Why are broadcasters moving to OTT? (and why you should too)

A few years ago, viewing Television for families meant watching their favorite show over a meal. Today,

Remember in the 70’s when people used to be glued to radio? That ended when people started preferring TV over listening to radio.

A similar shift is happening now in the Television industry. People are increasingly cutting the cord and moving to OTT.

By the end of 2018, a total of 33 Million subscribers would have cut the cord. Many of these subscribers are moving to online streaming platforms like Netflix and Hulu. For the first time in the history of Television, advertisers are spending more money on digital than traditional TV.

There are various factors for this shift: cheap and reliable internet, exponential increase in the usage of mobile and Smart TV devices, higher cost of cable, and better options for broadcasters to monetize their content online.

What does this mean for broadcasters? Launching OTT service has become a must-to-have that broadcasters can’t ignore or they will die a slow and painful death.

Look no further than newspapers to understand what I mean by a slow and painful death. Internet cripped the newspaper industry. Those who didn’t capitalize on the internet perished.

The shift happened so fast that many newspapers went bankrupt. NYT capitalized on internet and now their digital revenue is higher than newspaper revenue.

Broadcasters are moving fast to OTT. Here are 5 reasons why you should too:

1. Usage of mobile and smart TV devices has grown exponentially

Traffic on mobile and smart TV devices has grown significantly over the past few years.

Let’s talk numbers. Global mobile data traffic is projected to grow from 7 exabyte per month in 2016 to 49 exabyte per month in 2021. That’s a 7x growth just in 5 years!

At the same time, Smart TV’s household penetration is projected to grow from 11.5% in 2013 to 32% in 2019.

Infact, 82% of all internet traffic will come from video in 2021(let that sink in)

Consumption of online videos is ever growing and it makes sense for broadcasters to capture this audience by launching their video streaming service for mobile and Smart TV’s.

2. Television growth is stagnant

At the same time, the growth of traditional Television has been on the decline.

Consider these numbers: In 2017, AT&T’s DirecTV and Dish Network lost 554,000 and 995,000 satellite subscribers, respectively. At the same time, their OTT products DirecTV Now and SlingTV added 888,000 and 711,000 subscribers, respectively.

For the first time in the history of Television, advertisers are spending more money on digital than traditional TV.

Clearly, Cable TV’s growth is on the decline and OTT’s growth is on the rise. Broadcasters know this. They are launching their OTT service to compensate for the loss both in-terms of user-base and revenue.

3. Build a direct relationship with fans

As a broadcaster, you are dependent on Cable and DTH platforms for distribution. What if you could cut out the middleman and directly reach your fans?

Yes, you can do that with OTT. Users can watch your content on all devices – be it web, mobile or Smart TV. They just need a device and an internet connection!

Since you are not dependent on a middleman, you get paid from your users directly. Simply integrate a payment gateway and money goes to your bank account.

With OTT, you also get better insights about your users. You get details like their location, gender, likes and dislikes, watch history, active devices and many more. This data can be used by the editorial team in creating relevant videos to increase engagement. You also get to recommend videos to each user personally.

The insights can also be used by the sales team in getting campaigns with higher CPM rates.

4. Low cost

Setting up a Cable TV channel is very expensive. You need to pay for uplinking and downlinking, carriage fee, content delivery, distribution and more. These costs add up to hundreds of thousands of dollars every month.

There are additional downlinking and carriage charges if you want to broadcast to a new geography.

But with OTT, you don’t need to pay any of these charges. The cost of launching and managing a multi-device OTT service is very low when compared to the cost of launching and maintaining a Cable TV channel.

There are no upfront costs if you plan to use SaaS platforms like Ventuno to launch your OTT apps. There are only 2 types of costs involved:

Fixed cost – Monthly fee

Variable cost – Overages for streaming, storage, and encoding, if any.

The best part with OTT is that there are no restrictions on expanding your service across borders – reach users all over the world.

5. Expand your revenue

OTT gives you an additional way to monetize your content. You can either charge your subscribers, run advertisements or work on a hybrid model.

If you plan to run ads, you can simply get ad-tags from programmatic and direct advertisers and deploy them in your ad-server. Ventuno’s platform has an inbuilt ad server to manage all your ads in one place.

If you plan to charge subscribers, you can integrate your preferred payment gateway with your service and get paid directly. Ventuno gives you a simple dashboard to manage all your payments.

OTT revenue from both advertising and subscription is booming.

Subscription revenue (SVOD) is expected to grow from $25 billion in 2017 to $69 billion in 2023. During the same period, Advertising revenue (AVOD) is expected to grow from $20 billion to $47 billion.

Wrapping up

OTT is the future of TV.

A few years back, very few content creators through of being present on OTT. Today, creators of all sizes have launched or are planning to launch their OTT service.

Cord cutting has become a real concern for broadcasters as OTT adoption among users has been faster than expected.

If you are a broadcaster looking to launch your OTT service, click here.

What are your thoughts on this article? Add your comments below or reach out to me at gokul@ventunotech.com if you would like to talk!

Gokul K

Gokul K