Experts Lay Out Six Steps For OTT Success

How do you become the next Netflix or Amazon Prime? When thinking OTT, think niche. That was the message from large and small content producers who participated in the 50-plus sessions on OTT business and technology at the Streaming Media East conference in New York last week. Over and over, sessions emphasized that the best game plan was find your audience niche and then build a business delivering incremental value that viewers can’t get anywhere else.

While most experts presenting were light on actual numbers, they did outline the dynamics which made their business succeed. To that end, here are six steps to OTT success according to its emerging experts:

1. Test And Learn

Keynote speaker Serge Kassardjian, global head of Android/Play media apps and Android TV content partnerships at Google, gave the May 10 keynote where he said: “Our focus is on putting everything everywhere and testing it.”

He encouraged media to embrace the agile (technology) development approach to build quickly and test various things to see what resonates with viewers. The first step he outlined is to design for the specific platform on which you’re delivering, and don’t expect you can copy and paste your app onto each platform your viewers want. Apps need to be being designed and built for how users navigate their specific native environment. Android and iOS look and work differently, and the companies who succeed design for this.

“In apps you can iterate very, very quickly,” Kassardjian said. “You can A/B test your audiences and understand what’s working.” Data collected from A/B testing should drive which area to put your budget in for development or production and which to let go of.

2. Financing Device Choices

“Apps are really, really expensive to build, especially for connected TVs,” Kassardjian said. Viewers expect to see your content wherever they choose, so you need to decide which of the multitude of places you want to be.

“We build applications for all of these platforms — iOS, TVOS, Android and FireTV, the Microsoft stack and Roku — and we think it’s important that the user experience be comfortable for that platform,” said Mike Lucero, VP, connected TV strategy, Ratio.

That may be easy when you are a larger brand. If you’re a smaller publisher you need to be creative and consider content licensing to get your content exposed to a wider audience.

One content producer approached his company and offered to pay to be on their platform and then did a revenue share on the ad inventory sold. The result was easier access to several of the platforms they wanted to be on without having to build their own apps.

3. If You Build It, Will They Come?

“Whenever apps launch, the first thing that happens is nobody shows up,” Lucero said. Viewers need to find content, and that doesn’t happen without a lot of work. “In the production and entertainment world, the rule of thumb is that 50% of a budget should go into production and 50% should go into marketing.”

Ratio did a project with Whistle Sports and Xbox 360 and all it heard were crickets after launch because there was no marketing around it. “What we did was get Subaru to underwrite the promotions for the app itself,” Lucero said. “It was essentially a branded content play, which ultimately did very well for both companies.”

4. The Long-Tail Model

There’s a niche for probably every interest online. “Acorn TV started in 2011 as a long-tail economic model,” said Titus Bicknell, CDO-EVP of operations at RLJ Entertainment. It brought licensed British content into the U.S. The first window when it started was sold via a paper-based catalog for DVD and BluRay content, and it looked to see if there was any incremental value it could get from this content.

“A large part of the challenge is in the platform costs and the technology involved in getting to your audience,” Bicknell said. “You end up having to spend a lot of money to be on Roku and FireTV and Apple TV as well as the web and tablet.” His recommendation is to evaluate if being on all platforms is really something you need. Maybe the audience can still find you on fewer platforms.

Acorn grew its audience, which began with people ordering content they wanted to watch on DVDs. Its value proposition became “we can get you content sooner if you sign up” for online delivery. That audience is now 250,000 subscribers as of its most recent quarter.

5. More Niche Equals Good Business

“We are the ultimate niche. No one thought gaming was big,” said Colin Carrier, chief strategy officer for Twitch. “These niche experiences and communities are getting created around different products that have a chance at breaking through the competition for pure content, and have a chance at extending to something else.”

Carrier’s company has created new models around what a media company is and how it is monetized. Twitch is a platform of user generated content, geared to millennials who want to watch and talk about egaming. Their viewers spend more than two hours online a day on this ad-supported site. Twitch tried the subscription models and found it turned users off.

Now, viewers are able to sponsor or support their favorite broadcasters by donation. The premise being that when you give a viewer the choice, if there is value to them, they will support you. While this may sound contrary to how people think about their content, the value has played out for Twitch.

Other niches abound. Josefina Perez Davila from Caracul Television, a Columbian TV channel, said she is selling content to allow catch-up viewing inside her country and then re-licenses the content internationally as well.

Kelly Rinne, co-founder of Go Live Sports Cast, said she started her business focusing on three markets — arts programming, government access and sports. Which took off? Sports, and most of those broadcasts are ad-supported, except when it comes to contact sports, where her audience will pay more than $10 per view to watch a mixed martial arts or boxing match.

Another publisher, Mubi.com, provides a hand-picked curation of the top films its audience wants to watch. It started its own content delivery network when its traffic rates became too high from the commercial CDNs. Unlike in traditional broadcasting, success in streaming brings incremental data charges on processing, storage and delivery of content.

6. Big Data

“I think the companies that are going to be successful are the companies that are super data driven with a voracious appetite to continually seek the truth and continually iterate and A/B test,” said Dan Burkhart, CEO of Recurly, a company that handles payment processing for more than 2,000 customers.

“The most successful publishers out there have quite sophisticated insights that they keep track of daily.” This testing extends to all areas of the OTT landscape so you can find what content appeals to people, what user interface works for them and what business model resonates best.

“This is not something that companies get right out of the gate, they have to test, learn and iterate to find that bullseye target, that niche alignment between the audiences and the content offering,” Burkhart said. “You can get incrementally better at making that alignment work and the result is increasing the lifetime value of the customer.”