Broadcasters are embracing a new reality as we charge into 2017.
Over-The-Top video (OTT), which started “as a vexing outlier,” has not only been welcomed into the industry fold but is now driving mainstream broadcast strategies.
Its hold on cord avoiders and its radical influence on technology, programming and advertising shifts is certain and can no longer be ignored. OTT now shapes how we all think of “TV,” how the world consumes it, and how broadcasters produce, distribute and monetize it.
That’s how Ooyala’s third annual State of the Broadcast Industry 2017 report opens, with the declaration that “OTT is, without doubt, a central part of the broadcast experience today and will continue to be in the year — and years — ahead.”
What will broadcast TV and radio C-Suiters need to know about this “new normal”?
Ooyala’s key conclusions center on its conclusion that OTT has already emerged as a decision-maker on the production side. With NATPE set for January 17-19 in Miami Beach, it is OTT — and not the broadcast or cable TV networks — that seems to be calling the shots for the TV industry, Ooyala believes.
“OTT is now in the broadcast mainstream: an integral part of how video content is made, delivered, consumed and monetized,” the report’s Executive Summary states. “Led by changing consumer habits, video and advertising are evolving to offer more mobile and personalized experiences. The industry is plotting its future around new services and synergies, and technology is adapting to deliver video in advanced and immersive ways. Differentiated programming is becoming a critical competitive advantage in a crowded and fragmented marketplace, where content demands are exploding and production processes are changing to help solve these challenges. Data will prove to be the connective tissue and winning ingredient to ensure broadcast success everywhere.”
OTT’s rise is purely consumer driven, Ooyala notes.
“Today, consumers are demanding video the way they want it: on their time and their terms … and they’re getting what they want,” the report says. “The digital habits of millennials are influencing other generations, and the industry is responding by recreating the traditional TV experience on every screen to meet audiences wherever and whenever they’re watching. Video experiences in whatever form they take, based on whomever is watching, are becoming more and more individualized … just the way they like it.”
This is supported by Nielsen’s just-released Q3 2016 Total Audience Report, which shows weekly time spent in hours and minutes to App/Web content via a smartphone has overtaken that of Live+DVR/time-shifted TV among adults 18-24. It is also particularly strong among all Hispanics, regardless of age.
Meanwhile, Ooyala says consumers are becoming increasingly platform-agnostic, with content selection, cost and convenience paramount in their minds. “To wit: 41% of U.S. adults said they plan to shave or cut the pay-TV cord in the next year,” it says. “With the rise of OTT video, ‘TV’ as we know it is now on every screen and goes wherever audiences go. It offers both social, connective moments and individual, personal experiences — particularly important to younger audiences. Look for these engagements to be refined further this year by more consumer choice driving how video is created, delivered, viewed and monetized.”
How will this impact advertising for broadcasters?
“Monetizing video in this new paradigm offers broadcasters both more complexities and more opportunities for growth,” Ooyala says. “The end goals? Reaching audiences on every screen and platform, delivering tailored and engaging ad experiences, and gaining accurate measurement to maximize revenue on ad-supported content. However, the journey there is still littered with obstacles. A data-driven and holistic view of ad sales is emerging as the best path forward as OTT and linear TV continue to dance around each other and step ever closer towards full integration.”
Improved ad environments and more relevant ads remain the core challenges for monetization, Ooyaa says. But, the industry will make more active changes in combatting ad avoidance with “less disruptive, higher quality and more tailored ad experiences driven by data.”
What’s the bottom line?
“With all of this movement across the ad landscape, the alignment of video ad sellers, buyers, audiences and data is more important now than it has ever been.”
