OTT & CTV: A Primer for the Evolution of TV

Defining the LandscapeThere are four main pillars with which you should be familiar SVOD Subscription Video On Demand AVOD AdSupported Video On Demand PVOD Paid Video On Demand and FAST Free Ad Supported Television Additionally there is TVOD Transactional Video On Demand which generally refers to the ability to pay for a first run film to watch at home the day of its release in theaterIn general OTT refers to the content that various creators and providers are delivering to consumers through apps and which may also be accessed through the web This content can either be Subscription VideoOnDemand SVOD like Disney HBO Max Netflix Amazon Prime Video discovery Apple TV ESPN and Hulu amp160There are dozens of second and third tier SVOD services available including religious ethnic and international services OTT can also be AVOD like Peacock Crackle IMDb TV Tubi The Roku Channel and many more niche options So here39s where it gets a bit complicated Many of the SVODs like Hulu and HBO Max offer adsupported options that give consumers a discount on the subscription for limited ad loads On the flip side many AVOD options like Peacock offer an adsfree tierIn addition to OnDemand inventory there are many options to view livelinear programming on Connected TVs For a subscription fee anywhere between 25mo to 80mo you can subscribe to YouTube TV Hulu Live TV Sling TV FuboTV or Philo TV These services vary in their channel lineup and cost but you will generally have access to your local broadcast networks and top tier cable channels Some of the offerings offer premium tiers There are also the FASTs such as Vizio39s WatchFree Samsung39s Smart TV Pluto TV Xumo or Plex that will offer you a selection of second or third tier cable networks with the occasional top tier cable network and IP based programmed networks such as CBSN ABC NewsNow VEVO POP at no charge all ad supported The television manufacturers use this as a feature to convince consumers to purchase their set and may participate in revshare on ads sold on these platforms or the manufacturers may even sell the inventory directlyFinally Connected TV CTV generally refers to the device on which the OTT content is delivered However many of these device manufacturers such as Roku Amazon Fire TV Samsung LG and Vizio do have the ability to sell ad inventory on many of the apps on their platform They have their own endemic inventory within the guides and interface for the channels as well on some proprietary content channels such as The Roku Channel that are owned ampamp operated by the manufacturerThe Tipping Point and the MetricsIn 2020 several factors caused consumers to reevaluate their television usage Work from home and the lack of a commute for some an unfortunate loss of a job for others all led to a greater amount of 39opportunity to see39 content Yet hampered by massive disruption to production caused by COVID19 there was little if any new original content to view across traditional linear networks Even when sports were able to return the irregularity of games along with a lack of fans in the physical stadiums had a negative impact on ratingsBy happenstance all of this occurred in a year that would have been revolutionary for television by any standard even without a global pandemic due to the launch of major OTT streaming services While Hulu Netflix and Amazon Prime have been around for over a decade and Disney launched in November 2019 20202021 brought a tremendous wave of new wellfunded and well equippedwithcontent players HBO Max Peacock discovery and Paramount realigned viewing habits and provided a wealth of nostalgic and original content during a time where Hollywood was struggling to produce new content How would we ever have gotten along during those core lockdown months without Tiger King or The Queen39s Gambit How many of us felt that brush of normality when the MCU finally returned with WandaVision According to Deloitte 67 of consumers have a pay TV subscription and 82 subscribe to a paid video streaming service On average consumers pay for four video streaming services monthlyPer Nielsen39s Total Audience Report March 2021 for Adults 18 total live linear viewing continued to fall from 3 hour and 44 minutes per day in 2018 to 3 hours and 14 minutes per day in 2020 However during that same period viewing on an Internet Connected Device ie OTT ampamp CTV grew by 72 from 29 minutes per day to 50 minutesAs people spent more time at home and more time online we experienced the unprecedented shift to ecommerce across every demographic including older laggard demographics that had in the past resisted adoption of online shopping This in turn increased budgets for direct to consumer DTC products and attracted more advertising to streaming venuesThe State of the OTTCTV MarketplaceAll these changes along with the presumption of a return to normality which as of this writing is in jeopardy due to the Delta variant led to one of the most inflationary Upfronts in recent history Falling ratings of live linear means less supply A good portion of the OTT ampamp CTV universe is nonad supported viewing or lowad load so despite the growth of OTTCTV channels the inventory levels are not making up for the lost levels on linearWith the opening of categories such as travel hospitality movies restaurants and inperson live events demand for ad inventory is dramatically increasing More demand diminishing supply Higher Ad CostsAdding to the above many believe that the return to normal will adversely affect time spent with OTT viewing During Rokuamp8217s latest Q2 2021 quarterly earnings call they reported a slight drop in total hours viewed 174 billion hours down around 1 billion hours from Q1 2021 which they attributed to people getting back out to restaurants and travelling Of course the possibility is that it was also due to increased competition which should make itself clear within the next two quartersThe streaming boom has set the industry on a new growth trajectory but thereis a limit to the number of streaming video subscriptions a customer will buy As customers can easily cancel their OTT services there is a new focus on churn which is largely influenced by price content and experience As current pricing models to OTT services do not provide a large enough incentive for a consumer to sign an annual commitment or provide a negative impact for leaving there is now a new phenomenon of consumers signing up for a month binging the content that appeals to them and then cancelling and moving on to the next service This merrygoround of OTT services could prove to be a real challenge to profitability especially considering the major content investments each player is makingamp8220Specialty SVOD Subscription Video on Demand services which focus on one particular audience or content category have grown significantly faster than the premium players in the past two yearsamp8221 according to Jonathan Carson cofounder and chair of Antenna Analytics Antenna looked at growth for 17 of the SVOD services that it tracks and found that Sundance Now had the highest rate of year over year growth at 83 followed by Paramount 81 Epix 74 HBO Max 72 and BET 71Source Video Advertising Bureau 2021Targetability high quality content and brand safety are cited by the IAB as key benefits of OTT and CTV However measurement challenges exist as there isnamp8217t complete parity between OTT and linear TV There is a general consensus in the ad community that measurement standards and best practices are lackingThere has been a wide spectrum of advertising categories using OTT and CTV including directtoconsumer mediaentertainment finance health ampamp wellness telecom movie studios travel technology and pharmaceutical marketersItamp8217s unlikely weamp8217ll see a period of change for TV as dramatic as we have had over the past two years The major streaming players have launched Only CNN seems to be on the horizon What will be interesting now is to watch the chess board as players will either thrive whither or bundle in what may end up looking remarkably like a streaming version of the cable packageThe Upfront proved that current demand far outweighs the supply across linear and digital platforms OTT and CTV options will help to stem some of the ad impression attrition but marketers who understand the nuances of OTT and the growing longtail of content will find it easier to meet their video goalsClick the social buttons to share this story with colleagues and friendsThe opinions expressed here are the author39s views and do not necessarily represent the views of MediaVillagecomMyersBizNet

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OTT & CTV: A Primer for the Evolution of TV

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Jeff Minsky

Wendy Arnon

"About That with Carl Mayer": Involved Media Connected Audience Fall 2024 Report (Episode 5) - By Carl Mayer

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