What’s the secret to retaining fickle internet TV audiences?

This article was originally published via The Guardian Media Network.

amy-schumer-live-at-the-apollo-1024As well as the rise of comedian and actor Amy Schumer, 2015 saw the continual rise, and industry acceptance, of over-the-top (OTT) internet TV services such asNetflix and HBO NOW.

One of Schumer’s biggest achievements last year was her Live at the Apollo HBO special. In October, a few days before the show premiered on HBO and HBO NOW (the OTT subscription service that doesn’t require a pay TV subscription), my friend said she was about to sign up to HBO NOW. Her thought process was that she didn’t have a pay TV provider, but she wanted to watch the special as soon as it became available. “It’s $15 per month but you get a seven day free trial,” she said. “I can drop it whenever I want.”

I work at Kaltura, where we design online video services, so through the companies we work with we’re acutely aware of churn – customers discontinuing a service – and the problem it poses for OTT services in particular.

While churn was always an issue for service providers, OTT made it much trickier to fight. With paid TV, it takes one phone call to the call centre, convincing several different representatives that you are definitely quitting. Then you have to take the set-top box to the nearest service centre. It takes determination to go through with it. With OTT video apps, all you need to do is tap the screen and you’re free. The consumer’s dream is the service provider’s worst nightmare.

Subscribers cancelling OTT services as a percentage of the current subscriber base, in US broadband households. Illustration: Parks Associates

584study from Parks Associates (see graphic) sums up the problem. Viewers sign up and get their fix, knowing that they can drop the service any time and subscribe again in the future when a new series or another Amy Schumer special becomes available. In order for OTT to retain its momentum in the market and offer a real alternative to cable and satellite, it must retain customers. A leaky bucket will never reach a tipping point. Today, three main strategies can reduce OTT churn.

A/B testing

The process of showing a modified version of the website to a subset of users and then comparing their behaviour to the regular version proved to be highly successful, especially for Netflix, which has embraced this method from its early days in 2005. Netflix has run more than 1,000 A/B tests with tens of millions of users. It helped the brand redesign its TV app interfaces, launch the personalised log-in pages, improve search and more. The main goal is to increase usage, which leads to increased retention and eventually lower churn.

Raising the quality of experience

Increased usage isn’t enough if the viewing experience isn’t good. Viewers today have the same level of expectations from their OTT provider as they have (or used to have) from paid TV. In a nutshell, it’s the spinning wheel moment. When you turn on a cable set-top box, you don’t ever expect to wait one to two seconds for the video to load. OTT must be on the same level. The problem is that the internet was never designed to stream HD video at scale – and things get even more complicated when it comes to 4K or live video. If a video takes two to five seconds to load, about 20% of users will drop, and after 10 seconds, around 40% will have abandoned it, found a new study (pdf) from the University of Massachusetts Amherst and Akamai Technologies. It was previously hard for OTT operators to notice service issues, but today there are a number of quality of service (QoS) technologies that constantly track buffer time for every user and the video quality of every stream. If there’s reason to believe something is wrong, the operations team will get notified immediately so that they can address the issue by fixing the video file or switching to a different content delivery network. QoS may sound to some like a minor issue, but in markets with increased OTT competition, most vendors offer the same content at the same price. The main competition is on the quality of the experience.

Personalised and social marketing

Yes, those emails, phone notifications and in-app alerts that let the users know there’s a new show available. In OTT, such marketing campaigns don’t have to annoy the viewers. The service marketers should have full access to each viewer’s history so that they can send personalised alerts that will drive engagement and retention. OTT services should also embrace social networks to market to new viewers and go beyond Facebook or YouTube. Many of the young people in Generation Z today spend more of their time elsewhere like on Snapchat and Vine. Strong social marketing will be key for the growth of new OTT services.

 

DVR – the key for next generation OTT TV is in the clouds

This article was originally published on The Drum.

With the growth of OTT TV, multiple screen viewing and cord cutting catching on in the U.S., it is unsurprising that what matters in the world of video, TV and advertisers is converging.  For instance, in a recent report from June 2015, Forrester Research found that “lack of premium inventory is holding back digital video monetization.” Meanwhile eMarketer published a report about how US adults divide their TV screen time, showing that overall, video time continues to increase. While TV dipped a bit, time spent watching on connected devices more than tripled in 4 years.

So on one hand, advertisers are willing to pay 3x CPM, as their video-spending budget grows at the expense of search and display ads and on the other, viewers are craving content not just on TV, but on mobile devices.

What is the solution that can satisfy both advertisers and viewers? Cloud-DVR.

Cloud-DVR is the biggest differentiator between early OTT deployments (that mainly offer live, some VOD and limited discovery) to next-generation deployments (with advanced time-shifted TV, business model flexibility and full mobile device support). Cloud-DVR is arguably the killer-app that holds all the keys to unlocking the full potential of OTT delivery that will revolutionize our industry.

Cloud-DVR is seemingly simple – it allows end-users to record content on the cloud (instead of their set-top boxes or other hardware devices) and stream the content back on demand at any time. But Cloud DVR is anything but simple, and it has great benefits to all players in the TV consumption food chain.

Service providers can now let go of the expensive set-top boxes with their massive hard-drives, which require much investment and maintenance. Moving the storage to the cloud will allow for more storage with higher CPU for a lower price. Furthermore, service providers will be able to improve margins by offering Cloud-DVR users to pay extra for additional recording quota.

Content providers can set a new price for allowing their content to be Cloud-DVR’ed and downloaded for later viewing. In addition, with dynamic ad-insertion, VOD content can be monetized like never before.

Viewers will have the option to record an endless number of shows, watch them later on any device and also download content to view offline.

Advertisers can get access to more premium content inventory, as fresh and targeted ads can be dynamically inserted in cloud-recorded shows. Advertisers will also benefit from advanced mobile delivery that can easily ban the ability to fast-forward ads and better track engagement.

Storage Challenges are (almost) Solved

Historically, OTT vendors and operators faced challenges that impacted widespread adoption of Cloud-DVR solutions. We are now finally in a place where these hurdles are about to be overcome, including the most pressing one – storage. There are now a few approaches that help obliterate this obstacle, including having service providers record a rolling-buffer of linear channels and enable users to access their recorded shows based on queue point on that one long file. Another approach is to use a combination of core and edge storage with just-in-time transcoding, in order to reduce storage costs. In the US, where shared copies are not allowed, the leading OTT vendors experiment with storing individual copies in offline storage while streaming to users a cached (shared) copy.

Utilizing such technologies, we expect to see several tier-1 deployments offering Cloud-DVR in Europe and Asia by the Fall. Based on the potential benefits of Cloud-DVR to all aspects of the OTT food chain, 2016 will likely be an even bigger year for the industry with accelerated growth for publishers and service providers alike.

Spotify deja vu: is video killing the radio star again?

This article was originally published on The Guardian Media Network.

spotify-video adsOur world is being transformed by technology, but history, as the latest Spotify announcement shows, is destined to repeat itself.

In 1981, Viacom launched MTV. It used footage from the first moon landing and the song Video Killed the Radio Star to make it clear to the music labels and advertisers that it meant business. Before MTV, the music business (with the help of radio) was doing well. But video quickly took the industry to new heights. Fueled by the new medium, global music sales revenue quadrupled, before losing steam due to the new hip technology called the internet (and piracy).

Born in 2006, Spotify was the Swedish knight in shining armour using secret weapons like freemium and streaming to save the music industry from piracy. Last week, that knight called in the cavalry in the form of video streaming. Just like in the 80s, the music streaming business was doing OK (Spotify generated $1.3bn in revenue each year and is currently valued at $8bn), but the future was looking challenging – the company tripled its losses since 2012 and with Apple launching its own service in a few weeks – who knows when Spotify will turn a profit. For a company that is hoping to have its stock market launch soon, that’s an unbearable thought.

Spotify is trying to position its announcement as an evolution (not a revolution) of its business. Something along the lines of “music was just the beginning, now we will add TV clips and podcasts to create an entertainment platform”. One could say that Snapchat made a similar move a few months ago when it began offering video updates on top of its messaging app.

Spotify’s move, however, is quite different. Spotify is, first and foremost, a music service. Not just a distribution platform. If we know one thing about Spotify’s massive user base, it is that they love music. But interestingly, in the press event last week, where the video feature was announced – music took the back seat. When showcasing some of the new video content, Spotify chose to highlight short clips from comedy TV shows like Broad City and not music videos or interviews with artists that complement Spotify’s core offering. It seems as if in Spotify’s video realm, TV killed the radio star yet again.

The truth is that monetising music with a freemium business model is hard. Pandora, just like Spotify, is also sweating to make it work.

From a product design standpoint, there is something almost unfair in this story, since Spotify did a great job in designing a fantastic music experience: the catalogue is huge, the device support is superb, the playlists are great for sharing, the play queue is a cool tool for occasional DJing, the user profiles are what social discovery is all about and the recent announcement of Spotify Running makes perfect sense. And let’s not forget the best part – much of this is available for free.

But all of that wasn’t enough and so Spotify had to change focus and expand its content offering.

Maybe last week’s press event doesn’t mean that much and music fans have nothing to worry about. Maybe Spotify, just like MTV in the 80s, will take content streaming business to new heights with the introduction of video. Maybe Spotify, like MTV in its heyday, will be as innovative with TV clips as it was with the music streaming experience. Maybe it will even challenge YouTube’s viewing experience that hasn’t changed much over the years. But those are all big maybes.

One thing is clear – Spotify must make TV clips work with music. One will not work without the other. Just look at what happened to MTV once it lost all interest in music and its core fan base to focus solely on reality TV – it’s dying.

With millions of music fans who love Spotify and are looking forward to a bright new age for the industry, one can only hope that Spotify knows what it’s doing and that history will not come full circle.

Social Media And The Celebrity Factor

This article was originally published on TechCrunch.

Kim-Kardashian-InstagramThe re/code mobile conference took place a couple of weeks ago, and among the speakers discussing the trends in tech were YouTube’s Susan Wojcicki, Instagram’s Kevin Systorm, Kim Kardashian West and… “Wait, what? Kim Kardashian is a tech expert now? Seriously???”

Many on Twitter were not convinced, and even Kara Swisher had to kickoff the interviewsomewhat apologetic going over Kardashian West’s impressive social footprint: 21 million Instagram followers; 25.2 million Twitter followers; and her iPhone game made her millions in the last year (and she does it all via a BlackBerry). If that’s not a savvy mobile tech powerhouse then what is?

Kardashian West is much more than a reality-show star at this point but in a way the reason she is a pioneer in using social media and developing her media brand, stems from the fact that she first got famous on reality TV.

Reality stars are good examples of artists that have massive appeal, great brand recognition and (for some) the talent to have successful careers after the show ends. However, when they are reality stars, they have no leverage over the show producers. If their show gets dropped, if their persona gets twisted in the editing room, their career could end before it even really started.

That is why social media outlets are key for these artists; they allow them to connect directly to their audiences. If E! drops Keeping Up with the Kardashians tomorrow, Kim will still be famous, because every time she’s online, she can connect with an audience more than twice the size of the average viewership of an episode of The Voice on NBC. Having this direct channel to her fans, she can now easily branch out to other ventures, like her mobile app.

Another social media powerhouse is Ellen DeGeneres. Ellen has about 33 million Twitter followers and about 100 million YouTube views per month. As a TV star, having her own video space seems vital. She recently launched ellentube, a website with an accompanying slick mobile app that allows fans to view her show’s highlights, additional clips and even upload their own cute home videos.

So what are the main reasons to build such a unique brand experience and go, in Ellen’s case, beyond YouTube?

It’s about building a community; videos uploaded to ellentube are moderated, which is not a simple feat. It surely requires quite an operation in the backend. However, creating a safe environment is key for Ellen’s brand. If she is going to throw all her weight behind this, she must make sure her fans feel completely at home there. This feeling is going to encourage them to come back and participate. This environment, which marketers usually refer to as “brand safety,” is key to attracting large sponsors that usually worry about having their pre-roll ads before a cute kitten video. So if Ellen can make both her audience and her advertisers comfortable, this site has enormous potential.

It’s about owning the data. In her re/code interview, Kardashian West called her Twitter followers “an amazing focus group.” The ability to get direct, unfiltered responses from fans is priceless. Kardashian West often uses it to consult with her fans about which restaurant to go to, but she can also use that as a focus group when making business decisions. Netflix is using its fan base for that and HBO is looking to do the same.

In Ellen’s case, her producers can now make a calculated decision to air a user-generated video from the site, based on how many people liked it on ellentube.

These examples boil down to being able to call your own shots. Creating your own video site or gaming app isn’t easy; it takes investment, time and expertise. However, if you team up with the right people, the potential upside is enormous. It’s all about maintaining creative control.

These celebrities know their audiences better than any video or gaming expert out there. So if they are independent and can create their own experiences — as well as have a direct channel to their fans — their possibilities in the digital space are endless.

Forget YouTube, Ellen DeGeneres now has Her own digital video network, ellentube

This interview with me was originally published by Adam Flomenbaum on Lost Remote.

ellentube-og-1200x630Ellen DeGeneres on her show last week announced the launch of ellentube, her new digital video network (and app) that will host videos that are “fun” and not “mean spirited.” The site will allow users to send videos directly to Ellen – which will be reviewed by Ellen’s team – and ellentube will also host favorite videos, show clips, and exclusive content produced by the woman behind the selfie seen ‘round the world.

ellentube is powered by Kaltura’s open source online video platform, Kaltura, a New-York based company founded in 2006, has secured $100 million in financing and currently has over 300,000 publishers using its platform. ellentube is based on Kaltura’s MediaSpace social video portal, which can be deployed as an out-of-the-box application, with the ability for full customization and branding.

Ellen is no Oprah, but her following is sizeable, and more, she has proven to be more attuned to the digital generation. ellentube is not democratic – her team will carefully curate videos that are all-around positive and are thus good for Ellen’s brand. Using digital platforms for brand building is something that celebrities have already experimented with and will continue to do so. For more on ellentube, how it complements Ellen’s other digital undertakings, and whether this is something we will see more celebrities doing, we spoke with Kaltura product manager Iddo Shai:

Lost Remote: How is this a better experience for fans than YouTube?

Iddo Shai: The site perfectly mirrors the Ellen Show experience, which is always fun, open and positive. Unlike YouTube, ellentube is curated. YouTube has some great content, but it also has some not-so-great content. On ellentube the videos are always great, because there is an editorial team behind the scenes, making sure that only videos that meet the site’s standards are published. This means that fans can spend literally hours watching really fun content.

Curation helps making sure the content is good, and it also helps with content being appropriate for all age groups. This is not the case with YouTube. Let me quote Ellen when launching the site on the show “if you accidentally type in a word wrong, you are not going to stumble upon something that’s… bad or mean or… you know how that can happen. Everything on the site is fun, nothing is mean spirited.’

And finally there’s the interactive aspect. The show didn’t only build a site but also a native app that makes it extremely easy for users to upload their videos. Kaltura also helped make the reviewing process quick and easy. Doing that via the YouTube app would have been challenging and almost impossible”.

LR: How does this complement Ellen’s other digital undertakings. 

Shai: Ellen is really a pioneer when it comes to digital and social media. She holds the world record of the most retweeted picture, and she was also one of the first to interview the Twitter sensation #AlexFromTarget.

So it’s no accident that she is also one of the first celebrities to build their own video centric site, connecting directly with fans, asking them to register to the site and featuring their videos on her show. A few years ago, TV talent didn’t understand why the second screen was important, we heard TV producers worried about building a web entity thinking it would hurt their ratings. The opposite is actually happening. With these videos going viral, Ellen’s ratings will go up. And when people want to watch more content, they will got to ellentube, where the experience is all about ellen and she is not just another contributor in an ocean of videos. From there, the sky is the limit: exclusive content, selling merchandise and more – I am curious myself to see what’s next.

LR: Will this be something we see more celebrities doing to engage fans?

Shai: I believe so. And I believe ellentube will show many of them the way. I think this will make a lot of sense for celebrities that are highly engaged with video content. And now it is easier than ever with tools like our MediaSpace product – an out-of-the-box social video portal, which ellentube is based on. Kaltura MediaSpace can be launched as is very quickly, or further customized to the customer’s liking.

They can create video communities, where users come to watch but also participate. We at Kaltura have seen bands doing live streaming for fans while being on the road, for example. Some of this stuff you can do on free platforms, but not everything. And especially for celebrities that can get a massive audience, splitting the revenue with Google makes very little sense. If you are giving it for free, you can at least ask for your fans’ email address. You can’t do that on YouTube.

LR: Anything else?

Shai: We are seeing a strong trend with user generated content. Remember, this is the selfie generation and there’s huge potential in creating TV shows and also marketing campaigns that ask people to submit their own content. With smartphones and apps it’s easier than ever and it creates an infinite feedback loop. This is what social TV is all about and this is what good marketing campaigns are all about.

We have seen one good examples of that when one of our customers called Visalus did a weight loss challenge and had people document themselves every step of the way and then others voted for them to win a nice prize. Creating truly unique interactive video experiences for communities with common interests is difficult to do well on a mega-site like YouTube, where one size fits all.

Why is YouTube brand Maker Studios worth more than Marvel to Disney?

This article was originally published on The Guardian Media Network.

maker-studios-logo-lWe are all used to seeing movie and TV stars being promoted in the subway. Well, YouTube now feels that if you have at least 1.4 million registered fans – you are worthy of an ad campaign as well.

Hollywood is clearly taking note of the potential of YouTube talent. About a month ago, in one of its biggest deals in recent years, Disney bought Maker Studios for roughly $1bn – or about £600m (half of it in cash and the rest in Disney stock). Maker Studios represents many popular YouTube talents and help them to produce and monetise their content.

This deal reminded me of the deal in 2009 in which Disney acquired Marvel. When comparing the valuation of Marvel and Maker at the moment of purchase, the difference is staggering. In 2009, the year it was acquired, Marvel did about $670m in sales. Disney paid $4.94bn for Marvel, which gave it a valuation multiple of about seven.

In the case of Maker Studios, the revenue numbers were not public knowledge. But we do know that Maker was evaluated at $300m about six months ago, when it went through another round of funding. Even if we assume that Maker got a very generous valuation back then (say 10x), its revenue couldn’t have been more than $30m. Given that Disney bought it for $500m (with up to $450m in performance-based earn-out), Maker basically received an evaluation of between 16x and 31x. What makes Maker Studios worth at least 220% – and possibly as much as 440% – more than the people who brought us Spiderman?

Much of it is about the number of YouTube subscribers. Maker’s revenue may be small but its reach is massive. It claims to have 5.5bn monthly views and 380 million subscribers. In that sense, Maker’s acquisition is more similar to Facebook buying WhatsApp for $19bn. WhatsApp had 450 million users at the time, which means that Facebook paid about $42 per user, while Disney paid about $2.60 per user. So maybe Maker’s price tag makes sense after all.

“Eyeballs valuation” is another sign of technology and entertainment convergence, where every content property can be easily measured. But what happens now? How can the Maker acquisition drive much higher revenues for Disney’s stockholders?

Maker will start by fostering and monetising its biggest asset: the direct relationship with subscribers. The first stage will be to cut out the middleman – YouTube. Maker recently launched its video site, called Maker.TV (powered by the Blip player that Maker bought last year). While the YouTube channels will still be operated, I assume much of Maker’s energy will now be directed towards moving its fans to Maker.TV. This is strategic for Maker for several reasons:

Ad revenue – YouTube takes about 30%-45% of any ad revenue. In addition, Maker has to work with YouTube on selling its ads and it has much less flexibility with advertisers.

Sponsorships – Maker needs to be able to create more branding and sponsorship opportunities around its original content. This is extremely hard to do within YouTube’s unified design.

User targeting – Maker needs to know everything about its users: their email addresses, viewing history and engagement levels. It also needs to be able to track viewing trends. This data is worth money. If Maker can offer more targeted ads, it can receive higher CPMs from advertisers and deliver them better click-through rates. In addition, data is key to offering appealing content recommendations. On YouTube, Maker has little control over the suggested content. On its own site, it can push its original content and record – and subsequently act on – the data on what’s working and what’s not.

Now that online video distribution and social media marketing make content more accessible than ever before, we are likely to see more content makers following Sesame Street’s lead and creating their own holistic website experience, in addition to their YouTube channel. This is vital to creating a direct relationship with viewers, which is what is driving today’s eye-watering acquisitions in technology and entertainment.