App-etite for TV1 Dec, 2015 By: Nicole Urso Reed Response
New over-the-top (OTT) services are streaming in major disruption (and opportunity) for the next frontier of targeted advertising.
When something is described as “over the top,” it usually means “a bit too much.” It’s gone too far. Maybe it’s even downright excessive. Some might call it a perfect moniker for the torrent of new video from publishers including Netflix, Amazon Video, Google Play Movies, and video apps like Tastemade — all vying for the same living room audience that’s already being tugged and pulled between broadcast and cable TV, the DVR queue, and other on-demand offerings.
But “over the top,” or OTT, content actually derives its name from the ways in which it’s consumed, bypassing traditional methods and going straight from the publisher directly to the consumer — on whichever device they choose to view.
What’s on TV?
This is next-level channel surfing with some seriously compelling content — in its three seasons, Netflix original series “House of Cards” pulled in 17 wins and 109 nominations for coveted industry accolades, including a 2015 Golden Globe for Best Actor in a TV drama for Kevin Spacey. “Orange Is The New Black,” another Netflix hit that’s also in its third season, claimed 33 wins and 67 nominations, including Uzo Aduba’s 2015 Emmy for Outstanding Supporting Actress in her role as Suzanne “Crazy Eyes” Warren.
These shows are just the beginning as Netflix continues to roll out original series across multiple categories. Dramas debuted this year include the highly acclaimed “Bloodline,” “Narcos,” and “Sense8.” Comedies include star-studded casts in “Wet Hot American Summer: First Day of Camp,” and “Grace and Frankie.” There’s a variety of animated kids’ series too, as well as a globetrotting, cinematic docu-series showcasing the world’s most talented chefs — “Chef’s Table.”
Celebrity power and multimillion-dollar productions aren’t the only way to win an audience in the digital space, however. It usually works the other way around. Take for example “The Grill Iron,” which now airs on the Cooking Channel. The cross-country exploration of tailgating traditions at college campuses was originally produced by Tastemade Studios as a branded Web series for Hyundai.
After the campaign ran online, the Cooking Channel picked it up to air a seven-episode series during football season. Tastemade continues to roll out a variety of made-for-Web shows prominently promoted on Apple TV, iTunes and, most recently, the video discovery section of Snapchat.
Variety reported that the Cooking Channel deal “essentially flips the traditional TV programming business model on its head,” though Tastemade founder and CEO Larry Fitzgibbon said that his primary focus would remain on digital distribution, with linear TV as a secondary revenue stream.
“Every day we wake up and think about audiences that are primarily consuming the content on social and mobile platforms — that will continue to be our primary focus,” he said. “But we have learned over the past year that we can take this content to larger screens. To the extent we can reach a broader audience through partners with great distribution, we’ll look to do that.”
Podcasts are even in the mix of today’s most popular entertainment, and it’s pure audio — imagine that. “Serial,” which debuted in October 2014, a spin-off of public radio’s “This American Life,” tells a single story through a series of 12 episodes.
The first season re-investigated a murder that happened in Baltimore in 1999, and it captivated millions of listeners with each Thursday installment, all of which were free to download on the “Serial” website or iTunes podcast feed. It was an impressive feat for any medium, but particularly the open-source digital audio publishing platform, which Steve Jobs a decade ago predicted would be the next generation of radio.
With the popularity of “Serial,” podcasting finally legitimized its place in pop culture with many new shows now in production (and existing ones getting discovered) — and several of the best among them are available for free.
Podcasts promise to get a major popularity boost, too, with the second season of “Serial” now underway. Pandora announced in early November that it will be the exclusive streaming partner for new episodes, and starting November 24, would also carry the first season. New episodes will post at their regular time — Thursdays at 6 a.m. EST — but they’ll be broken into five-minute chapters for Pandora listeners who are accustomed to hearing songs rather than lengthy podcasts. The episodes can be played in their entirety as well.
“We also have our fingers crossed that [narrator] Sarah Koenig’s voice sounds enough like Justin Bieber’s that Pandora’s genome pushes the show on hordes of millennials,” Ira Glass, editorial advisor to “Serial,” joked in the announcement.
But he makes a good point: there’s a lot of room to grow for “Serial,” and podcasts overall. According to Edison Research, Americans 12 years old and up who have listened to at least one podcast in the past month increased from 15 to 17 percent, or an estimated 46 million. Introducing the show to Pandora’s more than 78 million monthly listeners will undoubtedly draw in new listeners and interest in podcasts. Starting next year, Pandora will also be the exclusive streaming partner for “This American Life.”
“‘Serial’ and Pandora are a perfect fit,” Pandora CEO Brian McAndrews said in the announcement. “We are always looking to delight our listeners with engaging and cutting-edge programming, while ‘Serial’ is looking to reach the largest audience possible. This gives Pandora listeners yet another reason to tune in.”
The New Perspective
The leading OTT entertainment publisher is one that many people might not associate with a TV viewing experience, yet it accounts for more than 170 million monthly users — more than Netflix’s 114.3 million, according to eMarketer. It’s YouTube.
“OTT simply presents another delivery method for content,” says Kevin Lyons, president of Huntington, N.Y.-based Opportunity Media, which provides direct response representation to A&E Television Networks. “With any new delivery method, opportunity is presented for advertisers. However, much remains to be seen as the advertising model for OTT is still evolving. The largest OTT provider in terms of penetration remains YouTube. We have seen tremendous growth in our viewing apps, both in total video views, as well as minutes spent.”
YouTube’s growth rate during the past year has been 4.4 percent — compared to Netflix’s 20.4 percent, but the report predicts that YouTube will remain the dominant force, with 187.8 million monthly users expected by 2019; Netflix should hit 143 million.
Amazon is the third-largest publisher with 65.2 million users and a growth rate of 13.5 percent, followed by Hulu at 59.9 million users and a growth rate of 16.2 percent. According to the report, YouTube has U.S. OTT video user penetration of 94.3 percent, while Netflix’s is 63.2 percent. Amazon has 36-percent penetration, with Hulu at 33.1 percent.
While smart TVs and set-top boxes, like Roku and AppleTV, proliferate the trend in accessibility to Internet-based entertainment, the OTT audience also includes viewers who are streaming content on other devices, including gaming consoles.
Hoping to wrangle and organize the myriad entertainment options, including games, the latest edition of Apple TV introduced a new interface of apps, including iTunes movies and TV shows, Netflix and Hulu, ABC and Disney, HBO and SHOWTIME, live sports and news, and much more.
“Apps are the future of television,” Apple proclaims on its product page for the new Apple TV. “Think about it. On your mobile devices and computers, you already use apps such as Netflix, Hulu, WatchESPN, and iTunes to watch TV shows. And that’s exactly where TV in the living room is headed. Apps have liberated television. They allow you to make individual choices about what you want to watch. And when and where you want to watch it. With the new Apple TV and its powerful new tvOS, developers are creating experiences that will change what you expect from your big screen, making your TV feel as personal as your iPhone or iPad.”
Ready to Shift
This past year has seen a tremendous push toward app-based TV with offerings including HBO Now, Sling TV (Dish), Noggin (Nickelodeon), and the Lifetime Movie Club.
“The way I see it, there are events that viewers want to tune into live, such as news and sports, and even reality television and game shows that people want to see in real-time because they are engaged on social media during the live event,” says Peter Koeppel, president at Dallas-based Koeppel Direct and a member of the Response Advisory Board. “That’s one category of content. Then there is the on-demand world, which is disrupting traditional advertising models. For example, Reed Hastings, CEO of Netflix, was recently quoted in Variety as saying, ‘No advertising is coming onto Netflix, period. Just relevant cool trailers for other Netflix content you are likely to love.’ HBO Now only runs ads for their own content. On the other hand, Hulu offers choice-based and target advertising, including 30-second spots to both English- and Spanish-language audiences. They can target based on Nielsen DMA, state, and ZIP code. Another advantage with the Hulu platform is advertisers only pay for ads that are viewed to completion. Customers can avoid commercials altogether, but they have to pay a premium. Sling TV has the same commercial breaks and national ads as the standard TV channels that you see via cable or a satellite TV service.”
Koeppel likens the evolution of OTT to the nascent days of cable TV. Not only is it disrupting the industry, but OTT services appeal to the “coveted millennials” who are already accustomed to apps and consuming mobile content on a regular basis.
According to Brian Norris, director, national advertising sales, at Dish Network in New York, Sling TV was launched with three markets in mind.