Not Such Strange Bedfellows

Why combining cable and over-the-top video is paying off big

The primary value of a cable operator has always been its ability to be the customer’s content aggregator. It began back in the ’70s, when operators started combining traditional linear TV channels with new, unheard-of cable networks, all wrapped up in a simple scrolling electronic program guide. Yet for some reason, today people are questioning why an operator would distribute an over-the-top (OTT) channel.

It’s simple. It is a natural extension for operators that have long been committed to packaging content in a way that is easy for consumers to consume. Be it Netflix, Amazon or YouTube, consumers prefer to be able to find their new OTT original content simply and quickly.

If we agree then that the only thing that’s changed is the source of content and that instead of premiering new cable niche programming, content is now coming from OTT outlets, then the question becomes, why wouldn’t you?

Before we get into the benefits of integrating OTT or premium OTT with live TV, let’s agree on the definitions. The definition of premium content is changing. It is evolving beyond authenticated programming like Netflix, Amazon and others, and starting to include any live streaming content around the world. Some have referred to this as live linear OTT, which is expect to grow from $1 billion today to $7 billion in global revenue by 2021, according to ABI Research.

This broader view of OTT goes beyond authenticated or subscription content. For example, an operator could introduce an app to drive live linear content that is not authenticated content. For consumers, this means one can simply access content from an app containing live broadcast TV instead of going to a specific channel.

Bringing this new library of content to the TV screen under cable’s service umbrella is working because operators are listening to customers and giving them what they want, which is more unique content when they want it, on the TV or any device. In fact, deployment statistics reveal that 90% of users who have access to these integrated OTT services from their pay TV providers have used it.

Here are just four examples of the benefits that operators are reaping from integrating OTT services:

1. Keeping consumers in the operator experience.
Market data affirms that having a robust lineup of apps and OTT content that is available from the main operator user interface (UI), or linear OTT that is accessible via channel viewing, does in fact yield higher KPIs (key performance indicators) with increased loyalty and reduced churn. Integrating content in one place that is easy to find blurs the lines between live TV and OTT and keeps the consumer satisfied. In contrast, if a consumer has to leave the operator experience to launch an app, they typically don’t come back.

2. Surfacing and promoting content.
Integrated content strategies open the door for operators to offer universal search capabilities that surface content from OTT and pay TV with a single search. They also enable contextual experiences that recognize what the customer is watching and act as a content feed, suggesting contextually relevant internet content across devices that complement the TV viewing experience.

Additionally, integrating OTT allows operators to curate content portals for seasonal events like the NBA Playoffs or the Olympics to showcase the breadth of available longform programming, videos, clips, etc., that are available related to that event.

3. Offering new monetization opportunities.
Combining OTT with pay TV services surfaces new ways to monetize content such as reselling OTT services and integrating them into a single bill, upselling additional content and, of course, new advertising opportunities. Recently, for example, Netflix participated in Comcast’s Watchathon Week in April, offering free Netflix shows to subscribers during the weeklong promotion.

4. Easily on-boarding and managing content.
While the business argument for integrating OTT is easy to make, the implementation and management can often prove more challenging. It’s not just about incorporating the top OTT and TV apps into pay TV offerings; it’s about creating a way to easily onboard new content and features well into the future. Today, it is premium OTT, but tomorrow it will be something new. Operators now have access to open-source technologies that can rapidly introduce new services and support a wide range of TV content, device independent solutions that can be customized to each their specific environment. Additionally, operators can choose the right solution that will streamline the lifecycle management of the apps so they don’t have to worry about every technical requirement change or updating it for every device.

Once considered a competitive threat, premium OTT is now being offered by some of the largest operators around the world. It’s not merely a defensive reaction, but simply a consistent philosophy that has withstood the test of time. With the right technology in place, operators will be poised to profit from OTT but also to quickly respond to the next competitive threat that is waiting in the wings.