A Shift in Streaming: Taking Linear TV Over the Top
By Peter Ostapiuk, Vice President, Media Product Management
Ushering in the Age of MultiScreen & Over the Top (OTT)
The past two weeks marked what many are calling a seismic shift for the media landscape. Four major players in the media industry – HBO, Univision, CBS and Turner – announced long-term strategies for giving viewers what they want—more content everywhere.
o HBO announced its stand-alone streaming service – for viewers who do not currently subscribe to pay-TV;
o Univision announced live and on-demand streaming;
o CBS unveiled digital subscription live streaming and -on-demand services; and
o Turner is expanding its TV everywhere offering in Latin America.
The announcements all within a two week time frame continued to build on the momentum around the Age of MultiScreen. That said, the recent coverage did not address all the technical and economic challenges that broad adoption of OTT and linear streaming may cause for broadcasters, programmers, viewers and digital advertisers. In today’s discussion, we are focusing mostly on the technical challenges that lay ahead.
Ensuring Current Technical and Economic Concerns Do Not Pose a Barrier to Long-term Growth
Given the behavioral patterns of millennials, this move to linear streaming was inevitable. But as viewers look to optimize the flexibility and cost of their media consumption, some significant technical and economic questions must be addressed if broadcasters and programmers are to achieve a multiscreen service offering that can scale, deliver a quality viewing experience and strong return on their investment:
o How fast will subscribers jump to linear streaming services?
o Can the current infrastructure scale to meet new bandwidth demand, or does high volume, linear streaming cross a network breaking point?
o Can quality and reliability be maintained with a large linear streaming viewership, a particularly important concern for advertisers?
o What are distribution costs in this new business model?
o How do you manage your distribution in an “unmanaged” IP network environment?
If these questions are left unanswered, viewers may find themselves not receiving the high-quality, reliable TV viewing experience they expect, digital advertisers will become disgruntled and media companies may not be in a position to fully scale and capture the growth this new landscape presents.
High Quality, Exciting and Reliable Content, Regardless of Screen is Expected by Consumers
The number of viewers watching content via linear streaming and OTT remains relatively low compared to the number accessing content via traditional linear channels, so quality and reliability are not a huge issue at this time.
However, according to research by Morgan Stanley, OTT only households in the United States alone are expected to climb from 8 million in 2014 to 14 million by 2020. With that in mind, Viacom’s TV Here, There, (Not Quite) Everywhere study, cited that the some of the main barriers for consumers to adopt OTT and live streaming as their main form of content viewing are technical in nature:
From a business model perspective, this could provide a huge issue for media companies. According to emarketer, advertisers are expected to increase their digital advertising spend as a percentage of their total advertising dollars from 28.2% in 2013 to 37.2% in 2018. Mobile advertising spend will rise from 5.7% in 2013 to 26.4% in 2018 while traditional TV advertising spend falls from 38.1% in 2013 to 35.7% in 2018. If the quality of the content suffers, advertising revenues for media companies could be negatively impacted.
Satellite Uniquely Positioned to Help Broadcasters and Programmers Scale and Generate Strong ARPU
Just as the traditional business model is changing, so must the distribution model, and today’s satellites are poised to deliver. As rapid changes continue to take hold, hybrid satellite services offer a compelling value proposition for those broadcasters and programmers migrating to linear streaming. The attributes that have allowed satellite to scale in the past remain relevant today. For example, a hybrid satellite solution is a perfect complement to fiber and cable infrastructure, supplementing current content distribution network (CDN) and fiber networks limitations. Satellite also has a long and proven track record of delivering large scale transmissions that are high quality, reliable and secure, regardless of the screen.
These service attributes are critical to advertisers that are shifting their dollars to digital and mobile advertising. A hybrid satellite network not only helps with the quality of delivery, but also provides media companies with more flexibility in terms of the modes of transport with its end to end solutions, AND provides predictable distribution costs as well. For example, current CDN unicast focused delivery business models rely on bits delivered per user that are variable attributes. Satellite distribution enables content owners to deliver linear multicast streams close to last mile networks and relies on fixed throughput for the broadcast.
Lastly, outside of developed markets, the broadband infrastructure necessary to host multiscreen devices is not there. Satellite, with its ubiquitous infrastructure provides broadcasters and programmers an opportunity to take OTT/linear streaming to those markets given our track record of delivering high quality, reliable content. This could be particularly interesting in Latin America, where the 2016 Olympics could test many new forms of content delivery, such as 4K UHDTV and multiscreen.
While linear streaming is gaining momentum and can be a growth opportunity for media companies, we believe it will be complementary to linear TV and drive more eyeballs to traditional. One thing remains certain… satellite will be there to ensure reliable, secure and high quality delivery across all screens.