With news that major content owners like CBS and HBO (Time Warner) are considering a new way to bring their respectively owned television shows to viewers à la carte (or à la entire series) without requiring them to subscribe to a bundle of channels they don’t watch, over-the-air transmitters across the United States must be creaking in their foundations.
Clearly, delivering content to viewers via an IP infrastructure is now seen as a cost-effective, fast and flexible way to give viewers want they want … and only what they want. Interestingly, analysts say some consumers might end up paying more per month for à la carte video content, but at least it’s content consumers want to pay for.
HBO and CBS’ recent announcements should not come as a surprise. Parks Associates recently calculated that 55 percent of U.S. broadband households already subscribe to an OTT video service, and the demand for online video will only increase with time.
However, these services are not a lock to succeed. One example is the closure of Verizon’s Redbox Instant service, which failed to amass the subscriber numbers it had hoped for. Other failures are sure to follow.
“It’s a competitive space, and companies entering it need to be armed with a strong content offering and wide availability across devices and operating systems,” says Kevin Joyce, chief commercial officer at Piksel, a New York City-based company that offers software, services and solutions to help B2B corporate and media & entertainment customers capture audiences, and maximize the potential for better reach and return.
“In today’s connected world, OTT services can help companies develop a deeper relationship with their viewers, but profitability is key,” he adds. “To succeed, players need to make sure they have a watertight monetization strategy in place that protects their investment and suits their own unique business model.”
Owning quality content is the real key to getting consumers interested in subscribing to a specific web-delivered channel or bundle of channels. The days of paying for what you don’t watch are slowly coming to an end as “cord cutters” increase their numbers. But that day won’t be here for another five years minimum, as legacy content agreements must first expire and new ones begin.
You can still watch TV over the air for free, depending on the market you live in, but how long will broadcasters keep paying those increasing electric and maintenance bills for a transmitter as new video services using less costly (and more highly targeted) IP infrastructures expand around them?
Kudos to the media industry for finally understanding what viewers want and giving it to them in affordable ways that make sense to everyone involved. It will take time for OTT to proliferate, but it’s surely coming faster than multichannel operators and OTA broadcasters would like.