ottexec.com/magazine Spring 2017 OTT Monetization Attracting Viewers and Extracting Profitable Revenues

Linear TV and Programmatic Advertising in an OTT World

Local Content Monetization OTT’s Biggest Opportunity?

Case Studies: Making Money off Mother Nature: NatureVision TV Foreign Content Finds a Home: bobbles.TV

Inside this Issue

Case Studies 8 From Total Recall to OTT on the Wall: NatureVision TV by Jon Gorchow 14 bobbles.tv: Bringing Home A Little Bit Closer by Arnold C. Kulbatzki Trends & Analysis 20 The Future of Television Is Not OTT by Gabe Greenberg 26 Streaming Media Is Stuck in the Muck by Mark M. Myslinski Executive Q&A 6 How to Better Monetize OTT Content, Interview by Nichole Janowsky with Michael Stattmann, CEO and CTO of castLabs 10 The Future of Linear TV and Programmatic Advertising in an OTT World, Interview by Brian Mahony with Placemedia’s CCO Christopher Raleigh 30 The Many Challenges of OTT: Fragmentation, Duplication and Navigation, Interview by Brian Mahony with Thomas Engdahl, CEO Vidillion Executive Insights 4 OTT ROI for Cable TV Companies: Is It Even Possible? by Brian Mahony 12 Download-to-Go: Never Mind Road Rage, What Can We Do About Buffer Rage? by Dan Taitz 22 Content Monetization: Creating Great Experiences in Less than Great Environments by Julia Dimambro 29 TV for the Everywhere Generation by Ivan Verbesselt Best Practices 17 Achieving ROI with OTT Strategy, Monetization, and Product by Jon Keller 18 Why Local OTT Is the Biggest Opportunity in Media by Christopher Pappas 24 OTT Puts the Power in Consumers’ Hands: Risks & Opportunities Abound by Virginia Juliano OTT Executive Magazine Volume 3, Issue 3 - Spring 2017

Staff Published by: Trender Research Inc., 24 Village View Road, Westford, MA 01886 • [email protected]

Brian Mahony Nichole Janowsky Copyright 2017 by Trender Research, Inc. CEO, Trender Research Publications and Research Manager The contents of this magazine may not be reproduced in whole Founder, OTT Executive Magazine or in part without the expressed written consent of Trender OTT Executive Magazine Editor Research, Inc. Editor-in-Chief Andrea Chambers Subscriptions: www.OTTexec.com/magazine Yearly printed/mailed subscription in the U.S.: $39.95 Andrea Nelson Business Development Manager Advertising: [email protected] Director of Operations Disclaimer: Some submitters may be charged an editing fee to Ann Czado ensure articles are well-written and not overly promotional. Operations Manager Printed in the USA

OTT Executive 3 Spring 2017 Magazine Executive Insights OTT ROI for Cable TV Companies: Is It Even Possible? By: Brian Mahony

y now, most people accept that the • Tier 2 cable/FTTH service providers various OTT services out there, are fighting a losing battle in the TV/ Bwhether they are giants like Netflix or video entertainment business. Many smaller niche SVOD services, are a boon of them are losing money, and if they to consumers. Most of those who cut the aren’t now they will be soon. cord claim they get a positive ROI (return on investment) in the form of cheaper • The good news is, these same entertainment bills and in some cases organizations can leverage their more tailored content bundles. There are strengths and build a profitable and of course trade-offs, but the cord-cutting sustainable business model if they trend is here to stay and the industry migrate to an OTT-based platform. has to make the best of it. You wouldn’t be reading this magazine if television I know this is a pretty radical industry fundamentals weren’t currently statement to make, so let me back up my Brian Mahony is the CEO and Principal undergoing a titanic shift. conclusions with real data. Analyst of Trender Research. He is also the What is less obvious— more difficult Let’s first take a look at the present Founder and President of OTT Executive Summit & Magazine. to estimate —is any kind of positive situation— cable companies that do ROI for cable TV companies and other nothing. We modelled a small MSO MVPDs who may be investigating a with 30,000 subscribers offering both largely because they can’t charge enough move to OTT. Until now. cable TV and broadband internet services to cover their programming costs. I am happy to report that I have just (we left telephony out of the model). In So what happens if cable companies concluded a 6-month study of the impact the most ideal of circumstances (“Year migrate to an OTT business model over of OTT on cable TV business models. 0”), they are doing quite well, profiting time? This is what their financials look I am grateful to SeaChange, who not from both cable TV bundles as well as like (see Chart 2). As you can see, their only sponsored the study but also gave broadband. But unfortunately, “Year 0” revenues decline somewhat since they me access to their customers. I was able for most cable companies was 5+ years are charging less for OTT skinny (or to really dig in and get good numbers ago (if it ever existed). What’s happening “skinnier”) bundles, but their profits are for a cable company’s various CapEx now, and only accelerating, is a perfect sustainable over time. and OpEx costs. I talked to three major storm of cord-cutting, customer churn How is this even possible? The customers who represented Tier 2 cable/ due to competition, rising operating model goes into great detail but let me FTTH/municipal networks. Added to expense, capital investments amortized share the variables that made the biggest this primary research were a half dozen over a small subscriber base, and huge differences: OTT RFPs and implementations I had increases in programming costs that can’t the good fortune to tackle over the past 18 be passed on to consumers. Below is a • CapEx and OpEx are way, way cheaper months. Combined with FCC data, some summary of what that does to your profit for an OTT-based TV/video service. Not third party research, and my extensive margins over 5 years (see Chart 1). only do you save a ton on truck-rolls knowledge of OTT system costs, I was This is what happens if you do and STB maintenance/upgrades, but able to put together a “before and after” nothing. In fact, several of the companies most OTT platforms are cloud-based OTT ROI model. Without further adieu, we talked to said their business already and highly scalable based on growth in here are the major conclusions: looks more like years 4 and 5. One is subscribers and usage. An added plus losing $6 per month for every subscriber that makes the service more attractive

Chart 1: The business case if cable companies do nothing.

4 to consumers is they don’t have to pay OTT TV bundles to help the consumer in the OTT ROI model to explain the upwards of $30 per month renting STBs make that choice. above logic, but we don’t have space for the 4 TVs in the average home. for that here. It’s also worth pointing • You’ll be able to win back some of the out that cable companies will have to • Programming costs are much more cord-cutters/nevers that you lost by develop some new competencies to make manageable. Granted, you may be offering a skinny bundle of local channels this work—namely becoming better at trading a Cable TV offering with 100-200 plus some free or low-cost content. sourcing and negotiating content bundles channels for one that has maybe 50, but as well as becoming better marketers you have much greater control of both • You’ll be able to grow your network to explain the benefits of their offering costs and content choices versus the more footprint more profitably. Most of the to various demographics, especially “take it or leave it” monolith you currently customers we surveyed had a good millennials. But these challenges are get with Cable TV bundles. Some service number of “homes passed” they could becoming increasingly more possible in providers are also embracing OTA as offer service to but were reluctant given an entertainment world that is waking a way to take local broadcast channel the negative profits of their current TV up to the fact that the current business costs out of the equation. Others are bundles. Some also offered retail or model is broken. Something must be

Chart 2: The business case for migrating cable TV customers to OTT. investigating OTT as a means to more wholesale broadband internet services done. Will programmers open up their easily source local, niche, and foreign that could be upgraded to an OTT TV content stranglehold to allow OTT content as new sources of revenue. bundle. skinny bundles? Will smaller cable companies have the skill-sets to capture • Studies show that a good portion of your • Finally, there is a big opportunity all the benefits that OTT has to offer? All subs that move to an OTT service will to capture higher CPMs for OTT ads good questions. Strategy and financial upgrade to a more expensive broadband that leverage targeted/programmatic modelling is one thing, execution is quite Internet service to ensure better quality advertising technologies. another. streaming video. As a next-gen cable/ The white paper and report OTT MVPD, you could also package Of course the devil is in the details summarizing this OTT ROI Model were that “turbo internet” service with various and there is a lot more we delve into still under development at our publishing deadline, but if you ask nicely I am sure SeaChange will share the model with you. Contact Steve Sweetapple, Vice President Sales, OTT Americas: steve.sweetapple@ schange.com. �

Yes it’s true; cable companies can make money with OTT.

OTT Executive 5 Spring 2017 Magazine Executive Q & A How to Better Monetize OTT Content Interview by Nichole Janowsky with Michael Stattmann, CEO and CTO of castLabs

n this interview, Nichole tracks down a varied range of ad formats such as castLabs CEO Michael Stattmann to get skippable linear ads, non-linear ads, and Ihis insights on how OTT service providers sequenced ad groups known also as “ad can better monetize their content and pods”. For example, our “PRESTOplay” provide quality experiences for their range of video player SDKs facilitate customers. these through the common VAST ad framework with IMA protocol. Nichole: Having invested in content, To another point though, maximizing OTT service providers are of course monetization also means protecting the keen to monetize that content, usually value of content. Studios, wary of piracy through either a subscription-based or and protecting IP, demand that content ad-based model. What are the best ways providers use DRM secured platforms. to facilitate content monetization? You need to facilitate DRM protected content in your players, and also provide Michael Stattmann is the CEO and CTO of Michael: The largest volume of views is a DRM license management service castLabs, a company specializing in digital indeed found within SVOD and AVOD supporting all the major DRM systems video solutions. Michael helps pioneer soft- business models, but I would like to add available today. Forensic watermarking ware and cloud services for businesses to deliver protected premium content to cus- transactional models like TVOD (rentals) capabilities through a content processing tomers online with player technology, DRM and EST (purchase for digital ownership) service are also important. licensing, and encoding/packaging services. to the list of viable monetization models. We also see an increasing trend of Nichole: Adopting new technology is combining multiple models within a often both time-consuming and costly. can always rely on having access to the single service. In what ways can customers face these latest DRM capabilities without investing Having said that, each model has its challenges? development or maintenance efforts. unique strengths. AVOD promises the One way to speed up player highest volume of views with revenues Michael: Service providers will often development is to adopt a more flexible related to these views, SVOD provides have a large library of content, not JavaScript framework for the browser plannable revenues while posing risks necessarily in the same or latest player, and offer pre-built integration on losing money on binge watchers. streaming format, and require license with certain streaming technologies often Transactional models offer highest keys across multiple DRM systems for requested by our customers. This may margins but require a large catalogue of full multi-device compatibility. Player require forging close relationships with latest releases to succeed. To facilitate and SDKs and cloud-based video toolkits companies like Conviva, Nice People At maximize monetization of these different need to support MPEG-DASH, HLS Work, Wowza, Elemental and Unified models you have to build flexibility into and Smooth Streaming formats, and Streaming. the video players. automate Smooth Streaming to MPEG- For transactional models a player DASH conversion on-the-fly. No need Nichole: Monetization is the goal of with highly secure and flexible DRM for server-side changes. It’s crucial to your customer, but that has to be set capabilities is needed due to stringent keep extending your player SDKs by against a good quality experience for studio requirements on early window the means of plugins which enables the end user. How is this realized in content as well as the requirement to offer customers to adopt new technologies by today’s OTT environment? download-to-own capabilities for EST. simply loading an additional plugin. For SVOD that’s largely in the flexibility For DRM licensing, the license Michael: From the player you want of controlling the data consumption as management service needs to allow just consistent playback without rebuffering, a primary cost factor, enabling DRM one integration to support all major DRM which is still cited by streaming users controlled restrictions on the number of systems across all screens, streamlining as a key concern (such as Accenture’s concurrent streams and offering audience the entire process. At castLabs, we “Digital Video and the Connected measurement and content tracking constantly evolve the DRM capabilities Consumer” report), but ultimately not capabilities like Nielsen. With AVOD offered while keeping the interfaces to our difficult to resolve using a common that flexibility comes from supporting customers stable. That way our customers adaptive bitrate (ABR) algorithm and

6 Nichole: HTML5 has become the new online standard as proprietary plugins including Adobe Flash and Microsoft Silverlight are being depreciated by every major browser. How is castLabs interpreting these developments and reacting to them?

Michael: castLabs has enabled a migration to HTML5 video since 2015. Our PRESTOplay SDK for Browsers utilizes HTML5 and MSE/EME with either Common Encryption (CENC) or FairPlay Streaming for DRM and is the only player SDK supporting pre-existing content encoded in SmoothStreaming even for HTML5 playback in all browsers. Modern video streaming players need to embrace future standards. We believe this is currently the most secure and futureproof configuration for leveraging integrations with QoE and systems in airplanes or busses that are multi-browser video playback. Yet we CDN switching technologies. completely offline but need to work on have to acknowledge some users have not Where interruptions can delay devices brought by the consumer. yet transitioned to HTML5 compatible streaming is with DRM services, waiting In certain regions, India and Sub browsers so the need for a fallback option for license authorization to access content. Saharan Africa in-particular, where data still exists. Compared to some other DRM services, costs are high and internet availability For us that fallback is Microsoft castLabs utilizes a highly scalable multi- poor, live/VoD streaming can be Silverlight. Silverlight uses PlayReady region key delivery to minimize the uneconomical. Where we’ve worked DRM, which is also used in Microsoft Edge licensing turnaround time globally to with clients in these regions, consumers and IE 11+ browsers for native HTML5 ensure fastest playback startup times. typically download content overnight playback. Unlike Adobe Flash Player, it As mentioned before, we recommend and watch it the next day, or the service doesn’t require an additional license from leveraging pre-integrated video analytics syncs content with the consumer device Adobe for use of their proprietary DRM technologies such as Conviva’s Intelligent when connected over Wifi. The player [Primetime] which also isn’t required for Control Platform or Nice People At has to be intuitively designed to meet any other cross-browser compatibility. Work’s Youbora. These technologies that preference for offline, so we help to enable you to analyse users’ QoE, facilitate that. Nichole: Finally, what does the future benchmark to industry standards, and With the “content everywhere” trajectory of monetization look like act upon that data to improve content market, you need to enable management in the OTT space as it relates to your delivery quality. of downloaded content, as storage on future product development? mobile devices is limited, and support Nichole: Consumers of streaming video DRM restrictions on downloaded Michael: An increasingly crowded are consuming online and offline, on content. Our PRESTOplay SDKs for iOS subscription space is going to set niche more screens in more places than ever and Android realize online and offline services into either fighting each other before. What are the challenges in playback with minimal effort from the or pairing together. There’ll be a need for providing offline services? user. The service provider doesn’t need more differentiation, new integrations to provide special files for download, and features that satisfy the increasing Michael: First, you have two types of PRESTOplay can download content expectations of their subscribers. offline markets here, emerging markets encoded for streaming. Though ad spend is rising, ad-based where internet connectivity is not In working with the airline industry, models have a challenge to deliver more prevalent and offline is seen as a necessity we also offer an offline DRM solution for relevant ads to users in order to retain for consumers to view content; and in-flight entertainment (IFE) systems customers. We’ll be looking at how to enabling “content everywhere lifestyles” as well as streaming networks on other better facilitate that with our player where there’s an appetite for offline forms of transportation. This offline SDKs. playback on WiFi-less flights or public version of DRMtoday can be deployed In the immediate future we will be transport where WiFi can be intermittent in environments with little or no internet implementing support for the emerging or non-existent – or simply to save data access, or where license keys can only be Common Media Application Format on a limited mobile data plan. Last but stored locally. (CMAF) which promises significant cost not least are the many entertainment savings across our player SDKs. �

OTT Executive 7 Spring 2017 Magazine Case Study From Total Recall to OTT on the Wall: NatureVision TV By: Jon Gorchow

lthough not formally launched I found a couple of exceptional nature until 2015, the roots for NatureVi- cinematographers sitting on hundreds Asion TV began to grow in 1990, during of hours of footage and a handful of well an innocuous scene found early in the produced relaxing nature programs fea- Arnold Schwarzenegger film Total Recall. turing beautifully produced scenes and Arnold and his wife (played by Sharon soothing new age music. After some Stone) were sitting down to eat in front back and forth negotiations, the content of a long blank wall, when suddenly the was acquired. That turned out to be the wall transformed into a beautiful nature easy part. scene. They proceeded to have a conver- Our concept was to offer program- sation, but that background was a scene ming that viewers would never actually stealer. I had just started a new job at watch (just like Arnold and Sharon). The Comcast, where I would stay for 21 years, anti-TV channel. We would air quietly and essentially forgot about the nature and seamlessly in the background while Jon Gorchow founded NatureVision TV in screen until I saw the film again on TV a “viewers” go about their day, or fall 2015. Prior to its launch, Gorchow had spent few years ago. Given the organized chaos asleep at night. We would enhance any 21 years in various senior executive level po- sitions in the corporate offices of Comcast of everyday life, and the advent of OTT, room, any screen, anywhere. Since there Cable Communications. Gorchow has an it seemed like an even better idea now are no hosts, and no narration of any MBA in Media Management from the Uni- that it had before. While the concept of kind ever, we would be truly universal. versity of Texas, and a dual Bachelors of Sci- calming, relaxation-oriented program- Just as relevant in the US as we would ence degree from the S.I. Newhouse School ming is certainly not new (it’s almost as be in China, Turkey, or France. There of Public Communications and the Whit- old as television), OTT opportunities are no boundaries to nature, or man’s man School of Management from Syracuse University. could turn it into a legitimate business appreciation thereof, and the need to opportunity. relax is equally ubiquitous. We felt that To start, I would need a content we should be a viewing option in every about world domination than (please library from which to build. In late 2014 home and on every screen. It was less forgive me) world peace (of mind). So now, how to actually make that happen, and how to turn this into a profitable business as quickly as possible? The initial thinking was that these programs, by their nature (pun intended), must be commercial free. The thought of interrupting relaxing nature program- ming with commercials seemed com- pletely out of place. So the logical choice was to create VOD and SVOD apps for burgeoning OTT platforms like Roku, Amazon Fire, and Apple TV. We found a relatively small and inexperienced app developer overseas, went through the ups and downs of getting those apps and our website developed economically, and in 2015 we launched “NatureVision TV, The All Natural Channel”. At first, we in- cluded 18 hour long programs for $2.99. We continued to build our programming NatureVision TV includes the best Mother Nature can offer in HD quality. library and looked for other opportuni-

8 ties to air our shows without interrup- tographers, we found a few other highly and devices in less than a year, and estab- tion. We were fortunate to get a deal with qualified nature cinematographers, lished our new network as a legitimate Netflix, and added programs to Amazon spread them out geographically, and programming service in less than two Prime as well! The next piece of the created a growing library of programs, years. distribution puzzle fell into place when some with no music at all (letting nature The sky is literally the limit for Na- we began efforts to distribute individual do the talking). We began producing in tureVision TV, and our success is a meta- programs around the world through 4K since programs shot in that format phor for the OTT opportunity at large. third party licensing deals to what we could still be “dumbed down” to HD. You can find us on United Airlines and considered “natural” targets such as TV That solved the programming piece. Japan Airlines, to name a few. In addi- networks, airlines, medical facilities, spas Next we had to find a service that tion, through a partnership with a dis- and resorts, and digital signage displays. could handle piecing our channel togeth- tributor, and a satellite company, we have Slowly, a revenue stream started to build. er and broadcasting it in such a way that launched an all 4K linear channel via sat- In early 2016, an OTT operator called OTT, cable, and satellite operators could ellite which is currently being tested with Pluto TV called. Frankly, I had spent my see it, and distribute it. Fortunately, those several MSOs. career in cable, and hadn’t really dug deep now existed in the OTT space as well. We So taking a step back and looking at into the OTT playing field yet, so I didn’t found a small company in California that all that has happened in just a matter of know much about them. They liked what had started doing just that. Last but not months, what have been the keys to our we were doing, and wanted to create a least, we found companies that could take rapid growth? First, we believe the timing linear channel on their rapidly expanding our channel, find name brand advertis- is right for our content. For those watch- service. Rather than offer our content as a ers, and actually insert the ads for us on ing the news today, turning the channel premium service, they wanted to include each individual OTT platform. and having stress-reducing NatureVision

Subscribers are willing to pay for soothing sights and sounds in a chaotic world. commercial breaks during the programs, The pieces had somehow come together as a viewing option is not such a bad an idea that seemed out of place. I agreed and by late 2016 we were launching free, thing. The Weather Channel seemed to to a “test” and provided a handful of pro- ad supported linear channels on Roku, have exactly that in mind during No- grams that they would stitch together to Apple TV, Amazon Fire, Pluto, Xumo, vember’s Election Night. While nearly create a channel (running those same Tubi TV, Opera, Olympusat’s Vemox, every channel delivered the same elec- programs back to back every day). I was Rabbit, Flipps TV, and Android TV. Our tion results, The Weather Channel skeptical that viewers would watch, but simple concept, exceptional production counterprogrammed the coverage with, fortunately, I was wrong. Our viewer- values, and immediate acceptance by au- you guessed it, a 10 hour marathon of ship stats were fairly remarkable right diences (who continued to find us despite NatureVision TV. In addition to the right from the start (soon generating monthly a complete lack of marketing and an content at the right time, exceptionally audience cumes of 5%+, with a startling overwhelming array of viewing options) well produced, we took a “no deal is too average viewing time of approximately opened doors for us with nearly every big or too small” attitude, and were open 90 minutes). The channel was in fact distributor we have met. Our 24/7 linear to any and all types of distribution (VOD, being used day and night in the back- channel quickly gained favor and has SVOD, linear, third party licensing). As ground, just as we had imagined, and the recently launched on Sling TV, and we long as revenue was involved, we would commercials didn’t make them turn the have a pending launch as a basic channel find a way to say “yes”. As a result, based channel. on tradition cable, with other cable deals on our rapid rise, we have every reason to A linear channel is of course a beast close behind. The rapid growth and ac- be excited about the nature of our busi- that must be fed, so along with the origi- ceptance by viewers in OTT had put our ness. Thanks Arnold. � nal footage, and the original cinema- new channel into or on 50 million homes

OTT Executive 9 Spring 2017 Magazine Executive Q & A The Future of Linear TV and Programmatic Advertising in an OTT World Interview by Brian Mahony with Placemedia’s CCO Christopher Raleigh

n this interview, Brian Mahony sits some time. We try to break it down very down to chat with Placemedia’s Chris simply. In our mind, it’s a combination of IRaleigh. data-driven audience targeting combined with technology. Brian: Chris, thanks for joining us for our executive Q&A series. Can you Brian: That’s a helpful definition. By begin by giving us a quick background “data-driven” it sounds like you are on yourself and Placemedia? adding a layer of intelligence on top of traditional television advertising and Chris: Sure. I am the Chief Commercial targeting. Explain that a little more Office for Placemedia. Placemedia is a please. supply-side platform focusing primarily on the linear TV business. What we do Chris: Exactly. What we’re finding is as a company is we aggregate access to that clients— meaning CMOs and Chris Raleigh is the Chief Commercial Of- linear TV inventory, whether that’s from procurement officers— are wanting ficer of Placemedia, a leading supply side the cable networks directly, MVPDs, to do more precise targeting, as in the platform (SSP) for linear TV. He oversees satellite, telcos, etc. Then we assess their digital space, using new data sets. They the aggregation of inventory from media company partners and manages the compa- inventory and estimate their audiences also want to have improved reporting nywide revenue generation from advertisers, through our patent-pending platform and execution. There is a certain efficacy agencies, and demand side partners (DSPs). and present it to the demand-side of the in regards to utilizing the platform on He has 20+ years of managing linear adver- business which consists of a combination a digital basis and yet, particularly the tising sales for national networks includ- of the DSPs (demand-side platforms) largest advertisers will still spend the ing the NBC network, The Weather Channel and Game Show Network in addition to their primarily coming in from the digital side, bulk of their money on linear TV. So mobile, OTT, ITV VOD, online, streaming, and as well as traditional agencies and clients they’re asking to have those same types other leading-edge technologies. directly. We’ve been in business for four of attributes and benefits in the linear years. The first year we essentially built TV space. What we are able to utilize is our platform, which does two things: the additional data-sets that really drive as the industry develops is that the DSPs first, it forecasts the inventory we have down to find the true targets of these are pushing hard to include linear TV in access to via direct relationships with our advertisers. So whether it is using third their cross-platform offering. They strive supply partners; second, it estimates the party, second party, or even first party to utilize the available data-sets, often audiences that we deliver. By “audience” data, we are able to go beyond just age times 1st party from their clients. They’ve I mean both the primary audience which and gender to reach what we consider the already targeted those audiences on is typically age/gender as measured by strategic target. digital properties including online video Nielsen/Rentrak, as well as what we and are able to identify which networks consider the strategic targets— which Brian: Can you please illustrate how and dayparts deliver them. In those cases, are often referred to as the “left-handed this process works from the purchase they will come to us “prescriptively” and women who drive luxury SUVs.” The real decision to the analytics, reporting, ask us to serve ads to those audiences value of our platform is delivering those etc.? and facilitate getting the ads to the right audiences to advertisers. people. We can either utilize the data Chris: The business is evolving in we have to identify the inventory that Brian: Thanks for that background different ways. We have data-sets that we delivers the impressions or we can do it Chris. For the benefit of our readers, have in-house. So for example if you want prescriptively, whichever way the client how do you define “programmatic.” to target men, $100K+ that have kids in wants to work with us. What is it exactly? the household, we have that data and we can find those audiences for you through Brian: Chris, can you give us an Chris: Well, all sorts of people have the cable television networks that we example of the “before and after” so to been trying to define programmatic for partner with. What we are also finding speak. Before, I might sign up to buy

10 ads for “Big Bang Theory” vs. starting the campaign in other with the open-ended goal of targeting areas. millennials. What is the difference in approaches? Brian: Is that an approach you see your Chris: It’s very different in a sense that clients take, where they historically when you buy national linear leverage a traditional television, you say “this is the audience I ad buy process but then want” and you will get a plan delivered come to you to target back to you by the networks that has a more niche audiences? standard daypart mix with a prescribed percentage of primetime, daytime, Chris: It’s not necessarily weekend, etc. and so it is very much set niche audiences but it’s in its ways. You are not able to say that that strategic audience Multi-screen programmatic advertising is made for OTT. my target audience only watches certain they are looking for. We dayparts and the others are wasteful. are able to deliver that What we are able to do is to cherry pick much more effectively and efficiently. So Brian: Do you think the platform the best networks and dayparts for that for example, if a client wants to go deeper really matters? In others words, does particular strategic target audience, and wants to find which dayparts of an it matter if I am watching “Modern resulting in a higher eCPM, or effective additional 20 networks to buy, it’s very, Family” on my iPhone or tablet vs. the CPM, making your investment much very labor intensive to do that. We can big screen? Does that really change the more efficient. I am not saying that the certainly easily execute it. What we are audience dynamics or the way people primary CPM, that is age/gender, is finding is some of the larger advertisers are engaging with that content? going to dramatically improve from an are using programmatic as supplemental efficiency perspective. The real value is to their larger traditional Upfront ad Chris: It varies quite a bit. At some point the reduced cost to reach the “strategic buys, while some of the smaller or mid- an impression is an impression but I target audience”. Once you start to move sized clients— or those that have only think that is still quite a ways away. There beyond program-based targeting you can been participating in digital— realize that is something to be said for the communal really start to find that strategic audience it’s very easy to reach a national footprint experience of watching a TV on the wall you want. Content is still important through programmatic and also reach a versus watching a very personalized 1:1 but what we find is that our approach great audience and great programs versus experience on a phone. The challenge for allows you to go deeper and also be more going through the traditional model. the supply partners and content owners efficient in reaching your target audience is how do they monetize wherever the in the programs they are watching. Brian: Ok, that makes sense. In regards audience is since they need to have to OTT and multiscreen, where do their distribution across all platforms Brian: So let’s talk a little bit more about you see the future going and what is regardless of whether it is OTT, mobile, the benefits then. What I am hearing specific or unique about OTT that or traditional linear TV. It is more is the benefits include better targeting programmatic can take advantage of? difficult to monetize content as things your strategic audience and a more get more fractionalized. In the past you cost effective ECPM. Are there other Chris: Well once again you always have might deliver one million households benefits that aren’t quite so obvious? to follow your audience and advertisers with an OTT solution and not monetize know they need to get in front of those it all. A few years ago, no one really Chris: Yes, one of the big ones is the ability audiences. So as we see OTT gaining so cared about a million households. But in to manage both reach and frequency. For much traction over these past few years, today’s marketplace, when you aggregate example, in a fractionalized marketplace we need to figure out how to reach those a million households here and there where in a typical national linear buy you audiences and do it efficiently. If we’ve from all the platforms, they really add might be going maybe 15 networks deep, learned anything from the programmatic up. Because of today’s fractionalization, you’re not going to effectively capture that space in linear TV, you need to be able content owners need to figure out how audience with the other networks that are to create a marketplace and to aggregate to monetize that and advertisers need out there or with the dayparts you may scale on both a supply and demand basis. to figure out how to reach that audience not be buying. Now, you are going to be It’s a challenge to be able to do that. across platforms. Today’s new approach able to extend your reach pretty easily We think there is a need for an SSP to combining traditional ad buys with across a broader set of inventory. Or, if connect the disparate OTT services for programmatic, executed across linear you bought those 15 networks on your the supply side for scale as well as a need and OTT, across all viewing platforms, is traditional Upfront buy, then you can for the demand side to have fewer points a way to accomplish the goals of both the come to us, blacklist those 15 networks, of access to be able to efficiently buy those content owners and the advertisers. � and work with us to extend the reach of audiences.

OTT Executive 11 Spring 2017 Magazine Executive Insights Download-to-Go: Never Mind Road Rage, What Can We Do About Buffer Rage? By: Dan Taitz

martphones are our most treasured, content distributors saved data by constant companions. But referring degrading video quality. That is senseless Sto the device as a phone—smart or when consumers are paying for high otherwise—is a misnomer. Smartphones quality, plus-size video screens on their are used for almost everything other mobile devices. “Uncapped” data offered than talking. Increasingly, Smartphones by some broadband carriers helped only are how we stream video, except when selected streaming services, but doesn’t we are disconnected or have exhausted help at all without a connection. The our data allowance. Thankfully, there is a era of ubiquitous high-speed, low-cost remedy for disconnection anxiety and it’s internet connections remains years away. called download-to-go or D2G (and the remedy has no side effects). D2G Goes Mainstream Download-to-go was available from The Connectivity Problem for Video a handful of streaming video servic- Dan Taitz is the COO of Penthera. He has Even in areas with great Wi-Fi and 4G es, but the entire industry took notice spent 14 years leading prominent tel- penetration, a connection that reliably when Amazon launched download-to- ecommunications through the evolu- streams video is often unavailable or go in September 2015. STARZ followed tion from “plain old television” into the subject to hefty mobile data charges. This last April and You Tube Go announced multi-screen, multi-platform world. He’s is especially true when traveling, and isn’t download-to-go in September 2016 created digital strategies, negotiated multi- million dollar mergers and guided compa- that the entire point of a mobile device? (starting in India). Last November, nies toward new revenue opportunities. Either we can’t stream video at all, or Netflix’s early holiday present to custom- He has a BA in history from Trinity College; worse, we spiral into “buffer rage” after ers was download-to-go capability for and JD, Magna Cum Laude, from Cornell numerous interruptions by the spinning selected content. University. ball. Several leading streaming video services will join the D2G club in Q1 Either we can’t stream 2017. The rest of the industry is busily Monetizing D2G: the Value Proposition video at all, or worse, we adding download-to-go to its product As an executive of the leading spiral into “buffer rage” af- road map so they can launch D2G by year provider of download-to-go technology, end. 2017 is the year that download-to- I frequently talk to prospective customers ter numerous interruptions go becomes ubiquitous. D2G will finally about D2G. Universally, they love the by the spinning ball. allow us to enjoy TV shows and movies idea, but ask, “How do I monetize it?” on the go without worrying about Wi-Fi The answer is five words: customer The term may be humorous, but or data charges. satisfaction and brand engagement. “buffer rage” is no joke. It causes Consumers love download-to-go: unhappy viewers to stop watching, whenever a customer watches a video cancel subscriptions and look for on a plane or train, that person feels video elsewhere. In developing parts rewarded for subscribing. That reward is of the world, the problem is starker— even greater when subscribers provide smartphone deployment outpaces the kids back-seat video without availability of high-speed connectivity. paying again to Apple or Amazon for In these regions, streaming video is more entertainment for which they’ve already idea than reality, and streaming video paid at home. D2G also creates greater services don’t offer a compelling value “stickiness” for services– consumers are proposition. unlikely to churn until they have viewed For the last few years, the streaming everything they’ve downloaded. video industry has been in denial that Second, but no less important, is connectivity is an issue. Instead of brand engagement. Consumers take their offering download-to-go and streaming, Buffering: OTT’s Achilles heel. smartphones with them everywhere. To

12 maximize the opportunity to engage the download continues to completion audiences, media brands need to be when a user puts the streaming app in able to deliver everywhere. Until high- the background to send emails or texts. quality broadband connections are freely Without this feature, disappointment is available worldwide, download-to-go inevitable. For any premium content, functionality is necessary in order to security is a priority and any quality D2G engage audiences 24/7/365. product will be able to enforce business rules like content windowing and observe Consumers take their consumer preferences like download Smartphones with them queue order. everywhere. To maximize the Offering consumers download-to- go will attract new and retain existing opportunity to engage customers, but only if downloading audiences, media brands enhances the customer experience. A need to be able to deliver bad D2G product will have the opposite everywhere. Download-to-go can solve “buffer rage.” effect. Before making the “build or buy” decision, a streaming service should do badly, that is. It’s tricky to add a user- exercise due diligence to make sure that Considerations that Ensure High friendly download-to-go experience into five-star customer reviews will always be Quality D2G an existing streaming video tech stack. the norm. � Following the Netflix announcement, There are numerous considerations competing streaming media CEOs asked when launching D2G: speed, background their technology team (if they hadn’t downloading and, of course, security already asked), “When are we launching and configurability. A streaming video download-to-go?” The good news is that service must be fast— consumers want it’s easy to implement download…easy to immediate gratification. It’s essential that

Congratulations to our past OTT Executive Summit Product Speedcase winners!

Past Winners:

NYC 2016

NYC 2015 (Tie)

OTT Executive 13 Spring 2017 Magazine Case Study bobbles.tv: Bringing Home A Little Bit Closer By: Arnold C. Kulbatzki

A pioneering new OTT service from common is their desire to retain links Bubbles Media, based in Hamburg, with home, even to watch their favorite Germany, is helping expats all over TV channels from their native country. Europe stay in touch with home. Arnold For decades diaspora populations – C. Kulbatzki, Founding Partner of Bubbles people of the same nationality or culture Media explains how bobbles.tv (www. located in countries other than their bobbles.tv) is combining satellite and OTT homeland – have been able to access to bring together people from all over the programming from their birthplace world, while giving them a taste of home. in numerous ways. But these kinds of This is a good case study on the unique language-based TV channel bouquet capabilities of an OTT service to tap into services usually were not professionally an underserved market. managed or attractively packaged. Also such services in years past were deas come when you realise from frequently associated with piracy. Arnold C. Kulbatzki, founding Partner and Ipersonal experience that there is a need But in the intervening decades the pay- CEO, bubbles Media GmbH, has over 20 for something new, something different. TV industry has changed dramatically, years’ professional experience as a man- I’ve travelled a lot during my career and and even more recently, the success of ager in the media and telecommunications sector. Prior to establishing bubbles media I’m familiar with the feeling of being Netflix has been a game-changer. For GmbH in January 2016, he was the CEO of abroad, but wanting to know what’s going the first time, people today have widely a2b media, a management consulting firm on at home. come to use and understand words like with extensive expertise in customer experi- Moreover, my personal circle of “streaming” and to adopt the vocabulary ence management, digital transformation, friends includes many expats who’ve of new kinds of TV services including paid content and OTT services. chosen to relocate to Europe. They’ve over-the-top. come from India, Korea, China and Meanwhile other new-era companies elsewhere. But their shared desire to like Amazon have raised the standard for and quality in programming as well as a see the world, to experience living in a service and speed, and have consequently much more seamless and easy-to-manage different culture, has led them all to start redefined consumers’ expectationssubscription process. new lives in Europe. for retail services across the board. My professional career in the television But something else my friends Everyone now expects more from their business has always been driven by taking originating in foreign lands have in entertainment provider, a greater variety the customer’s point of view, asking what kind of services get people excited? How can you deliver a level of quality and convenience that people are willing to pay for, and importantly, what is the pricing “sweet spot”? My Bubbles Media partners and I imagined there must be a way to create a business built around delivering multiple packages of programming to the many people from all around the world who have chosen to call Europe home. When our research revealed there are well over 14 million people originally from Asia, Latin America and Africa but currently living and working in Europe, we knew we had a potentially great business opportunity – and an idea that would really delight a huge number of people, including our friends. bobbles.tv offers international communities ways to watch their tv favorite shows. Thus bobbles.tv was born.

14 What is bobbles.tv? bobbles.tv delivers channels from around the globe. Our service can be received throughout Europe via satellite and online. bobbles.tv offers international communities a convenient way to watch their favorite TV channels, live or on catch-up. For us it was important to pair the bobbles.tv OTT streaming service with the reach of direct-to-home (DTH) satellite broadcasting. Certainly in Europe, if you want to truly engage with people located right across the region, pan-European satellite is really the only way to go. We realised that combining OTT with DTH would yield the best of both worlds and enable us to build our business based on universal Europe-wide reach, including areas where there is no boobles.tv designed its user interface to be highly usable and engaging. or limited broadband.

Choosing the right technology partners 3SS delivered customised apps for web, It was critically important to determine is business-critical iOS and Android, and other intuitive a price point for a new service like We knew that for the widest possible enhancements that help viewers easily bobbles.tv that would make choosing the satellite reach, choosing SES was a no- discover content, with interfaces that alternative route of piracy uneconomic. brainer as the worldwide leader in make accessing and watching that Broadly speaking, in Europe, we know beaming top TV programming straight content a great user experience. from experience that people are fairly to the living rooms of millions. Highly professional technical willing to pay 10-15 euros (US$11-16) for The long-established track record of integration with key backend functions this kind of language-specific package. its broadcast subsidiary MX1 gave us including DRM, content and language And this pricing level also allows the huge confidence that a multiplatform management systems, payment platform service provider to run a viable business. OTT-and-satellite service could be and user management operations was a One of the biggest challenges that seamlessly co-ordinated and would particularly important accomplishment any TV provider faces is consumer deliver the highest quality of service to all as we headed towards our launch. reluctance to commit to a long-term our viewers. Launching a multi-language contract. Viewers also want an easy sign- Among the most important international service on a pan-European up process and a hassle-free unsubscribe requirements for bobbles.tv was to ensure satellite system simultaneously alongside option. bobbles.tv subscribers only pay that the service was both engaging and an innovative new service via OTT was for the programming they want: A single highly usable. an amazing accomplishment in terms of subscription enables viewers to access the We knew of the great work that next- technology and process co-ordination. most popular channels from their home generation TV specialists TeraVolt, based In preparation for launch, regular country. in Hamburg, was doing in service design, international project team conference and their team delivered a platform calls involved engineers, designers, Monetization opportunities today and with a superb look-and-feel that would satellite and online distribution tomorrow appeal to people of different cultures and technicians and other specialists from In addition to attracting viewers with languages. all of these partners, as well as our own our simple, no-nonsense subscription 3 Screen Solutions, an innovative in-house team. Typically there were 15 formula, there are additional software developer based nearor more participants dialling in from monetization opportunities. Stuttgart, had been gaining a reputation various countries – all working together, The channels included in our various internationally for creating apps and sharing their expertise and creativity, and international packages benefit from front-end interfaces that engage viewers the common goal of making bobbles.tv the bobbles business model. For some across multiple screens. We wanted to satellite and OTT service a success, for us channels, our platform is their first foray ensure bobbles.tv subscribers would and for our audiences. into the European region. benefit from the flexibility to watch on Joining a platform like bobbles.tv is multiple devices, whether they were at Getting the pricing and subscription a powerful yet highly resource-efficient home or on the move. processes right opportunity to reach the millions of people

OTT Executive 15 Spring 2017 Magazine comprising diaspora communities. For a involved in our product while enabling channel located thousands of kilometres them to connect with each other. away from Europe, via our bundled All along, we wanted to ensure that channel offerings, we give broadcasters bobbles.tv was not just an à la carte menu a chance to reach new audiences without of linear services. We really wanted needing to invest in expensive marketing to deliver a world-class personal TV chosen to work with. campaigns or engage in complex experience, enabling linear and catch-up I have learned a huge amount about licencing operations. TV, with true PVR functionality such as the different cultures that comprise our They don’t even need to worry about search and backwards EPG, enabling a highly diverse audience base, and I’ve the transmission costs because we subscriber to access a programme even if learned a great deal about how people live, undertake that investment. For many they missed it. do business, and how their experiences broadcasters working with bobbles.tv differ. This has been a significant and is all upside, and they appreciate these What we have learned on our journey highly satisfying learning curve. Taking benefits. What has been the biggest challenge bobbles.tv from imagined concept to Other revenue opportunities going along the way? To make what on the reality has been, and continues to be, an forward include video-on-demand. And surface could seem like a complex offering unforgettable personal journey of which of course as soon as your subscriber base really easy to understand, navigate, pay I am immensely proud and thankful. reaches a critical mass, we can offer a for and enjoy by people from all over the My best advice to other people great – and, in fact, unique – business world. thinking of launching an OTT service opportunity for advertisers. I have learned that it’s important is to never, ever forget the viewpoint of In August 2016 we went live with to keep an open mind in every way. I the customer. Bobbles.tv viewers don’t Chinese and Indonesian packages, and once thought that you could simply do necessarily miss home every day, but before year-end, we launched offerings everything via the cloud. But in order they want to keep their connections, and for Korean and Vietnamese communities. to deliver a high standard of service being part of something bigger, alive. It A huge milestone as we embark on 2017 you need to put in quite a lot of work, feels great to be a part of that. is the imminent launch of our packages including raising your knowledge about At the end of the day OTT TV is for consumers originating in India and all kinds of technology disciplines. just like any other business – there’s no Pakistan in February. When all of the many talented mystery formula. If your product has the I’m exceptionally proud of the technical and creative people who right quality, service level and pricing, feedback our customers give us. They go contribute to the service are sitting you will have a successful business. out of their way to tell us how enjoyable around the same virtual table you have The service has not been operating the service is and how easy it is to use. to do everything you can to help ensure long, only since August 2016, so we They proactively suggest what channels that they are speaking a kind of common, don’t have much in the way of scientific from their homelands to add, all of which unifying language. This could have been a consumer satisfaction data. What we do encourages greater user engagement and major obstacle as we planned our launch know from our early focus group tests is retention. Additionally, the social media but we successfully overcame it thanks to what subscribers tell us – they like our tools we’ve integrated help users be more the professionalism of the people we have website, they think the service is friendly, and they find our user journey simple, intuitive and easy to understand. My advice to any prospective OTT service provider is, if you think that you have an idea worth trying, if you think you have something that will enrich people’s lives, try it. I can guarantee that it will take more time, energy and imagination than you think. But the rewards and personal satisfaction make every moment of it worthwhile. And it’s also a lot of fun. �

Customers can watch their favorite programs from around the world.

16 Best Practices Achieving ROI with OTT Strategy, Monetization, and Product By: Jon Keller

ontent creators, publishers, and more of your own content instead of brands are looking towards new more of someone else’s. Ctrends of distribution, leveraging over- At the bottom of your funnel you have the-top video streaming as a way to reach by far and wide the most engaged viewer, their audience in new places. The big who’s immersed in your own branded question is when can you expect a return applications. These viewers are more on your investment? The simple answer likely to purchase a subscription service, is; it depends. watch advertising, or even pay for a piece of content. Strategy It should come as no surprise that the Monetization very first and most important step to a Companies that successfully drive successful OTT strategy is content. The people down the engagement funnel into statement “content is king” still holds their own branded ecosystem have to Jon Keller is the VP of Platform Sales and true today. Without quality content decide how to monetize their offering. Marketing for Odd Networks, an over-the- to both draw and retain an audience, There are three primary monetization top (OTT) platform. His passion surrounds strategies; AVOD (Advertising), SVOD helping companies navigate and under- achieving ROI on your efforts becomes stand the online video space while enabling exponentially more difficult. (Subscription) or Transactional (TVOD). them to launch their own branded streaming Once the hurdle of producing or Advertising can be effective in building services on devices such as Apple TV, Roku, acquiring content is behind you, next large audiences. However, it also requires and more. He’s a cord-cutter of two years and steps should be laying down a solid these large audiences to be effective. strong proponent of change within the tradi- marketing strategy. With the current Subscriptions are a more straightforward tional broadcast models. fragmented ecosystem of platforms, offering, in that you’re charging a this isn’t a “build it and they will come” monthly or yearly fee of “X” and the math companies who have attempted to build scenario. An extremely important aspect associated with being profitable simply out their service internally, and wound up of achieving success is dependent upon comes down to the number of users who abandoning their efforts and purchasing your ability to attract and reduce user you’re able to get to pay for your offering. more of an off the shelf type service. churn within your OTT offering. Lastly, transactional allows you to sell Likewise, there are plenty of examples of The most successful marketingthrough videos, series, or seasons. This companies successfully building out their strategy that we’ve seen resembles a tends to be the most difficult form of own service. However, in these scenarios funnel. At the very top, you have your least monetization due to the fact that without - achieving ROI generally occurs much engaged audience on social platforms like extreme brand or content awareness - further down the road. Facebook and YouTube. These viewers viewers are less likely to purchase content The most important thing you can will represent the largest portion of your a la carte. do with regard to product is choosing a audience; however, they’re also the least The most successful strategies tend to platform that allows you to get to market engaged. Once a viewer finishes watching be hybrids, allowing viewers to watch ad- quickly while also being extremely a particular video, chances are the next supported free content with the option flexible from an integration standpoint. one they are served is not yours. This to upgrade to a subscription and remove Choosing an “end to end” solution absolutely helps expose viewers to new advertising. leaves very little room for negotiating content; but again, it’s the exact reason or swapping out components such as an why this platform can’t be your end-all Product online video platform, ad servers, even a be-all solution. When looking at how to achieve ROI subscription or paywall service and thus Moving down the funnel, we get into with OTT, it largely depends on what results in vendor lock. a deeper level of viewer engagement, you’ve invested into deploying your When it comes to making decisions which would be platforms such as Vimeo solution. One of the larger expenses on how you’ll get to market, monetize, or even a web portal for your content. tends to be the technology itself which and achieve ROI with your over-the-top The viewers that make it here are more begs the question, build or buy? streaming service the simple answer is— engaged and will likely be exposed to There are countless examples of there is no simple answer. �

OTT Executive 17 Spring 2017 Magazine Best Practices Why Local OTT Is the Biggest Opportunity in Media By: Christopher Pappas

merican business is littered with Problem Statement: examples of companies that knew Broadcasters have done a great job Athat they needed to evolve but did not or the last few years defending their turf. could not change their revenue models. However, there are too many changes The combination of changes in technol- buffering today’s video space for them to ogy and consumer habits has decimated adapt. Just a few the problems they are companies and sectors from Eastman currently witnessing are the following: Kodak, to Woolworths, to Lucent Tech- nologies to name a very few. Companies 1. Social Changes – Today’s viewers are that fight the tsunami of changing tech- not watching the 23 minutes 55 second nology and consumer habits by holding news cast at 5:30 pm. As we know, con- on to their existing revenue models is a sumers want their video on demand, with story that we are witnessing in the broad- quicker segments, in their social feeds casting industry today. To their credit, and new platforms and have the ability to Christopher Pappas is the Founder / CEO of many people have predicted the demise share with friends and family. Yokal Productions. Yokal Production’s first of broadcasters and the sector has con- brand is Yokal Sports and the company has covered over 100 games for schools sports solidated, successfully defending their 2. Cable Unbundling – As the cable in 3 DMAs, created the Yokal Sports Sports revenue models from new technologies unbundling continues to occur video Report and will be expanding in 2017. and increasing their payments from mul- companies will need to have a direct re- tichannel video programming distribu- lationship with customers. The existing tor (MVPDs). However, the OTT future broadcasters do not have this relation- 3. CPM Advertising – As technology of streaming video is here and broadcast- ship and are not looking to build it. They companies continue to drive down CPMs, ers don’t have the resources to adapt to have chosen to fight with the MVPDs local broadcasters will have to deal with a this change. Due to this, the opportunity over rates rather than building direct lower advertising rate. While that doesn’t for innovative local video services to fill to consumer options for their news and affect Google or Facebook due to their this void is one the biggest opportunities video operations. scale, it will become a problem for sta- in media today. tions that can’t compete at scale and are suffering from declining CPM rates.

4. Costs – Broadcast stations have been around since the 1930s and with that comes legacy costs. While they have reduced costs, an average station in a top 20 market costs around $15 million to operate per year. This cost structure is just too high compared to what a lean start-up would be able to do.

5. Corporate Affiliate Structures – As digital platform deals are being executed, they are not able to include local stations in many markets because they are not owned by the same company. Therefore these platforms are not including stations in their offerings and thus allowing a new company an opportunity to become the Yokal Sports uses a revenue sharing model to monetize local sports. local brand for digital.

18 Opportunity: Due to the above reasons, local OTT offers a dynamic opportunity for new companies to solve these problems. As someone who has been working on this for a few years, our company has devel- oped ideas that any company who wants to work in this space can benefit from. The below ideas represent the ways new companies must execute to become suc- cessful.

1. Innovative Revenue Models – Compa- nies in the OTT space must think differ- ently about all aspects of their business. Taking existing cable channels and just Local content, such as high school sports, is an untapped opportunity. moving them to these new platforms is probably not the best way. Everything means any person can be a reporter for focusing on sports and covering school needs to be different and the most im- you and get paid if they successfully sports in multiple markets. portant thing is revenue. CPM advertis- send in video. Additionally, the company ing will not work because the audience needs to polish this video and make 4. Low Costs/High Scale – A local video is too niche to justify large advertising sure it’s consistent and high quality. It is service needs to be very lean by using buys. Therefore, at Yokal Productions important to be a production company new technology and allowing users to we are focusing on creating customers. that also ingests user submitted videos. submit different video formats. Addition- We are starting with enterprise custom- Being a bottoms up/top down local video ally, companies must be able to execute in ers who are legacy media companies and service will allow for a company to cover multiple markets. Each market needs to digital platforms where we syndicate our more events, inspire more people, and be profitable quickly to justify the costs video and receive revenue shares. We are keep costs low. of covering games and events. By being syndicating different video packages that a low cost, high scale video service a have audiences and sales teams where 3. Verticals – Video companies today company can take these two business we get a revenue share of the money that need to focus on filling a niche in differ- fundamentals and become successful. is generated. As we expand to over 10 ent verticals. As media and video have DMAs, we will do a direct-to-consumer evolved it’s important to be good at un- Local OTT is a large and dynamic option; however, the best way to start is derstanding people’s passions. Whether market opportunity. People care about to focus on existing companies that will it is cooking, food, politics, sports etc., where they live and are looking for make money from our video. companies today need to focus on cat- quality local video content to educate egories. When covering local it’s even them on what is happening locally. The 2. Different Production Strategies – A more important to provide quality local challenge is to think completely differ- successful local video company must be video services in different verticals. For ently about what a local service does and both bottoms up and top down. That example, at Yokal Productions we are how it generates revenue. �

If you are interseted in speaking at the OTT Executive Summit, contact: [email protected]

For sponsorships, contact Andrea Chambers: [email protected]

NYC: June 8, 2017

OTT Executive 19 Spring 2017 Magazine Trends & Anaylsis The Future of Television Is Not OTT By: Gabe Greenberg

016 brought a very strong year for the audience is now consuming TV on monetization of television and video many screens, many of which are not 2with record up-front, new-front and properly measured by Nielsen or others. scatter markets. Was this a fluke resulting This lack of measurement currency and from an election and Olympics year, standards leads to the ongoing hype by or will monetization of video and TV those in the digital ecosystem, whose remain strong? This is a question many hopes are that if enough buzz and fear CMO’s, Chief Investment, and Chief is created about decline of TV that their Media Officers are grappling with as they digital products will win the day. So with consider strategies for 2017 and beyond. viewership up (across all screens), record To answer this critical question, we must numbers of original shows being created, first look at the macro economic and and time shifted attention, is the future business factors that are influencing of television going to be OTT or Video? media spending in TV and video. To The future of television is going to be Gabe Greenberg, CEO and Co-Founder of do so, it is important to level set on television – distributed on all screens GABBCON, has over 20 years of sales and the definition of TV, as its planned that consumers choose to consume it on. marketing leadership expereince. A pas- and bought today. The GABBCON Profound? Not really. sionate leader and outspoken advocate of the Advanced TV marketplace, Greenberg working group has defined television as Therefore, if TV viewership is up and serves as Global Audience Based Buying a programming feed that is packaged, marketing leaders and agencies are trying Conference and Consultancy. As a recog- created and distributed through various to push dollars from TV to digital, what nized expert on digital media and marketing, delivery means to various devices – is the fate of TV and TV monetization? Mr. Greenberg has been featured in AdAge, this may include a TV set, a mobile There have been several research AdWeek, BBC News, Biz Report, iMedia Con- device, gaming console, PC or tablet. It’s studies that suggest the elimination of nection, & MediaPost and has spoken at pre- miere industry events in North America and important that readers understand this TV in a media plan has negative impacts Europe and is an active Coleman Research distinction and definition of TV as we on brand lift, brand recall and sales. In a Group Executive Forum Member. further explore the trends impacting the recent report published in late 2016 by medium. TiVo and 84.51 entitled “Decreased TV Despite claims made nearly weekly advertising spend hurts sales” 15 CPG TV must continue to deliver on what by those in the digital ecosystem that brands partnered with A&E, Turner, it does best, build brands and deliver TV viewership is down (TV based on TiVo and 84.51 to understand whether sales. TV must however also catch up the above definition), TV is at its height a decrease in TV spending will impact with digital to allow for more index, with some of the best content and sales and if the hefty cost of TV is worth audience based and addressable buys at viewership ever. In fact, networks like the investment. The research indicated scale. This sounds easy and obvious but HGTV and Food Network are recording unequivocally that brands should not the infrastructure to deploy addressable, record ratings. We do however continue consider cutting TV. In fact, for every $1 index and audience buys at scale simply to face a scarcity situation with TV with saved or not spent in television, brands does not exist today. Most providers finite content and audiences to target. lost $3 in sales. The report states “Cutting have their own technical infrastructure Certainly, with time shifted attention, TV budgets may seem like an easy way or audience definitions that make it to save money, but as this study shows, difficult to cobble together buys at scale. brands stand to lose more in sales than There are groups working to develop they stand to gain in media savings. open standards to solve for this, but the Accordingly, maintaining a significant industry must come together to create level of weekly effective reach is a key an open and secure infrastructure that driver of ROI, and brands need to keep allows for common audience segments, those factors in mind as they consider inventory and audience targeting. budget allocations.” Walled gardens will not create Brands and agencies alike are being the scale and simplicity needed to scrutinized to deliver more return from effectively monetize TV and therefore, every media dollar spent. For TV to it is important that broadcasters and Brands like Coca-Cola still value TV. reclaim some of the dollars lost to digital, cable networks not fall into the walled

20 garden moat (or trap) that their digital customers,” said Cohen. “By integrating the power of television to deliver sales, siblings have. Some good examples of advanced ad technologies directly into brand awareness, brand lift and brand inventory providers innovating to more our TV operating system, Roku is able recall. effectively monetize TV inventory using to offer advertisers the most advanced ad For those of you talking up the hype programmatic, audience based or index capabilities in OTT,” said Scott Rosenberg or betting on the death of TV, or the buys include NBC Comcast Universal, VP of advertising at Roku. future of TV being OTT, do not hold Fox, Hulu and Roku. More will follow in MAGNA’s your breath. TV will regain its power Because of the great work Roku has footsteps by not only continuing to position as new and improved targeting, done, MAGNA has just doubled down commit meaningful dollars to television, index and audience based buying scale on their TV investment with Roku. but they will also bet big on new and as measurement of viewership on David Cohen, President at MAGNA distribution channels for TV including new screens and devices catch up. There talked about the importance of reaching Roku, Crackle, Hulu video on demand is a reason why billions are spent on TV the time shifted and attention shifted and TV everywhere products offered and why brands will continue to bet on TV viewer. “We’re continuing to by broadcasters, cable networks and TV. In fact, you can look past all the diversify the mix, transcending audience MVPDs. I am willing to bet that so as research and just listen to leading CMOs demographics while leveraging data in a long as we define TV as we have above, like Coca Cola Global CMO Marcos de new way through our partnership with dollars that have begun to migrate away Quinto who said “TV still offers the best Roku. They offer the most sophisticated from linear to digital budgets will return ROI across media channels.” OTT advertising path to reaching as brand and agency leaders recognize 2017 is a great year for television. �

Congratulations to our past OTT Executive Summit winners!

Past Winners: 1st Place 2nd Place 3rd Place NYC 2016 “OTT Genius”— Kurt Michel, IneoQuest “OTT Hero”— Don Wilcox, PBS “OTT Guru”— Roger Keating, Hearst Television NYC 2015 “OTT Genius”— Brian Balthazar, Scripps Networks “OTT Hero”— Rich Antoniello, Complex “OTT Guru”— Rick Howe, The iTV Doctor NYC 2014 “OTT Genius”— Jean-Michel Planche, Witbe “OTT Hero”— Amit Ziv, EPIX “OTT Guru”— Steve Harnsberger, OTT Digital Services Boston 2014 “OTT Genius”— James Norman, Pilotly “OTT Hero”— Jim Turner, Net2TV “OTT Guru”— (Tie) Gabriel Dusil, Visual Unity; and Jason Thibeault, Limelight Networks

OTT Executive 21 Spring 2017 Magazine Executive Insights Content Monetization: Creating Great Experiences in Less than Great Environments By: Julia Dimambro

’m British and I’m very lucky to be living which (trust me) leaves a lot to be desired and working in an utterly beautiful in terms of premium entertainment! Ipart of Spain, about 30 minutes south I set up a mobile content licensing of Barcelona and around 15 minutes in- business back in 2003, on a dial-up land, slap bang in the middle of a natural connection and in a bedroom of my park. parent’s house. They had recently retired I’m overlooking the sweeping Catalan to Spain and I had returned to Europe in mountains as I write this. I hit the haste after leaving my job and apartment working day early and the sunrise has in downtown New York in the aftermath just started to do the same over the tops of 9/11. of the mountain peaks and bounces off From day one, the content I could the different winter hews of the trees sell was totally limited by the technical and foliage to create a kind of magical restrictions of this new entertainment glittering light in the frosty morning. It channel. We had to format videos to a Julia Dimambro, founder of Seriously Fresh really is beautiful. standard called 3gp, videos couldn’t be Media, has spent the last 19 years in digital However, everything comes at a price longer than 15 or 30 seconds and the marketing & communications. Dimambro and the chances of me being able to finish maximum file size possible was only a founded her first company, Cherry Media in few hundred bytes, not even a megabyte. 2003, a multi-award-winning, content licens- this article without my broadband (yes, ing specialist that delivers great entertain- you heard me right - broadband in 2017, Having read many of OTT Magazine’s ment experiences on mobile devices. Earlier folks) cutting out at least once will be a great articles, it seems to me that the in her career, Dimambro launched the first miracle. broadcast industry is facing similar interactive division of the London ad agency, As you can imagine, this causes no challenges today as we did back in 2003. J. Walter Thompson and was later voted one end of frustrations when settling down We have all this great content, but the of the “Top 50 Most Influential Executives in Mobile” every year from 2005 to 2009. She in front of Netflix, my IPTV box for UK customer experience is compromised was also awarded “Outstanding Contribu- TV, or any other Internet-based service. because of the technical capabilities of tion to Mobile Entertainment” at the 2013 ME As a result we often have to revert to just the networks and CDNs. Awards in London. watching Spanish TV via our antenna, And going back to my idyllic location, Spain is considerably more advanced than many other wide open emerging territories like India and Africa where the vast consumer thirst for streamed digital entertainment is quashed by network AND device capability. Of course we all know it WILL happen eventually and the tech will catch up with the entertainment innovation and customer’s viewing shift to digital – in the same way it did with mobile. We are a far cry already from only being able to watch a 15 second 3gp on our mobiles. But as a video content licensor, my commercial strategy has always been to ensure sustainable revenue growth during these transitional periods to new platforms, which in this case is a robust, reliable OTT experience. I’ve done this by adapting and even creating content Living in a beautiful, remote area may come at the cost of quality broadband. specially tailored to the consumer’s

22 OTT requires a new generation of content for mobile, web TV, VOD, Smart TV and IPTV. natural behavioural patterns within said channels, but for the wider, more localised will ever go away – hopefully the social devices as well as the localised technical services, it delivers a way to offer quality factor of entertainment viewing like this capabilities of the region, platforms and customer experiences and generate will help keep it in the matrix, but to a) networks. income for all parties in the value chain obtain and b) engage the new audiences, My company, Seriously Fresh in order to prove the commercial models video snacking is an important factor Media Ltd, distributes video content and justify the necessity for further to consider for any OTT platform. It worldwide for all platforms. We work investment into technical development. requires a strategic blend of long and with our clients to understand both the As we’ve learned in the past with short form content and a well-planned localised and cultural requirements for mobile, if you have a 30-minute program, navigation system to target browsers and the content, but also the technical and but you can only offer customers a searchers, snackers and couch potatoes, even regulatory legal restrictions of each 5-minute video because of network etc. specific country or region. In a nutshell, issues, then other factors come into play Bottom line? It seems to make sense we aggregate global content for localised for content planning. For example, the that the inherent broadcast-originated needs, so we work with producers all type of content you can offer, how you OTT industry combines its strengths with around the world for specific languages, present that content contextually and the native-born digital entertainment local trends, long or short form, etc., and the environment in which that content is experts to help ensure hitting the sweet then our in-house team will both edit and sold. spot between tech and content, now and encode the content to offer the absolute All of these factors can effectively in the future. maximum user experience possible with support any lacking technical capabilities. And the good news is that I had not We call this digital retailing and in mobile one network outage whilst I wrote this – Given that OTT is by its very we saw it increases conversion rates on it must be a good omen for OTT! � nature a much more person- Pay Per View videos by up to 30% (back alised experience than linear in the day). Given that OTT is by its very nature a broadcast and that audienc- much more personalised experience than es can be segregated into far linear broadcast and that audiences can be more targeted viewing habits segregated into far more targeted viewing habits and tastes (thanks to single viewer and tastes (thanks to single devices), the requirement for localised viewer devices), the require- content strategies is combined with the ment for localised content need for more niche and specialised strategies is combined with channels. The other important factor about the need for more niche and content for OTT is content snacking. specialised channels. A combination of the bombardment of choice combined with new viewing the technical capabilities available for habits of the millennium generation that client. means that sitting down in front of the I appreciate that this is not always family TV to watch a feature length viable in terms of the top 10 or so OTT movie is decreasing. I don’t think it

OTT Executive 23 Spring 2017 Magazine Best Practices OTT Puts the Power in Consumers’ Hands: Risks & Opportunities Abound By: Virginia Juliano

Consumers in the Driver’s Seat Points of Risk (and Opportunity) he days of “set it and forget it Long-term cable contracts, limited entertainment” are officially over. choices and plain old inertia have been TNow more than ever is the age of the staples of the television industry. entertainment choice for consumers These elements translated into somewhat and this has created a dynamic where complacent, if not dissatisfied, but basi- consumers are more apt to reexamine cally trapped and powerless customers. their entertainment choices and But with the new amount of consumer reconsider their OTT subscription and control, here are some potential triggers usage decisions on an ongoing basis. for picking up share or a battle for reten- While this is good news for consumers, it tion, depending on where you sit: sets up a situation where customer churn has become more of an issue for OTT • Pricing—Perhaps the most important providers. perceived OTT benefit to consumers is Virginia Juliano is the Founder & CEO of Due to the constant new entrants cost. According to a recent Wall Street CobbleCord (www.cobblecord.com), a free into the space, the ease of canceling Journal article http://www.wsj.com/ website and App that helps consumers cob- or modifying services (checking a box articles/cord-cutting-could-cost-pay- ble together a personalized combination of paid and free OTT services, cut the cord and online as opposed to getting on the phone tv-industry-1-billion-in-a-year-study- stay on top of their streaming selections. with a call center), and an increased says-1475071214, the average cord-cutter Prior to launching CobbleCord, Juliano technology comfort level, customers saves $104 a month — or about 56% of spent a decade as a marketing executive at periodically reevaluating their mix of their bill—from dropping cable and Showtime Networks. entertainment is on its way to becoming piecing together their own “meta- the new norm. Therefore, understanding bundle”. With that much at stake, it can Varied and oft-changing price points and harnessing consumers’ hot buttons certainly pay for consumers to keep on alone are a major reason consumers are will become more of a focus as the OTT top of pricing. kept on their toes regarding their OTT heats up in 2017. setup. Promotional price periods or free trials coming to an end are cause to reexamine if a service is still worth it. Because the payments are often buried in credit card statements, OTT costs may not be as top of mind as that cable bill that arrived in the mail every month. But that’s no excuse to rest on laurels, as there are plenty of other touchpoints that prompt consumers to question the value of their OTT arrangement. Of course, a price increase is another opportunity for consumers to take a good hard look at whether or not a service still maintains its value. For instance, Netflix saw a drop in subscribers and slower growth following its $2 monthly increase from $7.99 to $9.99. On the flip side, discounts and holiday offers are also something consumers keep on the lookout for. A discounted offer at the beginning or end of a show’s season Understanding and harnessing consumers’ hot buttons will become more of a focus. makes it more likely for consumers to

24 One of the biggest challenges for OTT is determining subscribers’ willingness to pay for new content bundles. pull the trigger on an OTT show or to push those on the “cord cutting fence” money and reduce ‘content clutter’. service that they’ve heard about. over to the non-cable world. Seizing the Reins • Content Rights—In the OTT world, • New Services & Content—The As more consumers cut the cord (or content rights are constantly shifting. proliferation of OTT services has led to a a least seriously consider the option), Every month there are a slew of titles that lot of great programming and the firehose they will also become more comfortable roll on and off each OTT service (and of high-quality content just keeps on playing an active role in managing their there are tons of websites that highlight gushing. Yet there are only so many hours entertainment — although they may be these changes). Sometimes a chunk of in the day to watch (an undoubtedly first somewhat reluctant to do so at first. After content may no longer be available due world problem, to be sure). Whenever a all, the “lean back” pleasure of zoning to contract expirations (e.g., when Netflix new OTT service launches or compelling out with your favorite television show lost all of Discovery Channel’s content a new content becomes available, may not jive with the idea of keeping an while back; and more recently, when consumers have a stronger inclination to ongoing eye on the many dynamics of PlayStation Vue lost Viacom’s program- streamline their choices by sun-setting the streaming ecosystem. But getting the ming roster). Consumers may find that some old standbys that they don’t use most from their entertainment dollar is a an important motive for originally sub- as much to make room in their viewing powerful motivator and companies who scribing to or downloading a service may schedule. Culling and rejiggering OTT bring the most value to consumers and no longer be valid, leading to a regroup. subscription combinations also helps help them navigate the chaos will be the consumers surface and discover the most winners. • Seasonality­—Cancelling a subscrip- current and relevant choices out there for Home entertainment is now an tion at the end of a show’s seasonal run their particular interests. ongoing series of evaluations, not just one and/or subscribing/re-subscribing when static decision, and warrants an always- it begins again is a behavior that pre- • Oversubscription—In an effort to on marketing approach. Although this mium channels have long had to wrestle duplicate their cable subscriptions, new reality creates an ongoing scramble with. The same holds true in the OTT new cord cutters often oversubscribe to to win and maintain share and manage world. In fact, even more so, since a lack (and hence overpay for) OTT services. churn, it can also keep the OTT space of long-term contracts and packaged Sometimes an adjustment period is vibrant and fresh, with ever-shifting bundles makes it easier for consumers needed to understand their true needs, opportunity. And that’s good news for to pop in and out of a service at their after which they realize that they are not everyone. � discretion. Calendar-wise, summer va- watching the myriad of services they cations, winter holidays and sabbaticals initially subscribed to enough to warrant are also flashpoints for customers ques- the cost. Scaling down an all-you-can- tioning what’s actually necessary in their eat buffet approach in favor of a more entertainment stack. It’s also a ripe time customized and curated one can save

OTT Executive 25 Spring 2017 Magazine Trends & Analysis Streaming Media Is Stuck in the Muck By: Mark M. Myslinski

onsumers want the experience of advertisers. This triangle of constituents streaming everywhere and all the is resting on their current multi-billion Ctime. However, these consumers haven’t dollar laurels characterized as follows: given up on live/linear programming, First, they have a very tight albeit, and the current ratings support that highly-profitable triangle generating tens notion even for Millennials. In this case, of billions of dollars in subscription and there is no live/linear streaming currently advertising revenue. Second, they aren’t that can be delivered with consistent loosening up their cable packages now or high quality and that’s when the audience apparently any time too soon. And third, scales. the programmers are currently gener- The streaming industry struggles ally satisfied with their TV Everywhere when it comes to live/linear program- (TVE) distribution and MVPD relation- ming, particularly at scale or high reso- ships therein. lution-especially 4K. When you combine This power triangle is a complicated Mark M. Myslinski, OpenVideo Consulting, is these factors, scale and resolution, the web of rights and relationships which are a 15-year veteran of the digital cable televi- streaming industry just can’t do it. Part of tenuous to unwind without too quickly sion industry, with over 6 of those years in the issue is the reliance on conventional opening the dam of eyeballs and losing the streaming media industry. Most recently focusing on streaming media distribution CDN technology, and part of that is its control of the current advertising outlets and the challenges associated with live/lin- reliance on the Internet as an unmanaged and revenues. ear programming. His latter experience has network. Consider that streaming of media been in association with new generation In addition, the industry is strug- today is largely based on streaming and hybrid content distribution networks, gling to yet make money for over-the-top “video.” Yes, we have a few ads here and most recently various study of ATSC 3.0 and the next phase of opportunities in the (OTT) streaming services. Here’s what there and even as interstitials, but it’s still Broadcasting industry. Dan Rayburn had to say in his 2016 year- basic video at this point. Today, this is end comments: “OTT is growing, it is facilitated by conventional CDNs which expanding, but the business side of OTT have physical limitations of fixed ter- what the consumers are demanding. is still unproven for most. The number of restrial networks and a finite number of live streaming events in 2016 was proba- edge locations. More questionably their 1. Get the Goals Up to Date bly a record, but most of them lost money reliance on the Internet. The Internet? What consumers demand today and could only afford to be streamed due Really? How could we possibly talk about is fragmentation of programming and to a big financial backer. We are a long broadcast of anything live/linear, and entertainment that can be combined for way still from being able to monetize live even just “video” to any large audiences their own personalized consumption. streaming WITH profitability and still with these types of limitations? They want live/linear and on-demand have more work to do.” The business of “television” is a mashup of live, linear, on-demand and advertising. Now further combine that with blackouts and program substitu- tion. Then coat it all with distribution rights of which live, linear, on-demand and, even advertisements, all are subject to having their own set of distribution rights. I’ll sum it up and say that conven- tional CDNs have significant structural The monetization “power” triangle. limitations in supporting this complex mashup of what we call “television” and Now let’s consider the apparent lack the streaming thereof. Overall, the point of motivation for streaming live/linear here is it’s time to move on. The question programming by the “power triangle” is, is the industry ready to move on? To of the programmers, MVPDs and the answer that question, we have to look at “Skinny bundles” promote fragmentation.

26 programming, simultaneously with personalized Internet content and ap- plications and all of this synchronized at times. They want it anywhere not just in the home. This fragmentation starts with “skinny bundles.” Ultimately there’s the business of building audiences and making money. The effective curation and distribution of content by a major broadcast agent will require streaming broadcast television as a direct-to-consumer relationship, combined with Quality of Experience (QoE) analytics to enable a constant re- application of more personalized content along with targeted advertising. At such a point, when the content providers can stream live/linear tel- evision anywhere including personalized Internet content and targeted advertis- Consumers want skinny bundles now to make their own bouquets of content. ing, there lies the making of a far supe- rior consumer experience. This would “Crucially, our research shows that tional CDN technology combined with be superior for content providers as they incumbent operators have an opportu- efficient placement of caches. could parlay their existing large broad- nity to dominate the new video content First, there is live/linear video, and cast audiences into increased advertising marketplace – provided they play to their beyond that streaming of full-blown “tel- outlets based on as many demographic strengths. Consumers place far higher evision,” which certainly for the latter, is categories as a web-based target could trust in these organizations’ ability to an investment into conventional CDNs unearth, and as the advertisers can keep deliver quality content and support for with multi-layer caching infrastruc- up with. video-over-the-internet services. But if tures which appear to have diminishing The true golden goblet is for broad- they don’t act now, they risk wasting this returns. Particularly as “television” which cast programmers to deliver a QoE that valuable brand advantage. The new gen- conventional CDNs have never been maintains the viewer’s engagement eration of disruptive digital players may architected for. Yet, we’ve seen the effects within a live/linear large-scale event. still be less trusted brands, but they’re of these diminishing returns when CDNs This should be done in such a way that purpose-built for a digital world where try to do video or worse yet “television” at interstitial advertising can be sold and people are increasingly likely to consume scale. delivered throughout the programming video content via IP-connected devices In terms of Quality of Service event without consumers ducking out other than the TV.” [2] (QoS), the ability to deliver the overall during the event due to a poor-quality That was in 2015. Many might say experience, we have appropriate options experience. this is easier said than done, but there today. For starters, why do we not use In the excerpt below, notice how are options for achieving these goals if multicast in the long-haul/middle mile Accenture talks about the broadcast pro- we just get out of the current streaming to the edges? Broadcast = multicast in an grammer’s opportunity to assert brand muck. IP world, is the most practical and cost- advantage, which could be leveraged by efficient means in this realm. the major broadcast programmers or be 2. A New Distribution Network Satellite can do this. Satellite is the made anew from the next generation of The Netflix-style streaming business obvious example of the most cost efficient streaming services providers who assert works pretty well, and more often than means to distribute broadcast media themselves and their technology. not, very well. This is done with conven- point-to-multi-point and, in this case, directly to the last mile ISPs. Granted, a satellite-based IP multicast service for OTT distribution is not off-the-shelf today, but the technology to do it is. Satellite networks can provide the most globally distributed network of distribu- tion points and more ubiquitously than any other type of network on the planet. Take a look at the over–the-air Broadcast quality is limited by multicast technologies and the underlying network. (OTA) broadcast industry and ATSC

OTT Executive 27 Spring 2017 Magazine really want to achieve: fragmentation of programming and entertainment for per- sonalized consumption, made up of live/ linear and on-demand programming, simultaneous with personalized Internet content and applications and all of this synchronized at times. Additionally, meeting the demand for live/linear “television” and enabling that same high revenue-generating in- terstitial advertising to be now exploited with Web-based targeting technology. An ATSC3.0-powered OTA network could become a game-changer We then leverage some very current for OTT service providers and consumers. and new generation technologies already in our hands. For starters, we use multi- 3.0. In 2017, ATSC 3.0 will empower the on improved “edge” locations, yes, the cast in the long-haul distribution to effi- OTA broadcast networks to deliver both very same edge that conventional CDN ciently get content and linear origination on-demand content and linear origina- suppliers so dearly try to replicate and closest to the consumers. This combined tion from locations unimpeded to the place closest to the consumer. The same with using cloud-based technology and consumers, namely as these will have edge where companies like Netflix locate workflows help to leverage the currently reliance neither on primarily the Internet caches for the very same reasons. It’s clear thriving market of IaaS, PaaS and SaaS nor a mish-mash of third-party last-mile to the industry today that the closer the providers. providers. ATSC 3.0 networks will be able content or linear origination is to the As an industry, we can’t wait for the to multicast broadcast content to make consumer, the higher the QoE and QoS major programmers, MVPDs and ad- the distribution service truly scalable as for the consumer. vertisers (in its power triangle) to foster well as able to distribute 4K content ef- Previously, location of content, origi- change. Consumers want skinny bundles ficiently. nation, video processing and other work- now to make their own bouquets, and ATSC 3.0 has adopted ROUTE/ flow elements nearest to all consumers there are a growing number of sources DASH for delivery of DASH-formatted has not been cost effective as these ele- of programming and content that can content and non-real time data, and the ments have been sourced by manufactur- be used to begin to satisfy this consumer MPEG Media Transport (MMT) stand- ers largely as appliances (i.e. dedicated demand-for now (or at least until the ard which inherits major advantageous hardware and software). But today as a sleeping giants decide to roll over). features of MPEG- 2 TS for the real-time result of virtualization technology, the Now is the time to embrace whole- streaming delivery via a unidirectional hardware expense (capex) can be made heartedly the next generation of OTT dis- delivery network. [3] minimal. And the QoE and QoS can be tribution technology to enable consumers Combine these with the major delivered via software and subsequently to build their bouquets of programming, Broadcasters having a backbone of tower as opex (i.e. pay-as-you-go). as well as content and entertainment that locations, tens of thousands of tower lo- This shift from largely capex to will satisfy their current demands. And cations in the United States alone. Most largely opex makes embellishment of with that, those lucky content provid- importantly these locations represent the edge locations closer to the last mile net- ers will be able to embark on this new absolute “edge” closest to the consumers works both practical and cost-efficient. world order and get the ball rolling with which could facilitate processing therein. These include IaaS, PaaS and SaaS (get the golden goblet of quality broadcast, So literally and figuratively an ATSC3.0- your cloud dictionaries out). The beauty large audience, live/linear programming empowered OTA network could become of virtualization is that as the market and targeted advertising-muck-free and a very powerful new OTT network. changes, so can the infrastructure. achieve revenue generation. �

3. Virtualization Key to New Workflows 4. Time to Make that Leap References Both of the examples given are based We start by re-marking the goals we 1) “Open Letter To Streaming Media Vendors: Stay Focused In The New Year,” The Business of Online Video, Dan Rayburn, December 29, 2016.

2) “Digital Video and the Connected Consumer,” Ac- centure, The Pulse of Media, 2015.

3) “DASH and MMT and Their Applications in ATSC 3.0,” Yiling Xu, Shaowei Xie, Hao Chen, Le Yang, Jun Sun, Shanghai Jiaotong University, Shanghai, China, and Jiangnan University, Wuxi, China, published 2016.

Virtualization of all layers is key to new streaming media workflows.

28 Executive Insights TV for the Everywhere Generation By: Ivan Verbesselt

he “Everywhere Generation” has SVOD services do present a real platform taken over and is a vast group threat to traditional TV. In fact, experts Tthat extends beyond age groups. This predict that by 2020, SVOD will account is a generation of forward-thinking for 20 percent of viewing time and 10 consumers who expect no limitations in percent of global pay-TV revenues. how they consume content. They utilize To figure out how to move forward, TV a vast array of devices to watch their TV providers need to truly understand where content. This includes traditional screens, there are inefficiencies on the landscape. as well as computers, smart phones and Most notably, as a growing number of even watches – whether they’re at home, “Everywhere Generation” members are in a coffee shop or on a plane. pulling technology from column A and With this limitless access to column B to tailor how they consume entertainment possibilities, it would be content, they are frustratingly saddled naïve not to recognize that emerging with a fragmented array of apps and Ivan Verbesselt is Senior Vice President technology has fundamentally altered devices. Group Marketing for NAGRA. Previously, Ivan our relationship with TV. Two hours of This can cause mayhem. From TV was Vice President in charge of Alcatel’s TV video are uploaded to YouTube every to SVOD services there is a fight for business otherwise known as Information, Communication and Entertainment (ICE) minute from mobile devices. Although the HDMI-1 spot. Viewers are forced to after having led the Product Marketing and this shift does mean that TV viewing has toggle between TV inputs, using multiple CTO office of Alcatel’s DSL business. Ivan decreased by 38 percent among 18 to 24 remotes, cords and other gear. Many holds a Master of Science in Applied Phys- year olds between 2011 and 2016, it doesn’t simply can’t remember which app or ics and Electronic Engineering from Brussels mean the “Everywhere Generation” has PRV service to access in order to watch University and an Executive Degree in Busi- abandoned TV altogether. They’re often their favorite program. This disjointed ness Administration from Solvay Business School (CEPAC). He is a seasoned industry just approaching it in a different way. environment leads down the inevitable speaker and has also been active as a guest As for television’s place in this new path to bad user experiences. professor in Marketing at the International world order, it’s also important to note The key question providers must ask University in Geneva. that while Apple once claimed, “The is, why pick and choose when it’s possible future of television is apps,” this to have it all through a single provider At the same time, there must always be assertion is limiting. Apps obviously you know and trust? Solutions do exist an eye on content offerings. Statistics play a significant role in the content that deliver a single coherent experience show that the desire for SVOD doesn’t equation, but they’re just one piece of the with a single management environment mean viewers want to give up traditional broader TV landscape. Viewers love their across a single network filled with all the pay-TV options. According to IBB, 57 OTT streaming capabilities, but they also programs and videos consumers have percent want to combine television and crave their live TV and their modern TV come to expect. In other words, pay- SVOD services. Embedding this ability services. This includes HD/4K quality, TV providers can assure even the most into any product is a must. catch-up TV, start-over TV, social TV and discerning members of the “Everywhere Mixing the old and new by integrating searchable and recommended content. Generation” that they’ll connect them “traditional” pay-TV packages with The upshot is that as long as television to the content they love, and do so in a OTT offerings enhances the customer and pay-TV providers adapt to this seamless manner. experience and maintains one point of demographic’s “no limits” approach, One essential way to succeed on this contact for customers. Success stories there is still a vibrant market for their front is offering a single UI that delivers like Netflix and Spotify are important products and content. a simpler, integrated and seamless TV reminders that consumers are willing to Still, TV providers must be proactive experience with a user-friendly interface pay for quality content. Similarly, time in dealing with the market, because in one device, regardless of content spent on the Internet is driven by video, type. Pair that technology with cutting which is so often inspired by TV. As a edge features like elegant hardware and result, we must remember that so much touch screen remote controls that work of what the “Everywhere Generation” flawlessly with ergonomic user interfaces enjoys online can still be found on and consumers will be drawn to those television with the added benefits of an products. unmatched user experience. �

OTT Executive 29 Spring 2017 Magazine Executive Q & A The Many Challenges of OTT: Fragmentation, Duplication and Navigation Interview by Brian Mahony with Thomas Engdahl, CEO Vidillion

n this interview, Brian chats with Brian: Since your focus is on ad insertion Vidillion’s CEO, Thomas Engdahl, and programmatic advertising, can you Iregarding the many challenges of OTT. please share with us the business case for why customers would want to invest Brian: To introduce our readers who in those technologies? may not be familiar, please tell us a little bit about Vidillion and your focus Thomas: The first point is that customers in the industry. don’t invest in Vidillion technology, we invest in their content by monetizing Thomas: Thank you for the interview their channels by supplying optimized Brian. Vidillion founder Dennis Nugent advertising. Our Ad Exchange monetizes and his team are very early adopters content channels by connecting their of IPTV and thus OTT. I’m excited to ad inventory with demand. For each have joined them as the President and individual ad channel ad break, our Thomas Engdahl, CEO of Vidillion, is a Senior CEO. Vidillion is a one stop shop for patent-pending software collects all Operating & General Management Execu- video advertising monetization. We available information about the content, tive with a proven track record of delivering maximize content-owners’ revenue by ad break length, device, viewer and their consistent, measurable, shareholder and market value through decisive leadership, mediating between different ad networks, location, then determines what demand product innovation, problem solving and then optimizing based on dollars per is available to fill that request, and finally team development. Engdahl has served as second of ad duration rather than $/ builds an appropriate ad pod for the President and CEO of a number of compa- CPM. This results in a higher “fill” rate, request that will maximize the VSP’s nies as well as other key positions. He holds and more money in the content owners revenue. Our business model is a revenue six patents for telecommunications and pocket per viewer hour. Vidillion’s sharing situation where we provide the video-cable products, and has been active in setting standards in the telecom industry approach is a proven model allowing infrastructure and take a piece of every since 1984. our customers the maximum value ad we provide to channel ad breaks. for advertising time. Vidillion handles millions of CTV ad inventory per day Brian: SVOD is growing a lot and seems consumers inherently dislike their in multiple languages across all devices. to be taking up a larger share of OTT content being interrupted by ads. What Last month, we delivered ads to viewers business models for all types of service is the future of advertising in regards in 120 countries - almost half the world. providers. This is primarily because to new forms of television and video entertainment? Is there something about OTT that makes advertising based business models more or less attractive?

Thomas: SVOD is taking share but it’s not clear that SVOD is all that different. My Comcast account allows me to stream content to my mobile devices. Is this OTT or SVOD? The subscription model versus the advertising model has been around since the introduction of HBO in the early 80s. Viewers will pay for certain content and expect to watch advertising in other types of content. The OTT industry has passed the infant stage What does Vidillion’s crystal ball tell us about the future of the OTT industry? and has now entered the adolescent

30 stage, and as it continues to evolve we advertising becomes to the brands. when you have thousands of individual will see multiple avenues for content We are working on a programmatic channels providing content for every revenue generation. A good example of advertising solution which will combine subject matter genre, the viewership the evolution is the concept of pre-roles, a number of technologies and data points for each channel cannot support the or ads at the beginning of a show but and allow us to be very specific in our cost of providing and maintaining the not during the show. My point is there is viewer targeting. channel. Duplication: the same content room for both models. playing on multiple channels again Brian: If you look inside your crystal creates a viewership problem and as Brian: So everyone knows the ball, how do you see the OTT market such a monetization problem for each user experience has become very evolving in the next five years? What are of the channels. Navigation: discovery fragmented because of the various the top trends that will shape the future of channel is difficult at best, and with OTT services and devices. At the same of the industry? Is there any advice you thousands of channels the problem time content discovery has become a can share with our readers about how grows. If a viewer does not know a very difficult challenge. How do you see to focus on the important things to help channel exists, advertisers are hard this challenge being fixed and is there them grow profitably? pressed to trust it as a means of reaching anything your technology can do to their target audience. Across the next five help solve the problem? Thomas: The OTT market is growing years, Vidillion is setting its sites to crack and continues to enable viewers to the code by addressing the pins I just Thomas: It is indeed personal. People do “cut the cord.” As I look in to my out mentioned. For me, it’s exciting to play a business with people. Vidillion believes of focus crystal ball, I see the OTT role inside broadcasting’s evolution and in programmatic advertising— the more segment of the television market growing to also see what has lasting value over we can provide relevant advertising to the at a rapid pace. At the same time, I time. � viewer, the more effective the advertising see fragmentation, duplication and message will be to the viewer. The more navigation to be the pins which could effective the content is, the more valuable burst the OTT bubble. Fragmentation:

Brian Balthazar, V.P. Programming & Development, Scripps Networks accepts the “OTT Genius Award” from Brian Mahony, CEO Trender Research

Call for Speakers Over the Top Executive Summit and Sponsors! Exclusive to senior executives in the industry. Speaker submissions The OTT (Over the Top) Executive Summit brings together the top and sponsor inquiries: minds in video content, broadcasting and enabling [email protected] technologies to discuss how OTT is fostering new business models for both traditional Pay TV providers and innovators. www.OTTexec.com June 8, 2017 New York City • Marriott Marquis

OTT Executive 31 Spring 2017 Magazine