5 Reasons Broadcasters Need an OTT Strategy

Will 2015 be the tipping point for over-the-top video (OTT)? Around the industry, the answer is a resounding yes.

Erik Huggers, president and CEO of VEVO, recently predicted 2015 would be a “break-out year” for the technology, and Park Associates, an online video analysis firm, took it a step further, saying 2015 is “the year of OTT.”

Clearly, the industry recognizes the shift consumers are making to over-the-top video, and now they’re hustling to put together solutions to keep up. Already this year, big-name cable TV networks and content providers have jumped into the fray, like Dish Network with Sling TV and HBO with HBO Now.

But what does this shift mean for broadcasters? Most importantly, it means it’s time to develop an OTT strategy. The ecosystem is maturing as the OTT audience continues to grow. Advertisers recognize the shift and they’re following viewers to these platforms.

In 2015, OTT video is showing no signs of slowing down; the writing is on the wall. Here are five reasons why:

1. Viewership is going there with or without you

OTT viewership is growing exponentially as consumers want to enhance their viewing experience across devices, like Apple TV, Roku, Xbox One, PlayStation 4 and Google Chromecast. According to Nielsen, in 2014, consumers spent 3.6 hours per week watching OTT video; this year, that viewership is expected to nearly double to 6.9 hours per week. By 2020, Nielsen predicts that viewers will spend almost 19 hours per week watching video delivered via an OTT device.

It’s clear viewership is rapidly evolving, and today’s consumers are demanding content when they want, where they want, and on the device they want. For content providers, OTT represents potential for revenue growth, but that starts with a strategy for attracting and engaging this growing audience.

2. Advertisers Are Following Viewers to OTT Platforms

According to a recent study from The Diffusion Group, the OTT share of overall TV ad sales will grow swiftly over the next five years. By 2020, Diffusion predicts that OTT advertising will capture nearly half – about $40 billion – of the overall $85 billion market in TV advertising. One reason is that ad engagement is growing. Currently, about three ads are shown during a typical 30-minute OTT video, and that’s expected to jump to about 5 in 2020. Plus, viewers are watching more ads on startup, more than two on average. Advertisers are adjusting and “following the eyeballs” as advertising becomes entertainment. The latest GEICO ad is a great example.

3. The OTT ecosystem is maturing

The growth in OTT video is being driven, in part, by the maturing ecosystem. Now, viewers have multiple options to choose from to watch their favorite TV shows, movies and live sporting events. This creates two challenges for content providers: Viewers expect a near-perfect user-experience, as they’re growing accustomed to OTT video; and the growing number of platforms is fracturing the audience. In other words, audiences are going to become more niche, and they’re going to seek out the content they want to consume and choose to view it on the devices they prefer. Content providers will need to think about where they deliver their content and the types of audiences they want to reach.

4. OTT Competition is Heating Up

TV networks and cable providers are entering the OTT market in mass, and it’s creating tons of competition. Just in the last 12 months, HBO Go, CBS All Access, Turner Broadcasting and Sling TV have developed their own platforms or have made their content available over-the-top. This rush to OTT isn’t going to slow down. Verizon recently said they’re prepping an OTT release with AwesomenessTV and DreamWorksTV. Other networks and providers are right on their heels. Providers must differentiate, and in that regard, “Content is King.” Netflix, Amazon, and Yahoo have all earned critical praise for their original programming, and that’s helped differentiate their OTT services and attract audiences.

5. Viewers Demand a Seamless Experience

An OTT strategy must be an all-platform strategy. Viewers expect content on their preferred platforms, whether it’s a smartphone, a tablet, game console, or smart TV, and they’re bouncing between devices, sometimes in the middle of a program. Developing a strategy for the multiscreen viewer is critical to driving engagement, and the experience must be seamless. Engagement drops off quickly when streaming performance issues arise, and right now, engagement and brand loyalty are critical to winning the OTT war.  When it comes down to it, independent of the device, the experience must be engaging and consistent.

Developing a Strategy Now Is Critical for Long-term Success

TV is moving to digital. Publishers and broadcasters now have more ways to reach and engage new audiences, and OTT is quickly becoming a viable solution in the marketplace. But success comes down to strategy. Providers cannot cannibalize their audiences; they must use a strategy that attracts and builds new audiences.

ESPN, for instance, made history, going after growing OTT audiences by making their programming available on Sling TV. It’s a bold move and an early experiment in OTT, but it was necessary. ESPN saw the shift in viewing behavior, and they reacted. Now is the time to strategize and experiment. Viewers demand content when they want it, where they want it, and on their preferred device. Your strategy must address those needs. What are your plans for OTT?

About the author:As director of product management for Adobe Analytics, JD Nyland leads a team of professionals that guide the development of the leading analytics platform for enterprises in the world. Nyland is responsible for the product strategy for Adobe Analytics, including mobile and video capabilities.