What’s Holding Online Publishers Back from Investing in OTT?


With new streaming offerings from Amazon, NBCUniversal and Sinclair Broadcast Group announced in the US market alone over the past few weeks, the over-the-top (OTT) space is becoming increasingly crowded. In pretty much every market broadcasters and tech companies launching both indepenent and joint OTT initatives, alongside some ‘OTT native’ offerings like Tubi.tv, Viewster and Pluto TV.

However, connecting TVs to the Internet hasn’t led to an Internet-like boom in new apps either. OTT is difficult, and thus far news publishers and online publishers generally have been slow to get in on the act. That’s not to say there hasn’t been a handful of early adopters; Vice, Time Inc., Condé Nast and Insider have all built OTT apps, with the latter two launched just last year. But many others are yet to dip their toes.

What’s holding them back? After all, the revenue appears to be there for those who can make it work. Finecast CEO Jakob Nielsen said there’s a “huge appetite” from the buy side for advertising on OTT content from quality publishers. “Broadcast quality, long-form content is in relatively short supply, when compared to digital video, and there is a huge gulf between the two when it comes to viewability, fraud, and engagement,” he said.

But perhaps it isn’t as simple as it might seem from the outside as there undoubtedly are a number of hurdles to investing in OTT, some of which are increasingly simple, and others which remain tricky.

Long-Form Content is Hard

While many publishers have been investing in video over the past five years, this has been primarily for short-form content that has been opimised for social feeds. Long-form OTT content is a sizeable – not to mention riskier – step up in investment, and one which some publishers may be reluctant to take.

For publishers like Vice, which already specialised in long-form content, this hasn’t been a problem. Vice in fact had so much long form content that it’s launched not only an OTT app, a linear TV channel called ‘Viceland’ too.

One of the benefits of OTT, too, is that the entry requirements for content are theoretically quite low. OTT platforms generally don’t require you to have a minimum amount of content in order for them to host your app, and the content itself doesn’t have a minimum length.

Insider Inc.’s CRO Pete Spande said these factors made the step into OTT easier for his company. “Because Insider TV is freed from the constraints of linear TV — with its rigid 30-minute and full-hour programming structure — its video content itself can determine video length,” he said.

Publishers can also license content from third parties to help bulk out their libraries – again this will be costly, but less so than commissioning and producing entirely original content.

However, these factors come with caveats. While there aren’t any formal restrictions on content, long-form content is preferable for a number of reasons. It’s preferred by advertisers as “it has the best engagement, drives the best conversion, and has the best brand safe environment,” said Nielsen.

OTT apps also have to have more compelling offering than, say, a YouTube channel – since you have to convince a user to download your app, and keep coming back specifically to your app on their TV. Customers are probably less likely to download your app and watch your content on TV if all you’re providing is three minute videos they could watch on YouTube or via the Facebook News Feed.

Audiences are unlikely to stick around in the absence of a compelling library of content. Mano Kulasingam, SVP of products at Accedo, said that churn is a large part of what his company helps its customers with. “Generally I’d say it’s the content you have on your offering that matters,” he said. “If the quality is poor, if you don’t have a lot of content that keeps the user engaged, then churn will be high.”

App Creation and Discovery

For those publishers which do already have the content ready to go, or are willing to adequately invest, the next hurdle is creating the app itself. But building an app has become easier in recent years as platforms and tech companies have smoothed the development process.

Roku for example has developed a set of tools for content owners to help them create a simple channel for the Roku platform in a relatively short space of time. The only requirement is that video is formatted to Roku’s specifications.

“I think anyone who has a basic understanding of how to create a website or something similar could create a channel in 24-48 hours,” said Seth Walters, VP of demand partnerships at Roku.

Roku also encourages publishers to distribute their content via Roku’s own streaming channel, The Roku Channel. Obviously this strategy gives content owners less control over their OTT strategy, but allows them a way in without having to develop an app.

Some publishers might prefer to develop their own apps without using these sorts of tools (the most obvious reason being that it lets them make their app available more widely available). This requires more work on the technical side.

“You have the back end infrastructure that does a lot of the heavy lifting, and then you have a middle layer which is where the content management and some of the business logics are set, and they you have the content experience, what the user experiences,” said Kulasingam.

But companies like his own aim to make this process easier, and Kulasingam says is not as complicated as it once was. “The technology a few years ago was probably a bit more limiting, and required more investment. But I think now technology has caught up, and you can go to market quickly,” he said. He claims Accedo offers a solution which can get an app into market “within a couple of weeks”.

But as app creation becomes simpler, this amplifies the problems of discovery. With platforms like Roku hosting thousands of apps, your OTT app risks getting lost in the crowd.

Walters said making channels discoverable is one of Roku’s priorities at the moment. ““It’s becoming more and more like performance marketing, where media owners are leveraging Roku behavioural data to reach the right viewers, and surface content that would be relevant to them.” Roku promotes channels through a number of touch points – via ‘featured’ rows on its home screen, via promotions on screen savers, and via an ‘initial channel selector’ which points users to channels they might be interested in when they first start their Roku device.

But publishers might choose instead to decide which platforms they place their apps on based off whether there’s competition from similarly-themed content. “If they have unique content that a platform doesn’t have much of that content already, that’s where you’re probably more likely to get noticed, as the platform is more likely to promote you,” said Kulasingam.

Monetisation

With the app created and content ready to go, the last issue for publishers is monetising their content.

There’s a few options here. They might choose a subscription model – but asking audiences to pay out for an untested video service can be risky.

“If you go right off the bat with a paid model, you need to have really great content to bring customers in,” said Kulasingam.

Oath, which offers services to help publishers get into OTT, advises against subscription. Nicholas Ortega P&E Account Mgmt Lead and Martina Ekman, Senior Product Manager at Oath wrote in a joint blog post, that subscription models have only proven to work for OTT providers such as large broadcasters and original content hubs who have amassed an extensive library of VOD content (think CBS & Netflix with its original programming), or niche publishers with a loyal fanbase (WWE, Anime, etc.)”

An ad-supported model can make it easier to build an audience while an app is still unproven, and platforms like Amazon Fire TV and Roku have tools to help monetise apps through advertising quickly – though both ask for a cut of the inventory for themselves.

And for the portion of advertising that the publishers sell themselves, the market still needs improving. Nielsen says that to unlock more investment in OTT, media owners “need to support the creation of a trading environment in which there is better measurement and reporting, and where agencies can report and manage universal reach and frequency across all suppliers”.

The third option is to use an ad-supported model to establish an app, before moving towards a hybrid structure. “Our recommendation is always to try an ad-based model, where consumers can get comfortable for the app,” said Kulasingam. “Once they’re comfortable, then maybe you can bring in a premium option. We’re seeing more and more of those hybrid sorts of models.”


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