Global
• OTT services used to differentiate on technology and platform coverage
• Content has become the new differentiator, creating fragmentation for the end-user
• Technology has taken a back seat, stifling innovation in the OTT space
• Discovery, personalization, and packaging continue to be key areas for content providers to create unique and engaging OTT video services
The first wave of video content attempting to reach audiences through the Internet back in the early 2000s was mired with technical challenges. Delivering quality content at low Internet speeds was short of an impossibility. Streaming was a reclusive and difficult business, a side job for many media organizations who didn’t yet see value in bringing their content to the Internet but were open to toy with the idea. It took only a handful of years for the Internet to become the predominant way of engaging with video content, and for streaming to be available on a growing number of connected devices.
The technical barriers of entry have all but disappeared, leaving the economic barriers of developing and launching a video service as one of the main challenges for content providers.
During this evolutionary period, user experiences (UX) went through several iterations that saw video players growing over time as content quality increased alongside Internet speeds. It can be surmised that, to some degree, experience differentiation eventually stopped being “a thing” and that video streaming services are now differentiated predominantly on their offerings vs. their technology.
This is not to say that there isn’t some uniqueness to the look and feel of every Over-the-Top (OTT) service, but that the core tenets of content presentation have become industry standards.
While content catalogues are a key area of differentiation, with platforms like Netflix, Disney+, and Peacock investing billions of dollars in original content, there are investments happening in at least three key areas: content discovery, service personalization, and pricing and packaging.
Content Discovery
A key issue most content providers try to solve for their users is helping them discover the content they are entitled to, quickly and easily, before they choose to move on to a different platform. Simply stated, how can users get to the content they want in the least number of interactions?
Several standards have been created that simplify content discovery: “Continue Watching”, which presents a list of serialized content or incomplete movies for the user to resume consumption; “Favorites”, presenting content the user has opted to follow; and “Recommended Content”, which uses algorithmically generated recommendations to offer suggestions for discovery.
Search continues to be one of the top ways of discovering content, proving that sometimes even algorithms can’t predict the complicated tastes of human beings, and one of the most useful advances in this field has been the introduction of voice commands in platforms like Google TV, Apple TV, Roku, and Xfinity. Voice search reduces the editorial burden of predicting user behavior, empowering content discovery at a whole new level by letting the user simply speak queries into their remote control.
Voice technologies in the video space can be said to still be at a nascent phase. There are a great number of differentiating advantages that can be gained from creatively building experiences that leverage conversational AI to help users engage with the right content. A basic search allows the user to say the name of the show they want or to find content in a specific genre (i.e., “Show me Comedies”). The queries can even become more complex, refining outcomes by artist (“Find Tom Cruise Movies”), by audience type (“Shows for kids under 5”), and even by business model (“Free Premium Movies”).
With a bit of imagination, voice interfaces will evolve to provide a conversational journey that will allow users to clarify their queries, delivering more optimized results. An example of such an interaction could be:
User: “Let’s finish that show I was watching on Tuesday”
AI: “Sure, you watched a couple, do you mean Seinfeld or The Office?”
The challenge in this field will be in the ownership of voice technology. Voice services typically exist at the device level, so application developers can seldom use them in their full glory, stifling any significant innovation in this space. However, this is bound to change as platform providers realize the many benefits of opening their voice APIs to third party developers and unleashing experiences that engage with the users at a whole new level.
Service Personalization
Service personalization is at the top of the list when it comes to video experiences. User profiles have become a standard, allowing for functionality like favorites, history, and recommendations to present more tailored results to an individual user vs. a household.
While content consumption can be an individual experience, many times it is a social one, and that context matters when it comes to personalization. Innovation we’ll see in this front will be around joint profiles, family experiences, and co-watching (when users in two separate locations choose to watch something together).
Combine personalization with voice AI and you end up with a world of possibilities. Expressions like “we’d like to watch the news” would allow a system to infer that it is a shared user experience and respond with fitting content recommendations based on combined profiles.
Personalization could extend beyond the screen, enabling users to set the theme for watching TV with a single command that not only invokes the right content, but also dims the lights, closes the curtains, and turns on the home alarm, while putting your mobile on “Do Not Disturb” mode. This is an area where companies are going to want to “break the glass” and try creative integrations that provide a futuristic experience for consumers.
Pricing and Packaging
We’ve seen the rise of subscription video on demand (SVOD) services, which arguably started when Netflix decided to move away from its DVD business and build a dominant OTT platform, forcing content providers to followed suit. Disney+, Paramount+, Peacock, among others are boasting subscriber growth that has contributed to the decline of traditional video; however, combined pricing of discrete SVOD services is becoming an issue for subscribers, driving OTT providers to supplement their growth with advertising revenues, by introducing free or low-cost alternatives.
Another emerging trend is OTT aggregation, where traditional distributors are hoping to keep a stake in the game by combining the content offering of multiple providers into an aggregated experience. This provides content discovery benefits to subscribers but has yet to offer any financial benefits.
Disney has already attempted packaging with their “Disney Bundle” offering, which includes Disney+. ESPN+, and Hulu, but with the explosion of content across multiple services, it is unlikely subscribers will be satisfied with a single source for all their content needs.
A lot must happen behind the negotiating curtains of the Media and Entertainment industry, but from a product offering standpoint we can see an evolution of billing platforms that will allow cross billing, micro-payments, and easy on/off subscription capabilities, allowing users to move across services as they see fit without the punishment of committing to a long-term subscription.
OTT is nothing but the reinvention of the video business, something that has happened across all industries since the advent of the Internet and that has simply taken a while to become pervasive in the video space due to technical limitations and the complexity of the business models that drive the entertainment industry. New players like Netflix have been hugely successful; incumbents are finally finding their stride, and consumers are making the leap in troves to the new content economy.
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