OTT opens up new opportunities and revenue streams for television channels but comes with its own set of challenges, says Safia Rana The Middle East has witnessed an explosion in the number of smart devices in recent years. Research recently released by Ciscos Middle East branch revealed that smartphones represent 40% of the total impressions […]
OTT opens up new opportunities and revenue streams for television channels but comes with its own set of challenges, says Safia Rana
The Middle East has witnessed an explosion in the number of smart devices in recent years. Research recently released by Ciscos Middle East branch revealed that smartphones represent 40% of the total impressions in the Middle East, a figure that is higher than the global average by 45%. This increased device penetration, combined with better connectivity and internet access has fueled the demand for over-the-top delivery of television content.
This new trend in content delivery opens up new opportunities and new revenue channels for television channels. But it is not without its fair set of challenges. While there is no doubt that subscriber demands will continue to drive interest in the field, channels need to first gain a clear understanding of the regional nuances that will most likely determine their success or failure, before they jump on to the OTT bandwagon.
Beating the bandwidth challenge
The first major hurdle for OTT in the region is bandwidth, or rather the lack of it. There remain a number of countries wherein data rates and the cost of high speed internet are still an encumbrance to customers. Streaming content to mobile devices requires data packages which still come at a high cost and are restricted by data caps that, at best, would be in the 1-5 Gigabyte range. An HD stream running at 2Mbps for an hour on one device alone would amount to 0.84 Gigabytes of data! Even accessing such content through a WiFi network would take its toll.
What broadcasters in the region, therefore, need is a solution that adopts adaptive, real-time bit-rate streaming. They also need to ensure that they are providing their customer with the option of higher/lower quality streaming. This would enable them to deliver reliable OTT streaming services even to customers whose internet connections are not up to the mark.
New content keeping viewers content
OTT, in addition to being a new model for content delivery, also challenges broadcasters to rethink the content itself. Taking a leaf out of the book of satellite broadcasting, channels would do well to encourage interactivity. Engaging users with such content is, therefore, a surefire win.
While sports is more likely to remain in the domain of pay television, given the cost and challenges of acquiring broadcasting rights, there are other types of content which could be easily adapted for OTT viewing, namely news, movies and entertainment. Presently, in the Middle East and Africa, there is a high demand for all of these.
Movies and lifestyle shows could be condensed into bite-sized segments that would then be ideal for viewing on the go. Live programming, which has also proved to be a winning formula, encourages audience interaction and can be well adapted for OTT distribution.
Money matters
This is an area wherein OTT can truly set itself apart from traditional broadcast. Channels offering their viewers OTT services can stick to tried-and-tested revenue schemes such as subscription fees, pay-per view and traditional ad models. But as trends such as big data and niche marketing begin to influence advertisers, the quality of viewership rather than the quantity is fast becoming a key metric.
With OTT, channels would be able to demand a higher revenue per viewer given the targeted nature of the content. Google ads, although admittedly relating to the field of internet browsing, is a fantastic example of this concept of niche advertising. Hulu, the internet based over-the-top subscription service offering ad-supported on-demand streaming video of TV shows, movies and webisodes, has been very successful in adapting this to OTT. The service is able to pick up on viewer ad preferences and utilise this information to present users with advertisements that they would be most likely to enjoy.
Another advantage that OTT providers could tout to their advertisers is digital accountability. Unlike traditional broadcast, advertisements on OTT platforms can be linked with a rich set of metrics to evaluate their effectiveness. In addition to identifying the precise number of distinct viewers, advertisers would also be able to access information such as for how long, where and when. All of these vital insights into viewer habits could prove invaluable in shaping how companies chose to advertise.
Balance is key
Despite the promises it holds, for the foreseeable future, OTT will remain a complementary service to traditional broadcast models rather than a complete replacement. Because of this, TV channels are now tasked with appeasing this new customer base while still ensuring that they maintain the same level of quality in their existing offerings. They must identify partners that have a high level of competence and capability in both new and existing forms of broadcast. They can thus ensure that it is their quality of service, rather than the challenges they face that is over the top!
