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15 February 2018

NCTC hopes OTT distribution deals will buoy smaller operators

By Kendra Chamberlain

The National Cable Television Cooperation (NCTC) in the US is looking towards a future of OTT distribution for its tier 2 and tier 3 cable TV and broadband members. The body has struck a series of deals with OTT services that open up distribution to its 850 smaller cablecos, who are “eager” for new video products to offer to customers, according to Rich Fickle, NCTC’s president and CEO.

NCTC has made three such OTT deals in the past eight months to benefit its operators, which collectively reach about 9 million subscribers in the US.
The latest such deal is with CuriosityStream, a science-oriented subscription OTT service launched in 2015 by Discovery Channel founder John Hendricks. The deal was announced at NCTC’s Winter Educational Conference, taking place this week.

CuriosityStream hasn’t released any of its subscriber numbers since its launch, but the company has struck distribution deals with Comcast, T-Mobile newly acquired Layer3 TV and Sling TV; it’s also available on Amazon Channels, and the AT&T-backed online video service VRV.

Under the new deal, NCTC operators will be able to offer their subscribers on-demand access to over 1,500 documentaries, and on mobile and connected TV platforms via CuriosityStream’s streaming app. Some operators will also be offering the app directly on subscribers’ set tops later this year.

Though pricing hasn’t been released, we’d imagine the NCTC members will be offering CuriosityStream subscriptions to their subscribers for discounted prices. CuriosityStream charges $11.99 a month for access to 4K content, or $5.99 a month for HD content.

The announcement coincides with a new report out from Kagan, the media research arm of S&P Global Market Intelligence, that estimates broadband-only homes in the US will nearly double to 37.2 million by 2022. Kagan’s Tony Lenoir pegs the dramatic increase on “a perfect storm of long-term trends including increase in streaming content suppliers, widespread utility-like status of broadband, and a demographic shift attributable to shrinking baby boomers and rising Millennials,” which has spurred a “significant upward update for our projections.”

Amid this trend, the NCTC’s goal is to help the tier 2 and tier 3 cablecos bolster programming offerings for the growing pool of broadband-only subscribers and non-pay TV viewers, part of a larger transition for cablecos towards OTT distribution in addition to – and now sometimes instead of – pay TV distribution.

With programming costs on the rise, a handful of the smallest cable operators have decided to forgo pay TV all together, instead focusing on broadband subscriptions with streaming video services bundled on top.

In July of 2017, NCTC signed a deal with fuboTV, a “sports-first” streaming video service offering live sports programming. FuboTV’s line-up includes 60-plus live TV channels, covering 80% of pay TV’s regional sports networks, plus some of the major broadcast networks. All together Fubo offers subscribers streaming access to NFL, NBA, NHL, MLB, soccer and college football seasons. It also offers some news and entertainment channels, offering a niche streaming TV bundle targeted squarely at Millennial sports fans.

“There is growing demand from certain consumer groups towards live streaming video services,” said John Childress, NCTC’s VP of product management. “We feel these partnerships help provide members options to reach these different types of consumers.”

More boldly, NCTC signed a pact with Sony for PlayStation Vue – a streaming pay TV service that historically has been considered a direct competitor to traditional pay TV. Under the pact, NCTC members are able to offer access to PlayStation Vue in innovative bundles – a term that has come to mean programming packages that favor OTT content over traditional linear TV.
Dwayne Benefield, Sony’s VP and head of PlayStation, said the deal was “a great opportunity for customers to experience PlayStation Vue’s innovative cloud-based TV streaming service through their NCTC member provider.” It seems this type of thinking is gaining traction among cablecos, too.

Leveraging OTT services for competitive advantage was a hot topic at the NCTC Winter Education Conference (WEC) event this year. Analysts have long suggested that cablecos treat OTT services more as opportunities than enemies, and speakers at WEC argued that including SVoD services, either bundled with broadband subscriptions, or offered as supplemental programming options integrated directly onto the pay TV set top, can help pay TV providers attract younger audiences to pay TV.

Smaller providers who don’t have the technological know-how to develop fancy IP-based pay TV platforms like Comcast’s X1 are instead turning to these types of OTT distribution deals to deliver more value to the broadband-only crowd, and for help reducing churn among would-be cord-cutters. These smaller operators are also beginning to make their pay TV services available on streaming media devices, in order to be able to engage viewers on those platforms.

To that end, the NCTC struck a deal late last year with MobiTV, an IP video software vendor, in a partnership that would enable its membership to “remain competitive through a new sophisticated and forward-thinking approach for transitioning their offerings to IP/app-based solutions,” NCTC said.

Eight member-operators have already signed up for MobiTV’s IP and app-based offerings, including DirectLink, Citizens Fiber, USA Communication and Hickory Telephone.

“MobiTV can directly address many of the needs of our member operators who are aiming to stay competitive through an improved customer experience,” Fickle said in the announcement. “Our members may not have the resources to build solutions from the ground up, but they know that the transition to an IP-based infrastructure is highly beneficial.”

“Live, on-demand, and local content delivered through robust, consumer-friendly applications is the future of television,” Fickle said. “Clearly, app-based delivery leveraging IP technology is where the video business model is heading.”