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2016: Smart OTT is the new normal

BroadcastAsia2016 exhibitor, Peter Löfling, Director, Asia Pacific from Edgeware | Feb. 5, 2016
BroadcastAsia2016 exhibitor, Peter Löfling, Director, Asia Pacific from Edgeware, shares his predictions and imperatives for the broadcasting industry in 2016

This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.

Living in an on-demand world, a simple swipe of one's mobile phone or a few clicks of the mouse can now bring consumers a plethora of content and applications. Direct to Home (DTH), IPTV and Over-the-Top (OTT) services are projected to grow in the next five years on the back of government support in infrastructure development including fibre roll-outs fueled by increased consumer demand across the Asia Pacific. According to SNL Kagan, the region is expected to become the world's second largest for OTT SVOD services by 2018. 

It has no doubt been a great year for OTT in the Asia Pacific, with many new OTT service launches, most notably Netflix launching in Hong Kong, Singapore, South Korea, and Taiwan earlier this year. If 2015 was the year of OTT content, here's Edgeware's take on what 2016 will bring:

1.     Smart OTT is the new normal

We are already seeing increasing competition in the OTT space, and the number of players will continue to increase this year. "Pureplay" OTT players who aggregate content will face competition from new entrants including traditional pay TV providers, broadcasters and content providers who have started offering their own OTT services (e.g. Viacom's Noggin, HBO Now, CBS All Access, BBC iPlayer). The need to reach consumers' multiscreen demand with a direct-to-consumer offering is inevitable. With increasing competition, 2016 will solidify a new normal in which OTT providers compete on being smarter - both in acquiring or producing high concept originals, and in delivering relevant content to the consumer the way they prefer without compromising quality. Smart OTT requires providers to consider the packaging, formats and commercial model that work for the particular customer category. The increasing amount of available content via alternative distribution platforms are challenging the customer channel bundle model as viewers increasingly question the need to pay for content they are not interested in. This will likely result in new product packaging models and increasingly "slim" alternatives, specially designed for OTT distribution. Globally we have seen that Cloud DVR is demonstrating substantial growth, with the industry seeing benefits of cost savings and service flexibility as content rights become increasingly available. This trend is also expected to spread into Asia Pacific, with early adopters like now TV in Hong Kong taking the lead in the adoption.

2.     Reconsidering the ad-revenue model: Purposeful advertising 

Personalisation by ad insertion finds its place in the industry. Ad insertion technology has been particularly popular for live streams, replacing old ads with new ones, leading to new revenue opportunities. We can expect stronger industry adoption of the technology, fuelled by the fast-growing phenomenon known as programmatic advertising. Programmatic ad spend is estimated to grow at 20 percent annually and digital media spend will, "for the first time, account for more than a quarter of total advertising spend in 2016".

 

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