OTT: Local TV’s Latest Growth Opportunity

Stephanie Slagle saw what was happening.

As director of digital strategy at Dispatch’s CBS affiliate WBNS Columbus, Ohio (DMA 32), Slagle had noticed that millennials were moving away in droves from appointment-style TV viewing and toward over-the-top options accessed through smart TVs and set-top devices like Roku and Amazon Fire.

Clutching an eMarketer report from last May laying out the size of that shift, she pleaded with others at the station that it was time to plant the flag on the OTT landscape. They came around.

“The report kind of became our rallying cry that we need to have a presence in this space,” she says.

WBNS, which is now continuously streaming newscasts via OTT, is one of a number of broadcasters and newspapers that are now experimenting with local or regional services on the OTT platform. Others include Tegna, Raycom, Graham Media and Scripps.

The legacy media are determined not to be caught on the back foot by yet another powerful digital trend.

“You have to be where the eyeballs are going,” says Guy Tasaka, chief digital officer for Calkins Media, which developed an OTT platform for its media properties and is now selling it to others. “OTT is where the bulk of viewers are and will be, and if you’re not there, you’ll lose the audience to someone who is.”

The services tend to resemble each other in the broad strokes. They comprise linear channels of news and other content, much of it locally produced, supplemented by some of the same programming available on demand.

To receive the services, consumers must download an app onto their smartphones or smart TVs that have built-in OTT software that links the sets to the internet. Consumers without a smart TV need set-top boxes or dongles like Roku, Amazon and Apple TV.

According to MarketingCharts, four in 10 U.S. households own an OTT streaming device.

These OTT services mostly aren’t generating much revenue yet, but some broadcasters see serious potential down the line, along with content development opportunities they’ve never had on their own airwaves.

“Who’s to say whether all consumers will eventually be OTT consumers or not?” asks Scripps’ Laura Tomlin, VP of digital operations. “We don’t know, but it would be a missed opportunity not to have our strong local brands in places where consumers are. It’s really important for us to be in that space and see how it develops.”

At The Local OTT Vanguard 

As both a content and platform provider, Calkins was among the first to launch a full-blown local OTT service, at WWSB Sarasota, Fla. Its linear stream features original news and local magazine content replayed after the original airtime, along with syndicated content in areas where geographical restrictions don’t apply.

Calkins just sold WWSB and its two other small-market TV stations, but the buyer, Raycom Media, is maintaining the service and Calkins continues to forge ahead with OTT at all eight of its newspapers, including the Bucks County [Pa.] Courier Times, which runs original newscasts from newspaper staffers, thematically-arranged content and syndicated shows.

Tegna Media began streaming in June 2015, with each station offering a locally customized service. They include “a combination of local top news stories, the newscast as a live stream [and] unique local categories specific to each market,” says Frank Mungeam, VP of digital content.

Those original offerings include Land of 10,000 Stories for KARE Minneapolis, Grant McOmie’s Outdoors for KGW Portland, Ore., and Straight from the Heart for WBIR Knoxville, Tenn.

Raycom is working with an OTT platform from CMS provider Frankly to roll out services for its 62 stations. Live streaming will be augmented by news, lifestyle and sports content, including some original programming like The Southern Weekend, which the company runs on its own platforms as a digital-only feature.

“We’re creating a lot of Southeastern-oriented lifestyle content that creates the opportunity to do native ads within that,” says Joe Fiveash, SVP of digital and strategy.

Scripps has all 23 of its news-producing stations on an in-house-developed platform.

Dave Francois, senior director, product, says it runs all of its newscasts live, and most of it is delivered in VOD format, too. Each service also has a limited content integration with Newsy, the Scripps-owned, millennial-geared news service whose principal platform is its own OTT service.

Capitol Broadcasting’s WRAL Raleigh, N.C., has been in the OTT game since 2015, streaming its live newscasts, Doppler radar and other locally produced programming, says John Conway, Capitol’s GM of digital platforms.

One of the more popular features has been live-streamed high school football games, of which six or seven are offered each week during the season. According to Conway, they are mostly low-production, single-camera affairs and inexpensive to put together, using part-time help or even the school’s own feed, though occasionally larger games will get the two or three-camera treatment and better production values.

It also offers a broad array of VOD choices — some 300-400 clips — ranging from consumer and entertainment franchises to loads of food-related content, Conway says.

Conway notes that NBC is talking to affiliates about collaborating on local OTT services. “We’ll be interested to see where that goes.”

(NBC declined to elaborate on these plans.)

WBNS, whose OTT service is powered by Whiz, has a linear feed consisting of its most recent live newscast, which repeats itself until a new newscast replaces it in the broadcast day. On the VOD side, Slagel says the station is constantly experimenting with what to offer, including older original shows and documentaries.

According to Slagle, WBNS is giving itself “a decidedly un-TV station-like” 18-month test to experiment with content options, and it’s in the process of hiring a multimedia journalist who will be tasked with exclusively creating OTT content.

“Our goal is this individual will be integrated with our news department and our sales department, attending the news meetings every day and listening for stories that news doesn’t have time to do a lot of depth on,” Slagle says.

She sees one of OTT’s biggest opportunities as pursuing stories deeper than news departments can do on air, expanding, say, a minute-and-a-half story up to 10-15 minutes when warranted and opening up some new native ad or sponsorship prospects in doing so.

Catherine Badalamente, Graham VP of digital media, is equally bullish about those original content opportunities on OTT. The group’s KSAT San Antonio, Texas, launched a service last December and its stations in its other four markets will follow this year, starting with WJXT Jacksonville, Fla.

Graham’s stations are currently putting about nine hours of local news each day in a linear feed and then slicing-and-dicing them for VOD. It augments that newscast material with content from Scripps’ national OTT service Newsy, which is a launch partner on both the content and ad-selling sides.

“The content question is a big part of this,” she says. “What are we going to do to supplement what we’re already doing? What kind of relationships can we have, trying to work with other broadcasters to figure out how we can pool our combined assets to be able to help each other in this space?”

Audience Behaviors

The early OTT endeavors haven’t produced a lot of audience data yet, but some basic behaviors are becoming immediately apparent.

Top of the list is that viewers like live and linear viewing the most, with VOD taking a distant back seat.

“If you offer a linear channel, then people stay connected to it like they do TV,” Conway says. “There are people who want that typical, lean back television experience from OTT.”

Stations are also gleaning some branding lessons on the platform.

Calkins’ Tasaka says that call letters are far less important to OTT viewers than content. “The content — quality and context — matters far more than the brand that is creating it,” he says, citing an internal market study that found consumers favored content (80%) over both platform (5%) and brand (5%) when consuming news.

Graham, which uses the Calkins platform, was convinced to adopt that view when it launched its KSAT service as “San Antonio News Powered By KSAT” rather than leading with its call letters.

Badalamente says KSAT has not yet put any marketing muscle behind its service. All the audience growth so far has been organic, powered both by viewers actively searching the station out and those simply interested in San Antonio news, she says.

Francois says that so far Scripps’ OTT audiences have come from viewers typing its local brand names into their Roku searches to find them.

Scripps is also starting to pull together a picture of what those viewers look like. Signs point to an audience more like it finds on its digital properties than its broadcast, says Tomlin. “They skew younger, have more kids at home, are more affluent.”

Making Money From OTT

The biggest question surrounding OTT is how to make money from it.

Calkins’ Tasaka says treating it like regular broadcast advertising is the way to do it. “Spot TV selling works on OTT,” he says. “The TV revenue model is not broken; the TV distribution model is broken.”

Badalamente is less certain. “Selling it like linear TV is going to really limit who you’re going to sell it to,” she says, preferring to use dynamic ad insertion and to sell OTT as part of the overall digital video strategy.

Until recently, Newsy was filling most of KSAT’s ad inventory from its own pent-up demand, though the station has recently switched toward selling its own inventory. Badalamente also sees potential in native ads, though she wants to build more audience numbers before trying to sell it.

Others who are monetizing OTT, like Tegna and Scripps, concede that it’s early days for their pre-roll ads, which are sold directly and through programmatic.

Looking Ahead

Badalamente sees OTT as a win for opening up a new flank for broadcasters to increase their chances of both longevity and autonomy.

“Because we’re less dependent on syndication for a lot of our programming, we have to produce more on our own,” she says. “I want to be the one on the front line controlling that relationship.”

For WBNS, which is following an agile development model as it pushes through its 18-month trial, the low cost of entry to launching the service mitigates any real risk. The station gets another point of entry to extend its local content while learning more and more about its audience preferences and monetization potential.

Says Slagle, “Our goal in being ahead in this is we want to be able to experiment and figure it out instead of playing catch up.”