Why I’m Betting on OTT Video

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OTT video has been a disruptive force in the media industry with believers banking on its promised potential and naysayers faulting every pixel of it. After years of working in this space, I believe OTT video is finally coming of age. It’s not only co-opting the television space, but also creating its own, unique value proposition. Here’s the main business reason why I’m betting on OTT video as the future of entertainment: it takes a subscriber-centric approach.

What does that mean? Being subscriber-centric means your entire business must be centered on your subscribers—from acquisition to service delivery to customer care to billing and renewals. It’s very different from how traditional media companies were built and run (like other traditional businesses), where the focus is on the product and the company’s bottom line. And this is where OTT video has the enviable advantage of being subscriber-centric from day one.

Traditional broadcast and cable companies were built for scheduled, living room entertainment. They have a linear, one way relationship with their viewers, effectively telling them, “We will decide what you watch, when you watch, and even which device you watch it on.” As subscription-economy natives, on the other hand, OTT video services are built for today’s on-the-go viewer, telling them, “You decide what you watch, when you watch and which device you watch it on.”

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The success of this subscriber-centric approach depends on the perceived value that the viewer feels they are getting from your service. Unlike traditional channels, streaming services grew up in the age of the customer and not the advertiser. They know that today’s viewer is not content being an anonymous Nielsen statistic. This translates into programming that’s highly targeted and curated. Offerings are personalized based on individual customer data and regularly fine-tuned to keep up with changes in customer preferences. Netflix’s success, for example, has been attributed to their customer data analysis which allows them to deliver recommendations based on individual preferences. It’s like made-to-order entertainment. What’s not to like?

Now, more content will bring more choice and it’s probably going to become harder to offer recommendations and aid the search/discovery process. Traditional TV channels offer discovery services based on standard metadata such as category, director, actors, etc. So it’s not really a surprise that most people ignore that data and rely on social recommendations from like-minded reviewers to find new, relevant programming. Here again, OTT video seems to hold the winning card. OTT services tend to cater to specific audiences (Crunchyroll for anime, Motorsport OnDemand for auto enthusiasts, etc.) and are much better at building a community of viewers. As social discovery takes over, OTT video has an excellent opportunity to tap into this community to get people to help each other in the discovery process. This not only helps OTT companies but also makes the experience more valuable for viewers. Think of it as a film club that comes built into your service!

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Apart from content, other variables that influence this perceived value range across the subscriber experience such as ease of sign-ups, cancellations, payments, etc. Our company Zuora works with companies across industries and helps them automate and streamline their back-end financial operations. What we’ve repeatedly seen is that new OTT video services are not burdened with pre-existing, legacy backend systems. These old systems don’t meet the needs of today’s businesses in terms of agility, data and metrics but companies continue to use them because of prior investments and a reluctance to change. New OTT video companies on the other hand, don’t have this problem and make the most of their more advanced systems. Unlike traditional companies, they’re able to quickly test and iterate on their plans, and use data to gain deep insight into customer behavior and preferences and in turn, improve their services.

Most importantly, the systems that power OTT video services are built ground-up keeping the modern subscriber in mind. This has huge implications on aspects such as simplified sign-ups, customized pricing and packaging, clear and accurate billing, easy payment options and of course, customer service. It’s a completely new way of doing business - design and build for the customer rather than just your bottom line. For instance, most OTT video companies are able to offer self-service capabilities far exceeding those offered by traditional media companies. Customers can easily manage their accounts for renewals, payments, suspension—any time on any device. Go ahead and contrast your own experiences … Comcast vs Netflix, anybody?

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The numbers reflect OTT’s success. According to the North America OTT TV & Video Forecasts report from Digital TV Research, OTT TV and video revenues in Canada and the US is expected to reach $24 billion in 2021, up from $2.6 billion in 2010 and $15 billion in 2015. Given this growth trajectory and the fact that all the major media companies are now working on streaming services, there can be no doubt that it’s the future. Both as a consumer and as a professional, I’m betting on OTT video’s success because it’s all about delivering value to me (and you)—the subscriber.

Craig Barberich isglobal head of media for subscription management specialistZuora.