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17 March 2016

Connected TV Summit: Challenges and challengers in OTT

To put some perspective on the dominance of OTT platforms as not just content providers, but content producers, Netflix and Amazon were nominated for a combined 46 Emmy awards this year. At Connected TV Summit in London this week, a panel of speakers discussed how, if at all, operators and broadcasters can challenge the two SVoD giants in the original content game.

Amazon and Netflix have invested pretty significantly in original content, with Amazon splashing out around $250 million on a 3 season motoring show (that’s a mammoth $83 million per season), and Netflix with its successful $100 million investment in House of Cards – but does Amazon’s hefty investment make sense?

Richard Broughton of Ampere Analysis believes that Amazon has made a worthwhile decision – based on figures presented that show each Amazon Prime subscriber is worth $67 in annual net operating profit, and it would require an extra 1.2 million additional Prime subscribers per year to offset its investment in the series. This is a very realistic figure to reach for Amazon, which currently has around 60 million Prime subscribers, and the potential for the new motoring series bodes well considering the ex-Top Gear trio attracted as many as 8 million simultaneous viewers to the BBC for each episode broadcast.

BBC iPlayer is a popular multiscreen catch up service in the UK, which Brits pay £145.50 ($208) a year for, whether they use it or not. However, it looks like broadcasters are looking at a change in strategy, as the BBC reportedly held talks recently with ITV on launching a collaborative SVoD service, along with NBC Universal.

The panel at Connected TV Summit, featuring representatives from Facebook, the BBC, Clearleap, and 3 Screen Solutions (3SS), discussed what the secrets behind a successful OTT platform are. There was a resounding agreement that this secret is data, and being able to analyze these rich data sets using the correct tools – analyzing the existing customer base to know how to gain new customers, and reduce churn.

Netflix did not start out life as a data-focused company, although it most certainly is now. Amazon, on the other hand, has a huge advantage with its access to rich data thanks to its cloud computing clout, but the end user experience of Prime Video is not as good as other services. Facebook is also data-rich, but TV & Broadband Vertical Lead Matt Ring claimed the social network was not looking at long form content for the future, as the feed model is perfect for short form – with users checking in at an average of 14 to 15 times every day.

Another topic of discussion was if Netflix can sustain its growth, or whether the subscriber figures speak for themselves to show Netflix has saturated. It has recently expanded its footprint, but one of its downfalls is that its price points do not reflect local market incomes – in regions such as Russia and India it is more expensive than traditional pay TV services. If it wants success in these markets, it will surely have to adjust.

A 4-week old service called EveryFlix was presenting at Connected TV Summit, a sort of comparison site for SVoD platforms which aggregates content from multiple third party channels in the UK, to allow users to make decisions without having to browse multiple sources. Users can refine searches to include ratings from external sources outside of the platform’s own content rating, for example, search IMDB for movies with a rating of 8 or higher.

EveryFlix aims to combat what the panel coined “siloization”, as the range of OTT services were supposed to make finding content easier, but have in actuality made the process a complex and frustrating experience. For Netflix, it isn’t possible to view the content library without signing up or finding a third party site listing; with Now TV it has an old-fashioned A-Z listing with minimal search options; and with Amazon, it has many attributes to refine the search, but constantly defaults the search order to show featured content. We like the simplicity of this idea, but we’re unsure if a similar service has been launched in the US.

In other news from Connected TV Summit, Sky’s Director of Strategy Nick Hern revealed that Sky Q customers will be able to receive UHD broadcasts as of this summer – which should come just in time for the start of the 2016/17 Premier League season.