Up and Over: OTT Hits It Stride

An influential mix of cord-shaving, viewer expectations and mobile adoption has pushed the
programming market into an entirely new space; one where the traditional broadcast and
cable model is being augmented, and in some cases, replaced by a segmented, niche-oriented,
targeted viewing market.

That was the focus of the Super Session 76 “Constant Cravings — Using OTT to Win the Next
Generation of Viewers,” where a panel of professionals readily admitted that the traditional
viewing and programming distribution methods of the past are just that— in the past.

It’s estimated that these so-called over-the-top services — defined as Internet-delivered
programs sold directly to consumers, usually from an independent video channel — are
being used in nearly 40 percent of U.S. homes. Internet video now represents about a third of
video consumed by households, even though it is only about 9 percent of spending.

“We’re already seeing a shift from eyeballs into online video, and we’re just beginning to see
the shift of revenues,” said panelist Brett Sappington with Parks Associates.

Why now? What is it about today’s climate that has allowed program distributors like Netflix,
Hulu and Amazon to grab a significant piece of the OTT programming market?

Darcy Antonellis

Darcy Antonellis

“It’s kind of like the perfect storm of opportunity,”
said Darcy Antonellis, of Vubiquity, noting
the proliferation of mobile devices, the ongoing
shift of viewing habits and an abundance
of successful niche programming.

“You’re at this point where connectivity is now
working, whereas three years ago, it was seen
as a hodgepodge,” said Marc DeBevoise of CBS
Interactive. “If the connectivity is there and
the devices are there, consumers will come.”

Jokes were made about Netflix striving for world domination in the OTT market as the
subscription video service attempts to deploy its service in more than 200 countries over the
next two years.

And the big guys are following suit, including HBO, Dish, Verizon, Sony and CBS. For CBS,
which has been pushing its content online and through digital video channels for some time,
the move was a clear one, DeBevoise said. The network’s OTT offerings give subscribers access
to live programming, recorded content and a live-streaming news channel. “These are the
right kind of steps for a network like us to be taking,” he said. “It’s about having a multimodel

Alan Breznick

Alan Breznick

There’s also the age issue to consider. It’s been
well-reported that millennials aren’t viewing
programming the same way as older viewers
and in many cases “are not signing up [for
payper-view programming] at all,” said Alan
Breznick with Light Reading, who served as
moderator of the panel. “So what does that
mean for the market?”

While it’s true that new technology is often first
adopted by younger consumers, uptake of both
programming and technology isn’t just a youth
phenomenon, DeBevoise said. “The
television content that people are interested in runs across the [age] spectrum.”

What has been successful for those jumping into the OTT space is understanding the market.
“It’s about really understanding who the content is designed for,” said Sappington, pointing
to niche OTT services for groups as unexpected  surfers or comic book convention attendees.

Newbies need to understand how to aggregate those capabilities, bring down the barriers
of cost, use data wisely when it comes to targeting advertising and consider the impact of
new technologies.

“We already see experimentation with 4K, and we’ll see more and more activity,” said
Kanaan Jemili with NeuLion, pointing to the 4K-shot series “Marco Polo” on Netflix.

One thing that almost everyone can agree upon: The OTT moniker needs to go. “Not
since ‘synergy’ has a phrase been more overused,” joked Antonellis.

Regardless of what it’s finally called, OTT, both in practice and in the wealth of new
announcements on the show floor, is undeniably on the upswing. “This really is a defining
year for OTT,” Sappington said.