The OTT video market landscape: observations from NAB 2018

The first quarter of 2018 saw a lot of activity in the video media industry, and that was reflected on the show floor at NAB Show 2018 last week. Consumer viewing habits are driving a growing trend toward OTT video content available to watch anytime, on any device. Mobile screens are getting bigger, streaming live is more common, and new video codecs like AV1 are making delivery faster and cheaper. Let’s take a look at how the shift to OTT is influencing the traditional media companies as well as its effect on the technology companies enabling these new distribution models.

Looking at the media industry, comparing Recode’s Media Landscapes from April 3 and January 22 demonstrates the impact of the growth of over the top (OTT) video. Comparing past two months of M&A activity shows content providers and distributors competing to grow their content libraries. For example, Disney buying Fox, Comcast offering to buy Sky, and CBS bidding for Viacom. Not pictured are more deals like Sinclair buying Tribune, and back-end tech acquisitions like Disney-BAMTech, Endeavor-Neulion, and IAC (Vimeo) acquiring Livestream.

Back in January, I wrote about the $14.5 billion cumulative new content production budgets of new entrants like Netflix, Amazon, HBO, and Apple. This has contributed to a gold-rush for content, with traditional media companies competing to “acqui-produce” content the way large tech companies acqui-hired talent from startups.

But for these media companies to evolve from traditional broadcast or pay-TV distribution and move to a direct-to-consumer distribution model, they need to use the services of — or become — technology companies. Beyond the media-side of the business, let’s take a look at the M&A activity of the back-end technology companies behind the scenes.

Traditional media companies embracing OTT

 

Just 6 months after their acquisition of BAMTech, Disney has already (presumably) used it to launch the new ESPN+ service announced last week. With its Fox acquisition and library of content, Disney is positioned to compete with the biggest OTT platforms, technically enabled by its acquisition of BAMTech, formerly MLB Advanced Media, which operated the OTT distribution for MLB and NHL, among others.

 

Another media company that recently acquired a tech stack is Endeavor (formerly WME) acquiring Neulion, who “powered the next generation video experience.” Endeavor already owns live content from IMG, UFC, PBR, and more, so they’re smart to go direct to consumer, and now they will be able to operate it in house.

 

A final example, at NAB Steve Pruett, executive VP and chief development officer of SBG shared their vision of a national platform, “There’s lots and lots of content to be acquired. You could put that on an app and put that on a platform…we need to change our mindset and quit thinking we’re just broadcasters.” Of course Sinclair Broadcast recently acquired Tribune Media making them the “single biggest news organization in the country” with 2500 hours of local news on 193 stations, as some recently noticed from a certain viral video. One need only look at their recently announced Tennis Channel to see their progress in the OTT, direct-to-consumer world.

Improving Delivery in an OTT World

To compete, these traditional media and distribution companies will need to adopt a new technology stack while maintaining quality and customer satisfaction. At NAB, I spoke on the CMIP panel about innovating and improving content delivery strategies alongside Edgeware, Broadpeak, Tulix, StreamShark, and Unified Streaming.

 

On the panel, I articulated the difference between the traditional broadcast/pay-TV approach and the approach needed to evolve with the OTT architecture. In a speech entitled, “From Data to Wisdom: Best Practices in QoE KPI / Data collection,” I advocated quality measurement through asking the right questions, and improving quality of OTT video delivery by taking a proactive, “edge-to-core” approach to quality control, testing, and monitoring.

 

For example, Apple and Netflix are eager to adopt Alliance for Open Media’s video codec AV1, promising faster delivery, without the royalties — but are the aforementioned traditional-media-companies-turned-OTT-ventures as prepared as they are to measure the affect that change has on quality of experience?

 

In Witbe’s effort to help operators, content providers, and distributors to improve viewer QoE, Witbe was awarded a Best of NAB 2018 by Streaming Media for Datalab, a real data-engine and dynamic reporting interface that enables operators to view all the KPI’s they need to measure, control, and improve quality of any service, through any network, on any device.

Even in the entire two days that have passed since NAB has finished, there’s been a development: Comcast announced it will distribute Netflix to its subscribers. Perhaps they paid attention to TiVo’s “Q4 2017 Online Video and Pay-TV Trends Report” which showed that more viewers would keep cable service provider if they could find something to watch. It makes sense because ultimately viewers don’t care about the service provider or OTT application, the means to an end, but about watching their favorite programs — content is king.

 

But content can only be king if it’s delivered properly, so maybe QoE is king. One 2018 trend you can count on is creativity in content distribution in an effort to capture consumer attention and engagement. As an operator, there’s never been a more critical time to improve your delivery strategy to ensure quality for the viewer. And since you can only improve what you measure, be sure to measure the viewer’s quality of experience. As a viewer, there’s never been a better time to watch content any time, anywhere, on any connection, and any device!