Easeltv’s Bill Scott on How to Build and Monetise a Connected TV App

Bill Scott is Chief Operating & Commercial Officer for Easeltv, a connected TV app development company who work across all the major connected TV platforms. Easeltv have created apps for Channel 4, Virgin Media and All3Media (the production company behind Peep Show, Shameless and Skins). In a comprehensive interview with VAN, Bill explains what brands and content producers might want to consider before having an app developed and of course how to monetise it with advertising. Bill also discusses how broadcasters are likely to respond to production companies going directly to the consumer.

What does Easeltv do?

Easeltv are a software company and we have created a product called Suggested TV, which is a platform that makes it very easy for people to publish content on connected TV devices. The concept behind Suggested TV is that it reflects how TV is used in the home and plays to the strengths of television rather than trying to turn connected TV into another way to access websites. So our message is ‘don’t just try to put websites on the TV’.

Instead we would say you should build a TV experience, something that looks like a linear TV channel, something that’s familiar to consumers and allows them to interact and choose content if they want to, but if they don’t do anything it will still give them an experience. Our software is a set of tools that allows people with content to create a television experience and to monetise that experience.

Where would someone have to start if they want to have a connected TV app developed?

The first thing to work out is which platform you should go for, so you need to understand how many TVs are out there, are they being used etc. So you might start by going with Samsung as they have the largest market share and they’ve been producing them for longer so there are more of them out there. At the moment there’s roughly around 1.5 million Samsung connected TVs in the UK, or perhaps even more now because that’s the figure for the end of 2011.

There were also 20 million in the US at the end of last year, so there are a significant number of Samsung TVs out there that are connectable.  Samsung generally say there’s a connection rate between 45 to 55 per cent for those TVs.

The second thing is to go and do a deal with the owner of the app store. You don’t always have to do a deal but in most cases the platforms aren’t as open as the Internet is and you have to go and do a commercial deal with Samsung which might be on a revenue share basis, or some kind of payment for the use of their platform.  This of course depends on the quality of the content and how keen they are to get you onto the platform. So there’s a negotiation you have to have there whether you’re dealing with Samsung or LG.

Google TV are being a little more open but there are still strings attached, so it’s still not quite as open as the Internet on a PC for example. So you do the deal with the owner of the platform and you can then start to build your app and to do that you use a combination of what are fundamentally web-based technologies that have been deployed in the TVs. Some use Flash, some use HTML browsers and HTML5, and then Google TV is using Android.

There are a few technologies that you have to choose between in order to get on these devices. One of the things we offer is to take that pain away from our clients because we’ve already built our software for each of those different platforms and so we make it easy for people to not just get on to connected TV in general but on to lots of different connected TV platforms.

How are your clients currently monetising their apps?

So far most have taken the payment route, which is generally a pay per view model. We’ve integrated the PayWizard payment engine into our software platform and that allows us to work with a few different payment models. Most of our work has been based around the pre-pay wallets functionality, but it’s also possible to have a subscription model or any number of different payment models. But it’s mostly pay-per-view on a transactional basis.

In the future, we do expect advertising to work for apps with the right quality of content. It won’t work for everybody, but with the right content and the right audience, then advertising will be a lucrative monetisation route for content. But it’s very important to measure the advertising experience so that you’re not forcing the consumer to watch the same ads over and over again just because they’ve changed the piece of content they want to watch.

That’s a problem with many of the web-based video-on-demand services, where you start watching one piece of content that has a ‘must-watch’ enforced rule for pre-roll ads, where you might be shown three or four pre-roll ads. Then if you change your mind about the content you want to watch you’re forced to watch the same three or four pre-roll ads all over again during the second piece of content.

So it’s very important to manage the experience and that you don’t necessarily start that experience with advertising. You allow people to start enjoying the content in the same way they’d watch a programme on a linear broadcast channel, and then you insert advertising after a certain period of time. That might be when the consumer has been watching the service for so many minutes, or it might be at specific insertion points or it might be a combination of the two.

Another important thing is that the advertising needs to be video-based rather than the web approach of banners and skyscrapers. This is all about creating something that feels as close to a TV experience as possible and if the advertising is to be successful it needs to be seamlessly integrated into that experience rather than placed around the sides of the content. The experience we’re talking about here should be a full-screen, video-based experience, that goes as seamlessly as possible into advertising and then as soon as possible back into the content, so the consumer is taken on a journey.

How have the broadcasters responded to production companies going directly to the consumer?

At this stage we’re still seeing the first experiments being done and often by production companies who haven’t had direct consumer relationships in the past, but in time we expect to become more normal and the broadcasters might see that as competition.

But really it’s no different to going out to a shop and buying content on a DVD. We’ve had DVDs for a long time now and production companies use that as an effective route to market and make quite a lot of money doing that.

The commissioning of a TV show doesn’t fully fund the production of that show so you need to make money from the secondary rights windows once the broadcaster is finished with it. So the broadcasters might complain about it, but it’s a perfectly normal thing for the content producers to do to try and monetise their sunk assets.

Can regular online ad servers be used to serve ads into connected TV apps or is a certain type of technology required?

It’s web-based so you can use a variety of web-based ad servers, although sometimes we’re looking for a slightly higher quality of video than what is typically used on the web. Because we’re going full screen on an HD TV, the last thing you want is horrible pixelation, but it’s fundamentally the same technology.

So we’ll see real-time bidding on connected TV inventory and is it possible to use cookies on connected TV yet?

Technically it is possible as it’s a web-based service and some connected TV browsers are capable of handling cookies.  However, it’s going to be tightly controlled, so you might have a cookie for your own app, but you wouldn’t have access to those cookies from other apps, and you won’t be able to drop cookies without permission. So we don’t expect to use device-based cookies for advertising.

We’re going to use the server-based tracking of user behaviour because we’ve got a very good understanding of user behaviour within our app environment and we can’t see what’s happening in other app environments.

We’re only interested in what the consumer is doing with our content, but we have a very good understanding of what they’re doing, to the extent that you can say ‘X user always skips the trailers for horror movies so we’re not going to show them trailers for horror movies any more, and then create a relevant advertising experience based on that knowledge, not just on what they do like, but what they don’t like, which we think is just as important. In fact, sometimes it’s more important.

A common complaint from media buyers is it’s still hard to achieve scale in connected TV advertising. Is that true in your experience?

Yes, at the moment it’s still fairly limited and it’s partly because many app owners have been going with pay-per-view and partly because the commercial broadcasters in the UK have held back from connected TV. That’s partly because they’ve been focusing on YouView which has arrived a little late, but it’s going to be interesting to see how they get on.

One of the great challenges of advertising on connected TV is the currency of measurement. With linear TV the currency of BARB is well-established and everyone understands it and it creates a common currency for the whole advertising industry. On connected TV it’s different and we don’t have that currency established, so determining the value of your inventory is going to be quite hard in the early days. So it’s going to be interesting to see how Channel 4 and ITV sales teams get on with selling this inventory.

I’m expecting to see it bundled as part of a multichannel initiative in the early days and it will be treated as digital to start with, but in time as the currency is more established it will be more similar to TV advertising, both in the way that it is monetised and the way that it’s sold. We simply have to go through that evolutionary phase and we can’t hope to just go straight to selling a campaign that is just connected TV in the same way that we sell a linear TV campaign, at least until that measurement is established.

What type of apps are the most successful?

The video-based apps are the most successful because that’s what people expect to get on a TV. So if you put a website on the TV or anything that requires a lot of naviagation, it’s hard for people to get to the content and in some cases there is no content and you get an estate agents or Marks & Spencers, who haven’t provided a televisual experience even if there is video that’s hard to find.

The ones that do work are ones that feel like a TV channel and give you an experience that feels familiar and is similar to how you use TV at home. So TV is used in a shared environment, where you have apps in the living room and perhaps in the kitchen, maybe used as a focal point for family entertainment or as wallpaper. But the TV is never used as a personal data retrieval device.

And that’s the problem with some people who look at connected TV and see it as an opportunity to make an app which is essentially a version of their website on the TV, which is what we like to call a ‘crapp’.

What are the main barriers to the growth of connected TV?

The first barrier is getting people to buy the sets in the first place.  The second one is getting them to connect them. And the third one is getting them to actually use the services. In the UK, having things like iPlayer integrated into the device is a tremendous driver for growth.

The BBC always says how you can find content on iPlayer, but going to iPlayer on your TV is so much easier than going to your PC, even if you’ve got it on your lap. The TV is just there, it’s convenient and easy-to-find. So that’s important in driving the uptake of the devices and getting people into the habit of actually using them.

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