Why you need niche OTT

The viewer controls the dial. Not you.
The media and entertainment world is changing.

Viewers want to see their content when and where they want. Without the annoying advertising. With no breaks in between episodes. Without the noise, expensive movie tickets and snacks. And without paying for an expensive cable bundle with useless channels they refuse to watch.

Even though Netflix, Hulu and Amazon Video are generating the most press for their product (and mainline TV networks belatedly enter the OTT scene), there’s still room for you to prosper amidst all the competition.

Operators need solutions to increasing video consumption

According to Cisco, video traffic is increasing. By 2019, 80% of all IP traffic crossing service provider networks will be video; 42% will be viewed online.

Operators will be challenged with managing this traffic and extending traditional TV services to new devices. One possible solution? Turn to content delivery networks (CDNs). This means
1) distributing local content caching and multi screen streaming platforms out towards the edge of the network. This in turn reduces operator bandwidth requirements for delivering loads of IP Video content while giving their customers multi screens experiences they want or
2) operators can use the CDNs to offer “whole sale” CDN services to their content provider partners and other B2B customers who will pay to distribute their content over CDN.

Either way, this brings an enhanced live and on demand TV experiences to a range of screens (connected TV, tablets and smartphones through a single cloud).

Niche OTT = future profits
Even though the operators have the pipes, they will still need content to prosper. This leads us to niche OTT. It’s growing rapidly. In the US, it was worth $4 billion in 2014. By 2018, $8 billion.
Even though there are a lot of problems in
A) integrating infrastructure components from different vendors
B) acquiring large amounts of premium content and

C) retaining subscribers

niche OTT has a lot of potential as consumers are willing to spend on the content they love and easily can’t get. Fans willing to pay for the merchandise, interact with the actors, create content and talk about the brand.

Three examples:
Crunchyroll. In 2013, the OTT had over 200,000 subscribers paying $7/month for premium, ad free access. By 2015, the channel grew to 700,000 subscribers with around $60 million in revenues from subscribers and ad revenues from the site’s 10 million registered users. That’s the reason why it secured an extra $22 million in funding.

NBCU’s digital chief Evan Shapiro. Not only is he launching Seeso but 9 others as well. A strategy similar to the expansion of base cable networks over the last several decades.

Klowdtv focus on Spanish programming: http://www.broadcastingcable.com/news/currency/streaming-ott-service-klowdtv-adds-estrella/147433

Technological barriers getting cheaper by the day
First, the technical barriers to OTT cost less. It’s cheaper to outsource technology systems to others. The old way? Building a team that can manage content, delivery, transcoding, search, storage, management etc. Time consuming and expensive. The new way? Outsource this to others like Brightcove, MLS Advanced Media, thePlatform (Comcast), Ooyala (system integrators).
Second, tons of new entrants are selling and distributing long tail content for more narrow topics. These new entrants are coming from different backgrounds versus web companies like Netflix or Google. These multichannel video programming distributors (MVPDs) might have a major impact on the market. In terms of content delivery, each OTT provider’s content delivery strategy (IP peering, private caching programs, use of SSL, multi-CDN sourcing) is an extension of their business strategy, the key to achieving desired cost and quality goals.

Other considerations 

According to Ralf Jacob, President of Verizon Digital Media Services, some OTT providers platforms were designed with VOD in mind. Live video is the perfect opportunity to target advertising at individual viewers, rather than broad demographic segments. Be prepared for a 100x spike as viewers tune in at the same time. This means your servers must be ready to handle big surges in viewership. 

In an ever changing market, the viewer wants to see compelling content at their convenience. Even though a lot of viewers tend to watch Netflix or Amazon Video, there’s enough room in the marketplace to create your own OTT channel.
One which allows you to capture and profit from a niche audience.
An audience which is willing to pay for your content. Spread the word about your channel. And becomes a devoted fan of your product.

P.S. An update. For those thinking that the US cable industry will be DOA due to the cord cutting, SNL/S&P Global Market Intelligence has some interesting statistics: http://www.prnewswire.com/news-releases/next-10-years-look-upbeat-for-the-us-cable-industry-300312221.html

P.P.S. Update number 2: from an online video platform technology POV, continued growth as these equipment providers continue to provide the glue for everything to work together: http://marketintelligence.spglobal.com/blog/online-video-platform-vendor-revenue-to-grow-70-from-2015-to-2020?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%253A+spmarketing2+%2528S%2526P+Global+Market+Intelligence+-+Insights%2529

—, Cisco Readies Shaw’s Content Delivery Network to Share Thousands of Video Sources Across Multiple Devices, January 6th, 2016 courtesy of @CiscoSVP Video tweet (http://investor.cisco.com/investor-relations/news-and-events/news/news-details/2016/Cisco-Readies-Shaws-Content-Delivery-Network-to-Share-Thousands-of-Video-Sources-Across-Multiple-Devices/default.aspx)

Frankel, Daniel Fierce Cable “Seeso boss NBCU will go creating niche SVOD services just like it did cable channels” January 11, 2016 (http://www.fiercecable.com/story/seeso-boss-nbcu-will-go-creating-niche-svod-services-just-it-did-cable-chan/2016-01-11?utm_medium=nl&utm_source=internal&mkt_tok=3RkMMJWWfF9wsRonsqzIdO%2FhmjTEU5z14%2B0qXKexlMI%2F0ER3fOvrPUfGjI4CTMpiN6%2BTFAwTG5toziV8R7LMKM1ty9MQWxTk)

Haynes, Megan StreamDaily TV “How niche is too niche?” November 27th, 2015 (http://streamdaily.tv/2015/11/27/how-niche-is-too-niche/?utm_source=stream-newsletter&utm_medium=email&utm_campaign=how-niche-is-too-niche&_u=Hvo9PUxDWIw%3d)

Hultgren, Kaylee Cablefax “OTT Services to Grow to + $8 Billion by 2018; Niche Services on the Rise” July 15, 2015 (http://www.cablefax.com/screenster/ott-services-grow-8-billion-niche-services-rise)

Jacob, Ralf M&E Journal “How to Power a Live Video Event”, April 12th, 2017 (http://www.mesalliance.org/2017/04/12/journal-power-live-video-event/)

Published by Nick, aka, Research Guru

My real name is Nick but my clients call me the Research Guru. Why? Because I love researching and finding information. And they’re literally amazed when I find the information for them. I love analyzing how technology influences the media and entertainment world. Because the media and entertainment industry is constantly changing. And technology is playing a big role in changing it (from CD’s to live-streaming). Finally, I love coffee, going to the gym/working out and anything to do with athletic leisure clothing (I’m a big Lululemon fan). P.S. If you need to follow me on social media: Twitter: @nickhtang Instagram: @the_information_guru