The opportunities and pitfalls of the over-the-top market were the leading subjects of the OTT & Video Distribution Summit taking place Aug. 2 in Marina del Rey, Calif.
Consumers are cutting the cord with their cable companies and moving to OTT because of its superior value, including better choice and lower cost.
“Consumers have basically said, ‘We’re paying too much. I don’t want to watch all those channels,’” said panelist Mickey Alpert, president and CEO, Merisco Solutions, and former EVP at Cablevision.
“Cable companies are literally the most hated companies in America,” said keynote speaker Jeff Binder, EVP, home and entertainment, T-Mobile U.S., because they are regional monopolies and don’t have to cater to customers.
In addition to OTT services peeling away video subscribers, another threat to cable is the coming 5G technology, which will be a “game-changing technology,” he said. Cable companies that have been able to lean on broadband fees, even as cord cutters have eschewed buying a video subscription, may find customers can get rid of broadband with 5G.
“There are changes around connectivity that are coming that are probably a bigger story in some ways I think than the story about how the content industry is changing,” Binder said.
“4G changed the way all of you use your phone; 5G is going to change the way all of us use our home as well as our phone,” he said.
For now, though, it’s the chance to get the content they want at a lower price that is drawing consumers to OTT services.
“Customers value choice and flexibility,” said panelist Kathy Payne, head of content acquisition management, Amazon Channels. “At Amazon, we’ve decided we’d like to offer channels a la carte.”
Amazon Channels aggregates such OTT subscription services as HBO, Showtime and Starz. There are more than 150 channels offered in the United States, Payne said, not to mention the hundreds available internationally.
“We’ve heard from customers loud and clear that they like the option to just buy channels a la carte,” she said. “It’s really easy to come in and pick what they want.”
In addition to a la carte there are bundled OTT services that are making a go of it, such as Philo, which started in colleges. “It’s a TV package that hasn’t really been available before. [It’s a service] without paying this huge amount for sports,” noted keynoter Andrew McCollum, Philo CEO.
There are also ad-supported services that offer programming to consumers for free. Roku Channel has aggregated some of those. Roku’s Seth Walters, VP, demand partnerships, called it “our sandbox for creating our most premium ad-supported service on Roku.”
Making a go of it as a new OTT service is a challenge. The number of domestic OTT services has reached more than 200, with the three top players dominating, noted Brett Sappington, senior director of research, Parks Associates.
“It’s Netflix, Amazon, Hulu and everybody else,” he said, adding there is a second tier of services, such as HBO, Showtime, Starz and CBS, that range from 1 million to 5 million subscribers.
A smaller service must differentiate itself and appeal to a niche, rather than try to compete with the big pocketed broad services offered by Netflix and others, he said.
“If you cannot specifically identify who your customers are then you’re probably not going to be successful,” he said.
Offering exclusive or new content helps, as consumers rank new release or original content as most important, according to Parks research.
Many OTT services overlook marketing, and that’s a mistake, Sappington said. Startups “don’t realize the marketing costs involved,” he said.
He praised the marketing efforts of independent film streaming service Fandor, mentioned in a panel at the summit. Panelist Felice Oper, COO of Fandor, said they had sold 290,000 subscriptions through a Costco bundle with subscription theater ticket service MoviePass in just two and a half months.
“It was a very successful transaction,” Oper said. “We’re still working with Costco.”
Keynoter Darcy Antonellis, of Amdocs-owned Vubiquity, talked about the international reach of the OTT business and the services her company supplies it, noting her team is often on a plane.
“We all have to be thinking global,” she said.
“It’s all about understanding where the audiences are,” she added. “It’s an on-demand world, but it has to be in a form and a language for a particular culture.”
She offered an anecdote about a viewing spike at 3 p.m. that they found involved parents waiting for their kids to get out of school. She said the industry must start to understand how to service consumers when and where they need entertainment.
A prominent woman in the industry, she also addressed the dearth of women in the entertainment and technology business. Having mentored girls 8-13, she noticed, “You could almost set your watch, because of peer pressure, when they were gonna shut off STEM [science, technology, engineering and math].”
“It’s a real challenge for our country,” she said. “You don’t want any room as smart as one brain, and you don’t want any room as smart as a collection of similar brains.”