OTT Shifts the Paradigm
Hot Button Discussion
by Michael Goldman
As recent media reports, a quick tour around the Internet, a journey through any major app store, or an exploration of the capabilities of your new Smart TV illustrate, one of the most profound changes sweeping the broadcast industry right now is the rapid proliferation of so-called over-the-top (OTT) streaming content services like Netflix, Amazon Prime, Hulu (which recently came under Disney's full operational control), YouTube Premium, and others. Indeed, an Adweek article late last year indicated that 2019 alone was slated to see new OTT content services launching from AT&T, Apple, Viacom, Discovery, and most notably, Disney’s much ballyhooed Disney+ service, which launches in November. A more recent article in Forbes discussed a consumer OTT user survey, which indicated that 61 percent of Americans already own a Smart TV and 52 percent use OTT services to one degree or another.
The implications of this trend are potentially profound, experts suggest, and are rolling out rapidly thanks to the simple fact that the ability to transmit content to consumers via a wide range of platforms has suddenly become “a consumer friendly process,” according to John Clark, executive director of NAB PILOT, a rebranded version of the former NAB Labs initiative, designed to help broadcasters understand and meet challenges on the new industry landscape.
“My feeling is, one of the big reasons [OTT services] have taken off is that they are now consumer friendly,” Clark says. “The capabilities have changed. If you go back 10 to 15 years, the ability to stream ridiculously high-quality content was difficult. Now, that is not the case anymore. Just the ability, the bandwidth, to be able to send content streams to devices and end users is easier today. Things like compression are easier—the technology is a lot more advanced. And then, on the receiving side, we have had a proliferation not only of content services, but of devices you can watch OTT content on. And it’s not particularly expensive from a consumer standpoint unless you want to put a lot of things together. I can literally go buy a Roku or a Google Chromecast, or on the higher end, Apple TV, and none of them are crazy expensive devices.
“As I sit here talking, I’m looking at my desk, and I have a TV with Chromecast on it, a laptop, an iPad, an iPhone, an Echo Spot, and even an Oculus [VR] headset. I can pick any one of those to watch content that is high quality. So it has gotten pretty easy from a consumer standpoint.”
However, Clark’s colleague, Skip Pizzi, NAB’s VP of Technology Education and Outreach, Vice Chair of the ATSC’s Technology Group 3, and a member of the Board of Directors for the Ultra HD Forum, emphasizes that the OTT revolution, though advanced by dozens of mini revolutions in areas like compression, encoding, Smart TV development, mobile devices, and more, is mainly at its core a direct result of “the widespread deployment of high-speed broadband Internet connectivity. Without that, none of the other developments, in isolation or combination, could have made OTT what it is today. Even [the proliferation of different kinds of viewing platforms] has not been fundamental. Portability is nice, but most OTT viewing, at least for high-value offerings, is on fixed, home TV bigscreens. This implies that picture and sound quality are also important factors for consumers.”
In any case, this paradigm shift has led to a vibrant, new industry for streaming content providers, which, in turn, has led to new issues for both providers and consumers to consider, Pizzi suggests.
“Technical quality is important to viewers, but content choice remains the primary factor for differentiation among providers,” Pizzi remarks. “It’s assumed that high-value OTT providers will all provide state-of-the-art quality by default, and that implies UHD of some kind, even if it is 1080p plus high dynamic range. I don’t think delivery of true 4K is required—4K TV’s up-converters work very well, and besides, most viewers just want it to ‘look good.’ Another differentiator is the browsing user interface. Most providers offer so much content that the navigation and selection process can be exhausting and time consuming.”
Clark emphasizes that such developments mean big changes for traditional over-the-air and cable broadcasters. Among others, HBO, Showtime, and CBS, in particular, have dived deep into the OTT space already, with more offerings to come in the near future.
“At PILOT, we refer to broadcasters as multi-platform media companies,” Clark says. “It’s no longer just an over-the-air signal. There might be one, but we have lots of other signals to program and deliver content on via various services. That’s not new in the sense that if you go back 20 years, broadcasters have been publishing content of some type on the Internet, but this is a natural progression with video coming into phase. So the [ability to stream video seamlessly today] makes it essential to be a multi-platform media company.”
Where things become more complicated, Clark suggests, is how local broadcasters specifically will, or will not, be able to take advantage of the OTT paradigm shift, since they do not always own or control a large percentage of the content they typically air.
“If you are a local TV station, what is the business model behind an OTT play?” he asks. “The ability to stream content is there, but they have a lot of work to do to come up with a model that allows the local broadcaster to generate revenue from it. Can you scale up enough in a local market, or do you have to [settle] for being part of a larger network?
“I’ll use ABC as an example. Their [owned-and-operated] local stations have a series called Localish, which is specifically focused not so much on OTT, per se, but on mobile. But it is streaming video—a streaming series that has [local] content for [different markets] that is strictly a streaming series, not over-the-air broadcast. I think you will probably see a continuing shift and movement [by local broadcasters] toward that type of programming to complement traditional programming using [the streaming model].”
Still, Pizzi emphasizes there are a many obstacles that local broadcasters face in becoming fully invested in the OTT universe.
“The first one is getting their apps onto people’s devices, unless they are only trying to reach PCs or mobile devices through web browsers and native media players, but even then, content protection remains a problem,” Pizzi says. “More important, however, is securing online distribution rights to the content. Unlike radio stations, which can largely stream whatever they broadcast on air via a compulsory license—although the royalty schedules may differ between on-air and online—a compulsory license does not cover most of the content that TV stations air. Instead, it is typically licensed under geographically limited exclusivity for terrestrial broadcast only. Except for local news or other locally produced material, online rights for most of the content a TV station airs would, therefore, have to be negotiated with each content rights owner separately—the TV network or program syndicator. And while they do that, there are many other service providers, including non-broadcasters like Verizon, in competition for those rights.”
Pizzi says the only major model that has tackled this problem thus far is the CBS All Access approach, which targets mobile platforms with an app, but incorporates its owned/affiliated stations into the mix.
“They have negotiated rights for all CBS’ network content, including use of a geo-fencing technology called Syncbak to help them maintain local exclusivity rights by limiting the online distribution of a given station’s content to something mirroring their terrestrial broadcast market coverage,” Pizzi explains. “But that is the only solution so far in this space on a large scale for full-time TV station streaming, as far as I know.”
Other challenges en route to making OTT a fully mature broadcast methodology involve revising typical broadcast advertising models to fit the streaming experience, devising or revising rating measurement procedures and tools to be useful, and of course, the issue of standardization.
On the advertising issue, Clark says the question is “how do the two [streaming and ad sales] work together? How do ads get sold and delivered? People are trying to figure out the right mix. Is it a pre-roll, a post-roll, a mid-roll? Are there breaks, and if there are, are they 15-second breaks, 30-second breaks, or something different? Remember, these things are afforded by the different platforms you are on. You get different capabilities based on what you are doing. So yes, there are certainly conversations happening on this as people try to figure out the right mix. What the consumers like and get value out of is important, rather than just throwing [ad breaks] in their face and creating a horrible user experience.”
Regarding the issue of how to accurately measure ratings, Clark points out that you can’t treat OTT like so-called “regular TV,” because “if you are selling a subscription like Netflix does, I don’t think they care much about traditional ratings. They care how frequently people are watching, and how many subscribers they can get.”
Pizzi says ratings’ analysis giant Nielsen’s efforts to come up with systems for measuring aggregated on-air plus online audience participation have been evolving for the last several years with its Total Audience initiative. “They’ve been working it since as far back as 2008, or even earlier, and it’s a big challenge,” Pizzi states. “But they are kind of betting the company’s future on being able to do this and retain their value as analysts, along with the currency of their ratings.”
Additionally, he emphasizes, ATSC 3.0 was built with an audience measurement component that Pizzi says “could be used to directly monitor consumers’ viewing behaviors. This will be useful in the case of targeted advertising delivery via the new standard since measurement of the audience for a targeted ad’s delivery will not be possible using traditional statistical estimation techniques.” Pizzi adds that the World Wide Web Consortium (W3C) is also working on audience measurement techniques to improve the delivery of advertising over the Internet, which has potential applications for future streaming entertainment content.
Still, as Clark cautions, all these approaches will, by definition, make the task of audience measurement “a little different than traditional ratings. So there is a bit of a war going on as to what are ratings, what are analytics, what is the right kind of metric to use? I think it will come down to what you are trying to do or trying to sell.”
As it relates to standards for OTT broadcast, both Clark and Pizzi suggest the industry would benefit from some kind of new ratings’ measurement analytic standards. But more generally, the industry already offers sufficient standards in many individual categories like file formats, security protocols, compression, and so on, which work as well for streaming video as they do for other forms of delivery. However, the over-arching goal of making sure that such video is seamlessly delivered to a seemingly never-ending list of consumer electronics devices at a high-quality level is something the industry is still pondering, according to Pizzi.
“The Consumer Technology Association [CTA] hosts the Web Application Video Ecosystem [WAVE] Project, which [according to their materials] ‘aims to improve how Internet-delivered commercial video is handled on consumer electronics devices, and to make it easier for content creators to distribute video to those devices,’ ” Pizzi states. “Also, the Audio Engineering Society [AES] is developing voluntary standards for delivering online audio with consistent loudness, similar to the work done by several standards organizations in response to the [government’s] mandates for terrestrial TV broadcasters as part of the CALM Act.”
All that said, Pizzi adds, “with the marketplace comprised [for now] of relatively few major providers, and the app-based environment used for access and updates by each of them, the lack of such standards and a proprietary method of operation has not proven to be a real obstacle to adoption. Going forward, however, providers don’t like having to keep maintaining proprietary apps across an ever-increasing number of device types, so as time goes on, standards become more appealing to those providers.”
Overall, therefore, the biggest OTT story thus far has been the business story—how this new form of distribution is roiling traditional ways of doing things. Both Clark and Pizzi expect that the next several years will be “all about how traditional TV coexists with OTT, and how the two systems may settle into different uses, with over-the-air (OTA), for example, becoming the place for realtime, big-audience programs, while niche, on-demand content becomes dominant on OTT,” Pizzi suggests. “After all, no matter how fast online bandwidth gets, you can never beat the infinite scalability of OTA broadcast.”
Pizzi predicts, therefore, “a slow but steady increase in the amount of UHD content offered in OTT, including next-generation audio.” Clark expects the industry will see a broader focus “on content created specifically for these types of environments—an OTT audience or even a social media audience. And related to that, more custom content created in local markets.
Clark also thinks that, in a few years, the industry will start streaming virtual reality-related content that users will interact with using VR goggles. “That’s all part of immersing us more into video, into our content in ways we can’t imagine right now,” he says. “[As bandwidth keeps improving], OTT will be a [logical] way to get those virtual worlds to consumers.”
And finally, both men expect that, eventually, the concept of bundling services together through one pipe that simultaneously also transmits cable TV and possibly other services will become a thing if, for no other reason, than forcing consumers to subscribe to multiple services and grapple with multiple passwords and account logins can be extremely inconvenient. Therefore, streamlining the entire system with what Pizzi calls “hybrid delivery” would very much be in keeping with the idea of making OTT more consumer-friendly.
“The concept of hybrid delivery was actually envisioned by the ATSC 3.0 next-generation terrestrial TV broadcast standard,” Pizzi says. “Until now, Smart TV’s have switched between traditional and OTT sources. They are just different inputs, and you can watch content on either one or the other. What if future TV’s could receive a bouquet of content from a broadcaster that arrives via both sources simultaneously, with different elements coming in on each of the two paths? Broadcasters could send basic/common content over the air to everyone, but then offer a variety of synchronized, or even interactive enhancements online, such as alternate languages, director commentary, statistical overlays, alternative camera angles, enhanced or different sound mixes, and so on. The user could choose what they want, thereby customizing or personalizing the broadcast. This same mechanism could also be used to insert targeted advertising, as well. So that is the next level of convergence—OTA plus OTT on the same program.”
In the meantime, NAB and others have been pushing a range of educational initiatives around various OTT-related issues. A couple of years ago, NAB PILOT and the Local Media Association (LMA) co-hosted an OTT Summit at the NAB show for local broadcasters, and there was a Streaming Summit at the show earlier this year. NAB also periodically sponsors educational Webcasts on this topic.
ATSC 3.0 Applications
Just before press-time, according to a TV Technology report, the FCC announced it would begin accepting applications from broadcasters to start the process of deploying the ATSC 3.0 standard starting May 28 onward. The standard was approved in 2017, but underwent several revisions before the application process could begin. The article distinguishes between the traditional application process and the one the FCC has approved for ATSC 3.0, which is what the article calls “a one-step streamlined licensing approach,” meaning that many broadcast entities, with certain exceptions, will only need to file slightly modified license applications with the FCC. The FCC offers more details here.
Remember the Drive-In?
A recent historical article on the ProVideo Coalition site pays homage to drive-in theaters in time for “National Drive-In Movie Day” on June 6, scheduled to coincide with the 86th anniversary of the opening of the first permanent drive-in theater in the United States, in Camden, New Jersey. The article gives a detailed history of the drive-in phenomenon and the technology and business machinations behind it and also points out that 559 drive-in screens at 317 locations remain in the United States today, according to a recent survey by the United Drive-In Theatre Owners Association. That’s a far cry from the estimated 4,600 that dotted the nation in the 1950s, according to the article, as the entertainment form was radically degraded by the arrival of home-video entertainment, cable channels, and suburban multiplexes. The article also points readers to a 2014 documentary film that gives a full history of the drive-in theater, called The Definitive Story of the American Drive-In Movie.