Among many content provider perspectives impacting telcos, I wanted to relay some thoughts from our team on the most fundamental question asked repeatedly by content producers, distributors and broadcasters: “How do I make money off my content in digital?” This question comes as yet another distributor was heard complaining that "consumers don't want to pay for content." Well, a quick check of your telco or cable bill, your Netflix, or Hulu Plus and MLB subscriptions certainly counters that argument. Consumers WILL pay for content - maybe just not YOUR content.

So, WHY are consumers willing to pay for some content but not others? Because content providers expect to make money from their programming as they evaluate OTT opportunities, this becomes a critical question for telcos, as well. To the audience of television programmers at NATPE, here are three answers to this WHY question, which telcos need to understand when considering the design, development and delivery of video services.

• Make your content discoverable. “If you build it, they will come” may have worked in the popular movie Field of Dreams, but in a world where 60 hours of video is uploaded to YouTube every minute, your content is not alone. Maximizing use of metadata can help consumers find your programming across every platform. In fact, one company commented that they employ 150 full-time workers to do nothing but identify and tag TV shows by title, lead actor, genre and other key words.

• Content may be king, but viewer data is pure gold. To really cash in on your content, you need to go beyond what is watched and how long it is watched. Google’s TV advertising platform is beginning to deliver data on viewer demographics, tastes and specific ad engagement - telcos should do likewise. Quality data is especially valuable when designing channels across multiple devices that consider different viewing experiences, such as watching live TV in the living room or catch-up viewing on a tablet at the local Starbucks.

• Make your content brand-friendly. Advertising revenue represents roughly half of a typical cable network’s revenue and it is becoming increasingly important for operators reaching the limit of the monthly bill most subscribers are willing to pay. Likewise, brands remain desperate for quality programs on emerging platforms that they can trust, just as much as they've trusted TV fare for the past 50 years. Creating brand-friendly content will drive cross-platform ad revenue and can increase your viewing audience through brands’ ancillary promotional efforts.

There are many other important observations coming out of NATPE and the content community, and I welcome you to contact our content services team to explore how they impact your business.

I also strongly encourage you, if you haven’t attended NATPE in the past, to make plans to visit Miami next January and experience for yourself this global content marketplace. Telcos will clearly benefit from hearing first-hand from the content providers who are creating and distributing programming that is at the heart of the consumer video experience that you are (or will be) building and delivering.

That’s how I see it. What are your thoughts?

Paul D Hamm

Also during GITEX, Etisalat announced the launch of “eLife TV”, its new IPTV service, which establishes the brand upon which OTT services will also be marketed. Building on the initial launch of eLife OnWeb on LG Smart TVs over the summer, this was the first time Etisalat fully showcased its multi-screen OTT services to the industry and press, which are being served from the Endavo OTT Video Services Platform.

As we announced in September, Endavo signed a significantly expanded platform agreement with Etisalat, enabling us to pull together multiple technology partners and expanded services being delivered as a unified solution for this large global telco. Our partners, including PHXX, Verimatrix, Harmonic and LG, exhibited together inside Etisalat’s “Entertainment Network Zone” during the IP&TV Forum, thus supporting and validating the power of our unique end-to-end total OTT solution.

Also at IP&TV MEA, in addition to exhibiting and leading OTT syndication training sessions in the Content Theatre, Endavo presented “Strategies to Turn OTT Content and Interactive TV Technology into a Seamless Commercially Available Service” during Etisalat’s OTT Special Focus Day. Endavo’s Head of Content, Peter Contardo, shared perspectives on the “OTT commercial success equation” and featured insights from Blue Pond Media, which has multiple channels on Etisalat’s OnWeb service, to build a strong case for both telcos and content providers to profit from OTT video syndication and services models.

During both GITEX and IPTV Forum, Etisalat and partners showcased more than 25 content providers already being syndicated onto the eLife OnWeb services as provided by Endavo’s content services team. We are consistently adding more content providers to the Etisalat service as OnWeb grows in our quest to “syndicate the planet.”

Our demonstrations in Dubai this past month proves Endavo’s capability to deliver a total OTT video services solution to a major telco, which can be delivered anywhere in the world with Internet access. So while Etisalat continues breaking new ground in offering its consumers pure OTT services, with content that is unique and independent of broadcast TV, Endavo continues to power the total solution upon which its services are managed and delivered.

And speaking of breaking new ground, Endavo officially opened in Dubai our latest office, located in the heart of Media City.

It was certainly another busy month, and an important month, in demonstrating the commercial potential of Endavo’s total OTT video services solution. But we’re not stopping now, as there is much more to come. So, stay tuned. 

That’s how I see it. What are your thoughts?

Paul D Hamm

Here’s what has led to the Netflix decline in the short term: 

1. Netflix recently announced that it has lost Starz content starting next year unless it ponies up $300 million. Netflix estimates that it will pay twice as much for content in 2012, then in 2011.
2. Netflix decided to split the business into 2 separate businesses, DVD and streaming, despite massive negative feedback from its customers. Of course, the company quickly reversed this decision. But shouldn’t they have known their customers better in the first place?
3. Netflix nearly doubled their subscription fees and they have stuck to the decision, even amidst the current turmoil and though many subscribers have gone away.

Telcos can take a few pointers from this story as they incorporate OTT video services into their overall multi-service strategies (to even compete with pure OTT providers, such as Netflix).

First, Telcos must consider their content strategy carefully. Unless they have REALLY deep pockets to invest upfront the hundreds of millions of dollars required to gain rights to distribute mainstream programming across multiple screens, the content strategy must balance making an acceptable investment with providing an increasing quantity and mix of high-quality content. The end game is obviously to motivate people to uptake OTT services, and spend increasingly more time and money as content availability expands. However, content also has to have a path to ROI. Of course, the balance here is making some upfront content investment and then growing the base of paying and/or ad-watching users in order to build up a sustainable, even profitable, OTT services model that contributes to the overall Telco business strategy. Understanding content producers and broadcasters in support of developing a content strategy is an area where Endavo can help Telcos.

Second, OTT Telcos can’t forget their customers, especially given that their OTT customers are also likely to be their IPTV, voice and data customers. OTT should be considered within the context of the overall Telco brand strategy and business plans. OTT can be an extremely valuable – many would say now, essential – strategy for winning and retaining telco customers. However, OTT shouldn’t be viewed in a vacuum as a stand-alone business with its own branding, pricing, value proposition, etc. The Telco OTT strategy is part of an overall Telco strategy and brand.

Lastly, price, along with content and user experience, is a main driver for consumer value. Telcos don’t have to give away OTT services to customers, but the price for the service has to be considered a good value by consumers, balanced with the pricing of other telco services, and contributing to the overall business objectives of the Telco.

Simply put, what can Telco OTT operators learn from Netflix today? Don’t forget your customer. This should be an easy lesson for Telcos.

That's how I see it. What are your thoughts?

Paul D Hamm

Imagine more than 4,000 companies from a hundred countries and nearly 13,000 registered participants. MIPCOM – it’s a big deal. So if making the transition from telco to “mediaco” is your priority, Cannes was the place to be last week.

While there are numerous best practices, interesting concepts and even a few “glad we didn’t waste time with THAT strategy” worth talking about, I’m focusing on a few MIPCOM highlights to consider when thinking about content, and your own OTT video services initiatives.

Subscription and rental rights are becoming more strategic to content providers as they evaluate syndication opportunities. Operators expecting VOD rights to be “thrown in” as a free “sweetener” to content distribution deals should expect to pay significantly more for those rights as SVOD and TVOD are now a critical part of the content provider’s revenue mix.

Until the past few years, distributors preferred deals that locked up various rights for extended terms, oftentimes for a decade or more. Today, two-year deals are becoming the norm as these tie-ups allow content providers to get paid without being locked into long-term deals that prevent exploring and exploiting new revenue opportunities.

Emerging markets, while getting a lot of focus from some, are still considered a “nice to have” by many producers and distributors as new forms of distribution in existing major content territories continue to capture the greatest mindshare. To excite and incent content providers for emerging market opportunities, operators may need to formulate a more attention-grabbing value proposition than what is considered standard, including a compelling revenue model with minimum guarantees and committed investment in consumer marketing to provide a sustainable subscriber base. Pure revenue-share platforms will struggle to attract the content libraries of quality programming that are required to drive viewer interest.  A per-subscriber fee could be one means to address the significant upfront payments that many content providers expect.

Other insights from the show include game consoles gaining momentum as pay TV and VOD platforms, discussions about the consumer and commercial implications of the second screen trumped those about social media or even monetization, and if you don’t know the difference between transmedia and multi-platform yet, you better get educated…fast.

If you want to learn more about MIPCOM or the broader world of digital media, such as why consumers don’t watch “content” (They watch “shows” and “movies”), please contact us.

In closing, here’s a key MIPCOM takeaway from Jason Anderson of our content services team. “Great programming will always give you the best chance to get paid, whether you are a producer or an operator. But today, both parties need to use a bit more “elbow grease” to generate sustainable revenue together. Surround fabulous content with social media, mix in easy content discovery, offer TV Everywhere-style availability, provide viewers simple pay options, and support it all with solid marketing, and then content providers and service providers can both enjoy commercial success."

Put October 8-12, 2012 on your calendar now, and we’ll see you next year at MIPCOM.

Pete

Wanting to generate new, profitable revenue streams from OTT video services, telcos will also need to offer multiple services – including broadband, mobile and IPTV services, which can be strategically viewed as cross-marketing opportunities using OTT services.

For example, the more OTT video consumers consume, the more bandwidth they’re going to need. Telcos are also fighting to keep their customer’s attention (and wallets), so OTT services can be viewed as value-added service to further strengthen the telco’s overall brand and reach.

While telcos must consider which OTT video business models bring the highest direct revenue and profits, they must also see OTT from an uptake and customer experience perspective while seeking to use OTT as a ‘value added service’ to retain customers, compete for customers overall and provide a superior customer experience by bringing to light customer support/service, network (last mile) ownership, billing integration, and cost bundling.

It’s vitally important telcos choose models that motivate user uptake and consumption through superior customer experience, even potentially at a temporary cost of pure revenue and profitability, depending on the telco’s ultimate goals. It’ll be a balanced approach that works best for most telco OTT providers seeking to create new advantages in a very competitive market.

That’s how I see it. What are your thoughts?

Paul D Hamm

I've asked Pete Contardo, Endavo's Head of Content, to share with TalkingTelcOTT blog readers our perspective on what MIPCOM 2012 meant for telcos - so now that the show has closed for another year, look forward to Pete's quick thoughts on what's hot in the world of creating, producing, and distributing entertainment content via an OTT platform. In the meantime, if you weren't lucky enough to have been in Cannes this week, you can watch some of the conference here. 

Paul D Hamm

That’s how I see it. What are your thoughts?

Paul D Hamm

On the global stage (especially emerging markets like the Middle East and Africa), what’s interesting is that there really isn’t even much of a “cord” to cut. Granted, many people have satellite service (which qualifies as cord in this case) but many people also rely on limited OTA (over the air) broadcast or online video to get to their TV programs. But the cable industry doesn’t exist in the same way it exists in the US and other mature markets.

The point being, in many emerging markets, broadband connectivity and IP traffic is growing rapidly, which will support premium OTT video services. MENA broadband and IP traffic, for example, is expected to grow faster over the next few years than most of the world, at a rate of over 45% compounded per year through 2014, according to Cisco’s “Visual Networking Index”. And, unlike the US and other mature pay TV markets, OTT uptake in many global markets will not necessarily depend on wide-scale “cord-cutting” in order to succeed.

This market dynamic represents a high-growth opportunity to emerging broadband market telcos providing those broadband services to also provide premium OTT services without a lot of resistance.

That’s how I see it. What are your thoughts?

Paul D Hamm

First, because a lot of traffic pushed over the telco network is now attributed to online video consumption. The percentage of bandwidth being consumed for video streaming is only going to grow, and fast, so it makes sense that telcos will have an interest in owning more of the network infrastructure required to deliver video. If this is true, then it’s a matter of build or buy.

Second, we are seeing telcos increasingly want to be the actual service provider for OTT video, leveraging their assets – subscribers, billing, customer service, “last mile” network, etc. – and generating new service revenues, along with IPTV. As telcos consider delivering premium OTT video services, on and off their networks, they will quickly realize that CDN is a major portion of cost of delivery. Again, owning their own CDN infrastructure will give them more control and save money in the long run. Again, build or buy?

Now, as telcos have begun to see the strategic value of owning CDN assets, CDNs are recognizing the value of owning online or OTT video platform assets.  OTT video platforms - especially those focused on “telco OTT” - can provide further differentiation and value for CDNs, and telcos, by completing the infrastructure necessary to create and deliver OTT video services, end-to-end, to their subscribers. Once again, build or buy?

If these relationships make sense (and they do to me), CDN plus “telco OTT” video services platform can represent a significant value proposition for the telco industry when combined, whether telcos are looking for an outsourced solution or even an acquisition. If nothing else, the buzz around telcos acquiring CDNs certainly points to the movement of telcos looking seriously at OTT video, as a network provider or even service provider.

That’s how I see it. What are your thoughts?

Paul D Hamm

Okay, okay, so they’re not exactly high-stylin’ Oakley 3D glasses, but they did the trick over here in Dubai for the official launch of the LG and Etisalat eLife OnWeb ad campaign – which included the UAE’s first-ever 3D newspaper ad as shown here in the Gulf News daily newspaper.

Yeah, that’s me taking in the 3D ad experience at a local restaurant. You may recall I shared with you a few weeks back that Etisalat had partnered with global consumer electronics brand LG to deliver Etisalat’s eLife broadband content service to millions of homes through LG Smart TVs.

And all indications are, the initial UAE promotional launch has been a success. I saw banners and signage already going up at Dubai Mall and Mall of Emirates as well. This should also generate some good interest as it's hard not to spend time inside restaurants and the malls in Dubai during the summer.

That’s how I see it. What are your thoughts?

Paul D Hamm