SME 2018: Hey Google, What's Next in OTT?
Online video is making viewers work—and work hard—to find content when it comes to live linear viewing. Americans spend 12 hours a day consuming media on multiple devices for live and time shifted viewing. If that doesn’t present enough of a challenge to content providers,viewers have managed to stretch the 24-hour day to 31 hours because of all the multitasking going on second, third, or even fourth screens. That’s all according to Rachel Berk, business development manager, Android/Play at Google, who presented these and other findings at the closing keynote presentation of Streaming Media East in New York on May 9.
While 12 hours of media consumption daily seems large enough, what’s even more startling is 35- to 69-year-olds worldwide spend 160 minutes daily searching for live linear content, but only 24 actually watching something. 16- to 34-year-olds spend 130 minutes daily searching, and 30 minutes viewing. These stats arefrom Ericsson’s “TV and Media 2017” report.
“VOD definitely appears to be more efficient, and the ratio differential between searching and watching is around 2:1 vs. linear TV," said Berk. Daily worldwide VOD requires 19 minutes of searching for the 29 minutes of viewing done by 35- to 69-year-olds, while 16- to 34-year-olds spent 29 minutes of searching for 53 minutes of content consumption. Why do viewers watch more VOD? "The services make discovery easier," she said.
"I think it’s fair to say it can be decision fatigue," she said. "Users want to pick up where they left off. Binge watching is an important thing, but I think it’s also indicative of a desire for users to jump right in to that content. They don’t want to spend their leisure time browsing through a vast array of content options."
Why do viewers spend so much time searching on live linear services? "People actively seek out live TV for that ‘browse experience,’ because there is something inherently satisfying or valuable in channel surfing," she said.
Consumer Demand(s)
OTT is defining our current media landscape and has created consumer expectations that are a significantly different from in the past. "The global TV and video market is estimated at $461 billion, and 75% of the revenue is generated by the two legacy products," she said. "26% growth is coming from digital video advertising and 18% growth from subscriptions."
"The OTT shift has changed consumer experience and expectations, [including what consumers] think they deserve from media companies and where they think they can get it. From a consumer perspective they now have even more choice," she said "They have higher expectations when it comes to what they want to watch, when they want to watch it, [and] for the amount of money they think it’s worth. All these different models are changing the entitlement of consumers to get their content in a way that they want it."
The VOD Big Four
Four OTT services account for 80% of viewing time: Netflix (42%), YouTube (20%), Hulu (11%), and Amazon Video (7%), with other sources delivering the remaining ~20% of the market, according to a June 2017 comScore OTT Intelligence report.
Google is targeting search for longtail content to address this 20% segment. "We’re trying to serve the user who wants content that may not be available on these top four services," Berk said. They're doing this with machine learning and new technologies to better inform recommendation.
The Content Boom
On the content side, there’s no shortage of companies dipping their toes into traditional models, including YouTube TV and Facebook Live. "There’s a ton of experimentation and a sense that differentiated content will be the key value driver for media companies overall," Berk said.
To call it “dipping” might be an understatement. "In the U.S. there were 487 scripted shows in 2017; that’s 83% more than the year before. So it’s just explosive right now. Netflix is going to spend $7 to $8 billion this year on original content, an additional billion from the year before. Amazon is estimated to spend $4.5 billion. What we’re seeing is definitely an investment in original programming," she said.
Her prognosis for the future? Live, sports and local. "Looking forward, what we’re going to see is a lot of investment in live and even more investment in sports in terms of resource allocation. And I think local, we haven’t seen a ton yet, so it will be interesting to see how these media companies try to target users and locate users with these different source of differentiated content."
Google Assistant's Role
Google expects to see consumers get much more comfortable talking to their personal assistants. Right now, adoption is restricted to a small set of fairly basic functions. Google’s hope is that as both users and assistant technology become more sophisticated, the search company will be there to help decrease the time live linear viewers spend hunting down the content they want to watch.
"Our key pillars for the assistant are conversational, personal, fast, and fun," she said. "Our assistant is on our TV form factor as well. We really want to solve for both discovery and engagement."
"The world is changing, and these technologies are disrupting both consumer expectations and also the way that the industry is thinking about how to deliver their content. They are devoting more and more time and resources to content creation and so are we. It's a good time to be in the business," said Berk. For viewers, it sounds like it's an even better time to be on the receiving end of the business. (For more on voice assistants and video, see "Engineering the Video Experience for Alexa and Her Friends.")
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