nScreenMedia OTT multiscreen media analysis

4 signs of the splintering OTT video economy

disaggregation disintegration splintering

We are entering a new phase in the evolution of OTT video. The market is splintering on many levels, and it threatens to slow or even derail the explosive growth we have seen in recent years.

Here are 4 signs that the OTT video economy is splintering into many different proprietary pools of influence.

Content Disaggregation

Just a year or two ago, if you wanted to catch up on a current TV show there was a good chance you’d find it on Netflix, Hulu or Amazon. The ferocious competition for show rights and a growing belief that a content owner can better monetize the asset is starting to break that tri-opoly.

Here are just a couple of examples of this trend.  Variety reports that The CW is ending its relationship with Hulu. In the future, current episodes of hit shows will be available exclusively through CWTV.com, and library titles through Netflix. CBS says the new Star Trek series will be available exclusively through its All Access services, and NBCU is creating original content exclusively available through its Seeso comedy service.

Proprietary ecosystems

The number of companies that think they have a shot at controlling our video lives just keeps getting bigger. Apple is legendary for tightly coupling its hardware to proprietary software and ecommerce services. It makes the movement and viewing of video easy within the walled garden, but hell outside of it. Amazon is rushing to copy the model, and Google is scrambling to keep up.

It does not stop there. Disney turned its back on an emerging Ultraviolet standard for buying, storing and viewing movies online. Instead the company established its own Disney Movies Anywhere with a proprietary online movie locker. This effectively ended any hope that Ultraviolet would unify the market. Comcast is following Disney’s lead with its own proprietary movie store.

App proliferation

Proprietary ecosystems and content dis-aggregation have given rise to another problem: app proliferation. This problem plays out in two dimensions.

Proprietary ecosystems mean a content provider faces the nightmare of having to create a different app for all the different hardware ecosystems. For example, a completely different TV app is required for Apple TV, Amazon Fire TV, Google Chromecast, and Roku. Multiply this problem across smartphones, tablets, smart TVs and PCs and you begin to understand the problem. (You can read more about this problem in the free white paper Reaching All the Screens.)

The mess continues for consumers. Content dis-aggregation means they must accumulate more and more apps on their devices to watch all the shows desired across all the different services. As nScreenMedia’s Bill Niemeyer pointed out, there is just no way to search across all these apps.

Lack of data standards

Data is the lifeblood of the video business. It pervades every aspect of the video market, including:

  • Metadata: allowing the content to be found and rules for its use to be established
  • Usage data: supporting valuation of the video, and the license and advertising revenues it earns
  • Consumer preference data: allowing the personalization of experience

There are no universally accepted standards in any of these areas for the gathering, format, storage, or interchange of the data. It is horded to gain competitive advantage, put into proprietary formats to gain financial advantage, and selectively mined to gain a marketing advantage.

Conclusion

Of course, there are pockets of standardization and aggregation. In the realm of data, EIDR is making progress in establishing a universal content numbering system. HTML5 is slowly becoming a cross-device alternative to native apps. And Roku boosted the number of channels it can search across to over 50 with the help of Guidebox. On the whole, however, the powers pushing the industry to splinter are holding sway.

In the long-run, this splintering of the industry can only have one result. It creates a nightmare for consumers as they try and figure out when and where the content they want can be found. And we all know what happens when things get complicated for consumers. They sit on their hands.

Why it matters

The OTT video industry is splintering into proprietary silos in many different ways.

  • Content is spreading out among many different video sites.
  • The number of proprietary ecosystems are growing and consolidating their positions.
  • Video apps are proliferating..
  • Data is pooling in proprietary silos.

These four factors will slow or stall the growth of OTT video.

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