Accedo: The Big Shift white paper

White paper

THE BIG SHIFT: NEW APPROACHES TO BUILDING AND MONETIZING VIDEO EXPERIENCES

www.accedo.tv

1. THE EVOLVING MARKET AND INDUSTRY PLAYERS INTRODUCTION: NEW CHALLENGES USHER IN A NEW DEVELOPMENT APPROACH

HOUSEHOLDS WITH ACCESS TO AT LEAST ONE ONLINE VIDEO SUBSCRIPTION

Content providers face new challenges in today’s increasingly competitive video streaming industry. The standard for video experiences is set high: providers must offer unique, engaging experiences that capture viewers’ attention, while also developing effective strategies for monetizing their digital content. How can content providers stand out in the crowded video experience space?

USA

Monetization has become the major focus for content providers. They’ve established innovative ways of delivering content to viewers, and they now want to discover new ways to capitalize their captivated audiences. And different businesses seek different monetization approaches: there’s no onesize-fits-all solution for content providers of diverse sizes and at different life stages.

Content providers today need a tailored approach to development that empowers them to deliver cutting-edge video experiences with customized monetization strategies.

THE CURRENT STATE OF VIDEO STREAMING The video streaming industry continues to grow and become more sophisticated, with new players constantly entering the space. These recent entrants increase the competition to earn viewers’ attention across all screens.

The number of connected devices available to viewers is growing exponentially. As of 2016, there were 734 million connected devices in use in the U.S., with an average of 7.8 connected devices per home1. This amounts to an increase of 64 million new connected devices compared to the previous year2.

With the advent of more and more streaming devices and services, our time spent on digital video moves closer to the amount spent viewing linear TV. In 2017, the time spent consuming digital video is expected to reach 30% of linear TV, with the average adult consuming an estimated 72 minutes of digital video per day3. But with the rapid expansion of a few new streaming services, it’s estimated that figure could approach 50%4.

For today’s viewer, one online video subscription just isn’t enough. While 61% of all Americans use at least one online video service, two-thirds of Netflix users also subscribe to at least one other online video service5. In Europe, 60% of UK households use online video subscription services, while 34% of French households and 31% of German households use SVOD services6. In the Nordic region, more than half of the overall population is estimated to have access to at least one online video service7.

61% UK 60% Nordin region Over 50%

With the rapid expansion of the video streaming industry, the competition to offer immersive video experiences that capture the attention of viewers has never been so fierce. On the other hand, viewer’s expectations for the quality of video experiences is at an all-time high.

Content providers are seeking more than a one way to get their content in front of new and existing audiences. As the market has matured, their focus has shifted instead to the issue of earning more revenue from online video platforms.

However, video service developers have not yet followed this shift in focus. As a result, content providers currently lack the flexibility they require to quickly pivot and adapt to emerging content strategies.

TRENDS IN THE TV EVERYWHERE LANDSCAPE TV Everywhere (TVE) products and content strategies continue to evolve to keep TV viewers engaged across multiple screens and to minimize the trend toward cord cutting. In 2016, the total TV Everywhere usage in the U.S. was estimated at 5.4 billion streams.

The traditional service providers – typically broadcasters and television providers – have built their TVE content strategies around offering access to live linear feeds. This remains their biggest differentiator versus other streaming services, especially for programming that draws large realtime audiences, including live sports and entertainment events.

Some traditional service providers have adopted a hybrid model for their TVE offerings, making some of their content accessible to everyone. DISH is leading that charge with its new DISH Anywhere offering. With DISH Anywhere, anyone can freely access thousands of TV shows, movies and clips, without the need to authenticate. However, to stream DISH’s live linear content and other advanced features, users must be DISH customers, using an authenticated login to access premium content.

At the same time, DISH has launched a complementary live linear Over the Top (OTT) initiative, known as Sling TV. Sling TV allows subscribers to watch a basic package of 28 to 44 channels, both live and on-demand. Although it’s a subsidiary of DISH, viewers do not need to have a DISH TV subscription.

TRENDS IN THE OTT LANDSCAPE OTT services continue to dominate the video streaming industry. Broadcasters and TV networks have largely accepted the importance of OTT, and as a result, traditional players continue to move into the OTT space to reach new consumers and to carve out a larger slice of the revenue pie.

OTT revenues in the US are expected to climb to US$12billion by 20208, while in the Asia-Pacific region, revenues are expected to hit US$1.6-billion by 20219. While traditional linear TV channels still capture large audiences and will continue to do so for the foreseeable future, OTT continues to nip at the heels of the traditional broadcasters. In fact, Netflix became the third-largest broadcaster in the US in 2015, gaining nearly 30% of total viewing10.

With traditional TV services consistently losing subscribers year over year, OTT likely represents the last best hope for content providers to grow their audiences and revenues.

DEFINING THE KEY PLAYERS IN THE GROWING OTT MARKET The OTT playing field has widened, and it’s no longer exclusively the domain of Pay TV Operators, TV Networks and Online Video Distributors. Today, the market is more varied and inclusive than ever.

The key players of OTT now include:

BROADCASTERS AND STUDIOS These are the traditional TV giants, including broadcast organizations and TV networks.

PAY TV OPERATORS Another conventional player in the TV space, these include cable operators, IPTV providers and satellite DTH providers.

CONTENT DISTRIBUTORS The original disruptors of the TV game, these include online video distributors that mange the delivery and distribution of media, including Netflix, Hulu and Vimeo.

MULTI-CHANNEL NETWORKS MCNs work with video platforms, including YouTube, tooffer assistance in areas such as product, programming, funding, cross-promotion, partner management, digital rights management, monetization and sales, and audience development.

DIGITAL MARKETERS AND BRANDS These non-traditional content providers have recognized the power of video and choose to offer OTT video content to drive their marketing goals.

1.

NPD Group, “Connected Home Entertainment Report” 2016.

2. Ibid.

3.

eMarketer, 2017.

4. Adobe Primetime, “Impact of Linear Streaming on OTT and TVE Monetisation” 2017.

5. S&P Global Market Intelligence, “Internet Media and OTT Market Industry Presentation” 2017.

6.

SNL Kagan, “Europe is embracing online subscription video” 2017.

7.

SNL Kagan, “State of Nordic online video: subscription” 2017.

8.

SNL Kagan, “The State of Online Video Delivery” 2016.

9. SNL Kagan, “Keeping up with the evolution of OTT at BroadcastAsia 2017” 2017.

10.

wOoyala, “State of the Broadcast Industry” 2016.

The world’s largest provider of choreographed group fitness classes for health clubs streamlined access to its library of video content. Instead of using a static web page, Les Mills launched a multi-platform OTT video service. The platform allows fitness instructors to stream all teaching materials including video, music and choreography notes and allows them to download video for offline viewing, all in a single interface.

By creating an OTT platform, Les Mills gives its instructors a more immersive experience than a simple website, offering users the flexibility to choose the format in which they access materials, as well as the device.

The world’s first TV channel built especially for canine companions, DogTV leverages the growing OTT market to deliver content to its four-legged viewers. The content is designed to stimulate and relax dogs using movement, sound, objects and experiences.

A few years ago a niche product like this would have struggled to reach an audience sizeable enough to drive revenue. But the growth in connected devices and advancements in technology now allow companies to deploy OTT services like Dog TV on a global scale, reaching audiences that are still inaccessible through traditional broadcast TV channels.

A retailer specializing in outdoor gear and sports apparel, Salomon leverages specialized video services to tap into new revenue streams. With advances in tech helping to lower the cost and complexity of video streaming services, Salomon decided to launch a branded video experience using Brightcove OTT Flow, powered by Accedo.

Salomon TV features rich, immersive video content specific to the outdoor sports and adventure niche, including skiing, snowboarding and hiking channels, that also showcase Salomon products in action. Video marketing offers a deeply engaging experience for audience, and can significantly boost retail sales.

2. EVOLVING BUSINESS MODELS

Content providers have devized innovative and engaging methods for getting their content in front of audiences. The challenge both new entrants and established players face is the issue of earning more revenue through online video streaming services.

Online video service providers are experimenting with multiple revenue streams to test for the most successful strategies and drive greater earnings. The mix of revenue streams includes subscription, rental, electronic sell-through (EST) and advertising models.

The following chart outlines the models adopted by some of the big players in OTT streaming:

SELECT ONLINE VIDEO SERVICES Subscription Amazon Video Amazon Prime Video

X

CBS All Access

X

CinemaNow

Rental

EST

X

X

X X

X

Crackle

X

FandangoNow

X

X

Google Play

X

X

HBO NOW

X

Hulu

X

X

iTunes

X

X

Microsoft Movies & TV

X

X

X

X

X

X

Netflix

Advertising

X

Playstation Store Showtime

X

Starz

X

Vudu WWE

X

YouTube

X

YouTube Red

X

X X

X

X

Includes select services in US. Š 2016 SNL Kagan, an offering of S&P Global Market Intelligence. All rights reserved.

As illustrated in the chart above, entertainment brands and broadcasters alike are embracing hybrid monetization strategies.

Ad-supported content has become just one of many approaches for monetizing content. Broadcasters increasingly first offer their ad-supported content across their owned properties, before then licensing that content to SVOD providers, including Netflix, Hulu and Amazon.

In-app advertising has grown more sophisticated recently, with several broadcast networks incorporating advertising in their subscription services, including CBS All Access. Some networks are now offering options to dynamically insert local-market digital video assets within live digital streams.

Beyond in-app ads, standalone on-demand providers have been diversifying their offerings and giving viewers more choice, such as Amazon Prime’s Streaming Partners Program (SPP), which gives Prime subscribers the option to choose from around 50 add-on content packages for a set monthly fee.

EXAMPLES OF EVOLVING MULTISCREEN BUSINESS MODELS:

HAYU FROM NBC UNIVERSAL NBC Universal is one of the original TV broadcasters in the United States. In an effort to reinvent itself to capture Millennial audiences both within the US and internationally, NBCU turned to online distribution. Hayu is an NBC Universal online direct-to-consumer video service that launched in March 2016 in the UK, Ireland and Australia.

TELSTRA TV AND TV+ FROM TELSTRA Telstra is Australia’s largest telecommunications provider. In 2015, Telstra launched ‘Telstra TV, a Roku powered streaming device that was aimed at aggregating the best of Free and Paid streaming services for customers. In 2016 Telstra expanded its aggregation experience to mobile with the launch of ‘Telstra TV+’, an app that brings the Telstra TV search and discovery experience to iOS and Android devices.

VIEWLOCAL FROM NRTC AND NEONOVA: NRTC is a cooperative of more than 1,500 rural telecom and electric utility members in the United States. Its wholly-owned subsidiary, NeoNova, launched a multi-screen, multidevice broadband TV service called ViewLocal, available to more than 230 independent rural broadband providers serving over 1,000,000 subscribers across 44 US states.

3. KEY DRIVERS OF THE MARKET’S EVOLUTION There are a series of factors, driven both by technological advances and evolving consumer needs, that are driving widespread changes within the video streaming industry. Understanding these key drivers can empower content providers to adjust their strategies to better engage and monetize today’s audiences.

1 2 3 4 5

CHANGING VIEWING HABITS The number of available streaming devices has exploded in recent years and today’s viewers want to consume content across all available screens, both inside and outside of the home. Appointment viewing is no longer standard practice: the new normal involves people watching content on their smart phones on the bus to work, streaming live programming through Smart TV apps at home, and watching movies on-demand on their tablets. With the proliferation of screens for content consumption, more players are competing to make their services accessible across all available devices.

EXPERIMENTATION IN MONETIZATION APPROACHES Content providers are testing out new strategies that involve multiple revenue streams and a variety of licensing models. Providers begin with an AVOD model, in which content is offered to consumers for free in exchange for serving ads within the content. Providers will then expand to hybrid monetization models, in which digital ad models are paired with subscription models. Finally, providers are exploring live digital streaming options that allow authenticated Pay TV subscribers to purchase add-on content on-demand.

GETTING HIGH-DEMAND CONTENT INTO THE HANDS OF CONSUMERS Content providers and TV networks are recognizing the value of their robust content libraries. They’re tapping into these libraries to push high-demand content, including premium series (like HBO Go, which offers live streaming of episodes and access to the network’s full back catalog of popular content) and a diverse range of children’s content (like Hulu Kids, offering a range of kid-friendly TV shows and movies).

Audiences access these services through on-demand, subscription-based models, or by subscribing to online

AVAILABILITY OF LIVE LINEAR CONTENT The availability of live streaming, particularly with the advent of out-of-home access across a variety of screens, greatly contributes to the rise in time spent on video services. This is particularly true during live, must-see events, including live sports matches and entertainment events, such as the Academy Awards.

FLEXIBILITY IN ACCESS CONTROLS Some networks are beginning to claim control over their content, rather than offering it up to established players in the OTT market. Content providers and TV networks are recognizing the value in owning their own content, and have gradually tightened the pipeline of shows offered to online subscription services like Netflix.

Hulu recently adjusted its model, with plans to discontinue free access to ad-supported content, moving instead to subscription-only models.

4. CURRENT APPROACHES TO BUILDING VIDEO EXPERIENCES UX development approaches have not kept pace with the rapid shift in the video streaming industry. While content providers focus on developing more sophisticated monetization strategies, developers are still stuck on the question of getting content online, across all connected screens.

Currently, development players offer three options for video app development: the out-of-the-box approach (OOTB), the bespoke approach, and a hybrid approach combining OOTB and bespoke elements. Each method presents it challenges: • Out-of-the-box video apps offer a quick build at a reasonable cost, but the end product is a templated, cookie-cutter solution that doesn’t stand out from the competition. These products don’t offer much flexibility to scale as businesses and audiences grow.

• Bespoke elements enable customized branding and design that allows the product to stand apart from other video experiences. But introducing bespoke elements causes development costs to sky rocket and development timelines to increase significantly.

SHORTCOMINGS OF THE CURRENT APPROACH: SELLING POINTS OF YESTERDAY ARE NO LONGER ENOUGH In today’s landscape, quick time to market and the ability to scale rapidly across platforms is standard. It’s no longer viewed by content providers as a unique differentiator, rather it’s the norm.

CHANGING LANDSCAPE, SAME APPROACH Offering to solve the problem of how to get content online, across all screens is no longer enough. The problem content providers struggle to solve today, is how to earn more revenue from online video.

LACK OF FLEXIBILITY AND ADAPTABILITY Apps today are built with a company’s present business model in mind. This makes it difficult for content providers to quickly pivot and adapt to evolving content strategies as they arise.

A RACE TO THE FINISH Video service developers may compromize on quality and user experience to get products to market faster. However, for the best video experience, the focus should be on helping content providers build smarter – scaling and monetizing easily and effectively as audiences grow.

IN-MARKET OPTIONS ARE LIMITED Content providers, from established players to new entrants, have diverse OTT and TVE needs. A canned, one-size-fits-all solution that offers slight customization won’t serve all businesses of all sizes.

5. REVOLUTIONIZING VIDEO EXPERIENCES The industry needs to shift its focus to properly address the pressing needs of today’s content providers.

It’s no longer enough to simply build apps that house content across multiple devices. Today’s apps should be intelligent and flexible enough to adapt and scale to the shifting content and monetization strategies of providers.

Content providers should look to developers with a wider, more adaptable view: •

From selling video products to solving customer needs

• From one-size-fits-all development to tailored solutions for each business •

From building fast to building smart

• From scaling to multiple screens to scaling with audiences • From app development to a holistic solution provider

ONE CLOUD PLATFORM, ENDLESS POSSIBILITIES

INTRODUCING ACCEDO ONE Accedo designed a new approach for creating video experiences that puts the needs of today’s content providers at the forefront.

Accedo One is a unified cloud platform that gives you access and freedom to build, transform and grow video businesses and experiences. With Accedo One you can choose from our robust roster of products, tools and solutions, paying only for the products you use.

Accedo One simplifies the development process by bringing together all the systems, infrastructure and integrations needed so it’s easier than ever to build, manage and deploy engaging OTT and TVE solutions. It’s a simple, integrated platform that allows you to access all your solutions with one login, and upgrading or downgrading your products has never been easier.

NEXT-GENERATION VIDEO SOLUTIONS Our future-proof products and expertize eliminate silos and complexity, enabling service providers to readily create nextgeneration video experiences for their customers.

DYNAMIC SOLUTIONS TO DRIVE ANY CONTENT BUSINESS Our building-block approach to video service development offers a new level of control to content providers. They can build video experiences in the way that best serves their unique audience – smarter, faster and more profitably.

SMART PRICING FOR RIGHT-SIZED PRODUCTS Content providers can choose the Accedo One products, tools and expertize that best-fit their business needs and budget without sacrificing on quality.

SOLUTIONS FOR EVERY BUSINESS AND LIFE STAGE Accedo One packages the right products for businesses of all sizes, from new entrants to established players in the OTT and TVE market. We provide the solutions needed to build and scale immersive video experiences, at any stage of the game.

THE FULL PRODUCT SUITE INCLUDES: MANAGEMENT

CREATION

ENABLEMENT

PERFORMANCE

FRAMEWORKS

CONCLUSION

Rapid disruption in the video streaming industry has caused content providers to shift their areas of focus, away from merely getting content in front of audiences, toward more sophisticated ways of monetizing it.

To ensure continued success of their video services, providers are prioritizing their development strategies and plan for the future, preferring agile solutions that enable them to anticipate and respond to market changes, growing audiences and shifting monetization strategies in real time.

With this in mind Accedo, the video experience pioneer, has developed Accedo One, the first cloud platform dedicated to providing operators, broadcasters and brands with the freedom to build, manage and deploy high-quality, engaging video experiences the way they want to.

For more information visit www.accedo.tv

Accedo Magnus LadulĂĽsgatan 65 Stockholm 118 27 Sweden www.accedo.tv