The following piece is a guest post from Rob Byrnes of Cox’s Gamut. Guest posts do not necessarily reflect the opinions of this publication. Read more about MediaShift guest posts here.
The rise of “over-the-top” (OTT) video has created a range of new avenues for audiences to consume content. Delivery of programs is no longer married to linear TV. Today, you can watch a TV program as easily on Video on Demand (VOD) or on your mobile device. This remains the beauty and the challenge of the OTT marketplace: it enables so many more options for consumers.
For both advertisers and content creators, the growth of options is positive. But this rapid growth also has the potential to inflict substantial damage to the growth of OTT. As the options for content delivery fragments audiences even further, it will become increasingly difficult for ad buyers to compile the reach they’re used to from linear TV – that is, unless standardization and cooperation take place.
The evolution of the OTT market is the result of a changing consumer. New habits of consumption are increasingly apparent among younger generations. On the rare occasions my children (ages 11 and 8) tune into a live cable channel, they refer to it as “regular TV.” And what they normally consume through VOD or through Roku or the iPad is still “TV” to them. This year, the MTV VMAs generated 10x as many viewers via live streaming than it did on live TV. Advertisers and content owners need to think about the way their audiences are consuming content. Advertising on “TV” should no longer refer to a physical TV set alone.
The problem with repetitive ads
Today, many top broadcasters have not completed the infrastructure to serve ads dynamically on their OTT channels, and so instead choose to “stich-in” ads, similar to the early days of VOD. This, coupled with a lack of uniformity for measuring OTT audiences alongside live TV and VOD, leads to fewer advertisers for these impressions. As a result, the viewing experience on OTT channels feels diminished. While the ad experience on a smartphone or tablet does have the infrastructure in place, you’re still seeing repetitive ads.
These repetitive ads are a symptom of the industry thinking like digital and not like TV. On TV, commercial playlists are drafted with intention. These ads are logged ahead of time, with regard to things like content repetition. Mobile and OTT channels, of course, operate on digital platforms, where commercial playlists are dynamic with less of an opportunity for media companies to curate.
This infrastructure challenge couldn’t be more clear than in the world of sports. Live sporting events continue to generate strong audiences, both on linear TV and via streaming channels. To deliver options and increase the return on their content investments, providers now offer access to streaming channels via OTT for games that are out of market or not broadcast on a TV channel. MLB.TV, for example, offers such a package to baseball fans.
The main difference between the two is user experience. The games accessible via linear TV have commercials, while the OTT channels like mobile apps have either repetitive ads or in some cases two minutes of dead air time (which, as a consumer, can feel excruciating!). The dead air is evidence of the fractured market and furthers the point that both content owners and advertisers aren’t integrating with OTT devices because the market is too fractured. To resolve this, a common platform or operating system for OTT must be written.
The changing landscape of OTT devices and Smart TVs is reminiscent of the early days of mobile. Android solved the problem of multiple smartphone manufacturers needing access to multiple app formats. Before Android, some developers chose to make an iOS-only app, forsaking the rest of the market using non-Apple devices.
Today, media companies are faced with a range of devices to deliver OTT content. Pew Research Center found that as much as 24 percent of American adults do not have cable or satellite TV. The days of the TV set as the sole video medium are long gone. To reach the full OTT audience, because there isn’t a common platform, content creators are faced with the arduous task integrating with a range of operating systems and ad platforms from TV manufacturers, Roku, Apple, Amazon and Google. Only with a common platform will they be able to offer advertisers what they want: the full scale of the viewing audience.
Universal Operating System?
So, who is going to produce the universal operating system for OTT? The answer to that questions remains up for grabs. We’re lucky that it’s still the early days of OTT. It’s vital to accomplish consistency before we reach a critical mass of consumption. It’s clear that OTT will increasingly become the consumption channel of choice. Failure to address this need for device-agnostic integration will slow the growth of the industry. Take a lesson from Tower Records, who didn’t embrace the digital revolution. At one time, Tower recorded over $1 billion in sales. Then, just two years later, they filed for bankruptcy. By failing to address changing consumer habits, they allowed others to take their business from them.
To “get down” with OTT, a neutral party independently managing the collective will help advertisers maintain or increase their reach with people on the family room sofa, and at the same time help new OTT channels see more advertisers and better revenues beyond what they can get connecting to programmatic video platforms.
Rob Byrnes is senior director of partner solutions at Gamut, smart media from Cox.