NEW YORK--The media and entertainment industry is getting in its own way in the campaign to package content for a younger, OTT-friendly audience. Most companies are struggling due to their adherence to traditional TV business models, which impede the effect that current technology could have on IP-based, over-the-top video.
"It's all the same bits," SeaChange CEO Jay Samit told an audience at the opening session of the OTT Executive Summit in New York. "It's the business models and legal issues that hold back technology."
However, Samit added, those business models "are crumbling faster than anybody has ever imagined."
Samit gave the example of technology developed for an Android-based tablet that allows users to "swipe" content they're viewing from the tablet to a television screen in the same room. It's an idea that builds on Google Chromecast's "cast" capability, but it hasn't been implemented.
How traditional M&E players and distributors like pay-TV companies are handling the transition to a predominantly OTT environment was the overarching concern of the opening summit session.
"What's unique about OTT is so many 800-pound gorillas are now fighting" for the same territory, Samit told attendees. Cable companies and large broadcast networks are making their way into the space with TV Everywhere offerings and even SVOD offerings like CBS All Access. But local broadcasters--who may feel they're being cut out of the deal on OTT ad revenues by the networks they're affiliated with--and even content owners, who wonder why they need to go through distributors, are exploring the space. Device makers, like TV manufacturers, are bringing their own complexity with OTT app bundles. And the wireless vertical is now looking at ways to own the video streaming experience to better control IP video moving across their network.
"That's an awful lot of people," Samit said. "So capital destruction is guaranteed."
That market shakeout hasn't yet happened. But one thing that is actively taking place is the destruction of the pay-TV bundle. From skinny bundles to cord-cutters building their own content selections, the channels and content consumers want to watch are no longer aligned with what cable and satellite providers deliver.
That breakdown of the bundle won't last, David Price, head of TV business for Ericsson, told the audience. "You've watched the Terminator [movies] where the bad guy gets blown up in a million pieces and reassembles? I think the bundle will rebuild. There's going to be deconstruction for five or six years but it will reassemble in some way."
DirecTV's Joshua Snow, senior director of digital incubation, agreed. "Like everything else, things fragment and reorganize over time." However, rebuilding the bundle will be a challenge. "The challenge is from a content perspective: Can you pull together the content the consumer wants and keep the price low enough [to offer] a $50 cable bundle?" he said.
For now, however, pay-TV providers are employing a purely defensive strategy in channel bundling, according to Verizon's Darren Lepke, product line manager, OTT applications. For many years, operators like Verizon FiOS, Comcast and others provided the three key things viewers needed to get video: the connectivity, the content, and the viewing device (a set-top box). Now that viewers don't need all three, they've begun to put together their own ad hoc bundles--combining ad-supported and subscription VOD with broadcast or cable, for example.
Trying to match viewer preferences for content and price with "skinny bundles," for example, is an imperfect way to try and retain subscribers. But the key to retaining and gaining subscribers isn't clear, yet. "I don't think anyone knows that answer today," Lepke said.
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