should be seen as an effective click through and follow the promoted show channel for driving viewership as well. through Roku’s MyFeed feature or download Buying ads via these new platforms can their channel from the Channel Store. enable you to drive awareness and tune in among speciﬁc audiences. ECOMMERCE One important promotional channel for Top media brands today, including the OTT services is on streaming platforms new rising stars of OTT, often have a themselves. For example, Roku provides merchandise or retail extension to their a rich set of advertising and promotional marketing plans. Tying content with capabilities, building these tools directly merchandise boosts top-line revenue, into its OS. Content providers on the Roku and also has a positive spillover effect platform can promote their services to users for brand awareness and afﬁnity. A good during new user signup, in the channel store, example of this is the DailyBurn online store, on the device’s home page, and through where vitamins and other health-oriented video ads. The Roku Ad Framework (RAF) merchandise are sold.

CASE EXAMPLE:

DailyBurn: TV Ads, Digital, and eCommerce Together

The DailyBurn streaming service was The DailyBurn online store enables them launched in 2011 with a strong value to mesh eCommerce with their content proposition: DailyBurn is a low-cost operation. The results of these tactics video alternative to private training at working together are impressive. the local gym. DailyBurn is one of the most successful They have executed smart retail OTT services, ranking #1 in Health partnerships, including participation in & Fitness and #93 Overall on Apple Amazon’s marketing launch of the Fire TV in downloads, and #12 Overall in TV and the Apple launch of their brand gross revenue. DailyBurn is also the new operating system for TV, tvOS. #1 app within Roku’s Fitness category. DailyBurn has also executed a targeted Most impressive, DailyBurn increased ad campaign on local cable TV, hitting subscribers by 56% in 2015 to end the key demographics, including exercise year at 105,000 subscribers16. fans who are likely to pay for private training at the local gym.

In the past, OTT services have taken quarters or years to design, build and launch.

First, a market-facing team outlines a vision As a result, we are pleased to introduce for the consumer offer. That drives product Brightcove OTT Flow™ - powered by requirements for a solution architect, who Accedo, an innovative new solution then defines the functional blocks needed to designed to help media and content complete an end-to-end platform. companies quickly and seamlessly launch new OTT services. Brightcove OTT Flow For each functional block, there are is a joint offering with Accedo, the leader multiple vendors that can fulfill the in multi-platform application design and specified requirements. It is rare for a tool development. Accedo’s App Grid app to provide all possible functionality, so management console powers apps for many custom code may be needed, resulting of the world’s leading media brands and we in multiple integration and engineering have tightly integrated Brightcove Video efforts. The entire solution needs to be Cloud with the App Grid framework to well-documented, and typically specialized create one easy workflow for our customers. resources need to be trained to maintain and support it. We have combined our industry-leading video ingest, processing, storage, playout Unfortunately, these complexities make it and monetization with Accedo’s best- especially difficult to articulate roadmaps, in-class client app development so our translating to a low level of flexibility and customers can launch world-class OTT business agility. services quickly — and with the confidence Brightcove pioneered the OVP category and of both their product and finance teams. over the years we have partnered with some That’s the formula for success in fast-moving of the world’s leading media companies to markets: launch a viable consumer offer and launch successful OTT services. We have solution together, and update both of them seen up close the pressure-filled challenges over time as markets change. that organizations face to get to market quickly or else risk losing out to competitors.

©2016 Brightcove, Inc. All Rights Reserved. 14 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 Reduce costs by eliminating the need box solution for developer time and resources while still delivering beautiful and performant Unlock new revenue streams and cross-platform video experiences monetize content via advertising or subscription models Leverage cloud technology for smooth and seamless app updates Extend audience reach and a consistent UX across multiple platforms including Receive ongoing customer support from desktop, iOS, Android, Apple TV, and our global team Google Cast

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.

1. Wikipedia entry for RealNetworks 9. Deloitte Touche Tohmatsu Limited, states streaming video technology was “Television’s Business Model: Fit for a announced in 1997. Taken from the Web Digital World”, IBC Leader’s Summit March 20, 2016. September 2014

2. The New York Times, Jan 16, 2007, 10. Magna Global, June 22, 2015, “Magna “Netﬂix to Deliver Movies to the PC” Global Forecasts Global Advertising Revenues” 3. The Verge, August 4, 2015, “The Changeup: How Baseball’s Tech Team 11. RLJ Entertainment, Presentation at ROTH Built the Future of Television” Conference, March 2016

4. Total Telecom Online, October 20, 2008, 12. Digiday.com, January 28, 2016, “BBC and BSkyB announce iPlayer deal” “DramaFever ﬁnds Latin America loves Korean soap operas” 5. USA Today, March 11, 2008, “Hulu goes live with free TV shows, movies online” 13. Digiday.com, September 11, 2015, “How DramaFever gets people to pay for 6. Wikipedia entry for Amazon Video states Korean soap operas” that the service was renamed to Amazon Video-on-Demand on September 4, 14. Freewheel, Q4 2015, Freewheel Video 2008. Monetization Report

7. ParksAssociates.com, November 17, 2015, 15. Digitalsmiths, Q4 2015, Video Trends “Parks Associates Announces Top 10 Report: Consumer Behavior Across Pay- Subscription OTT Video Services in the TV, VOD, PPV, OTT, Connected Devices, U.S. Market” and Content Discovery

8. Altman, Vilandrie & Company, October 16. PR Newswire, Feb 2, 2016, “IAC Reports 15, 2015, “AV&Co Consumer Video Q4 2015” Research,” online survey of 3,461 respondents