As OTT content grows in popularity, the challenge is to adopt models and tools that provide revenue in keeping – or outpacing – traditional delivery methods. 

According to the latest research by Cisco, by 2021 the annual global traffic on the internet will more than three zettabytes. That is the number 3 followed by 21 zeroes. And 80% of all internet traffic will be video.

There really can be no doubt that OTT video is now a major source of content, and perhaps in the near future will become predominant. Which means that content providers have to find a highly efficient way of preparing material.

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Connectivity specialist Equinix, which counts high profile players like Netflix, Advanced TV Network and Foursquare among its users, set out the position in a recent paper. “To truly succeed, media companies and their technology partners must address:

  • New, more efficient and cost-effective ways of working to ensure integrity of content and quality of service
  • Flexible business models to maintain audience share and secure monetisation
  • Creative partnership strategies that harness the latest technology and rapidly engage viewers

Yuval Fisher of Imagine Communications points to three likely sources of revenue: transactional (pay per view), subscription (all you can eat services like Netflix) and advertising.

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Netflix on a tablet

Source: Netflix

“This is the route which appeals most to traditional players in the media industry,” he said. “Advertising has been extremely successful in funding broadcast, and it is easy to transfer those principles to new methods of delivering the same content.”

Peter Blatchford of Starfish Technologies sounds a note of caution, though. “A lot of streamed OTT content from broadcasters is the on-air feed, re-encoded,” he said. “The advertisers never paid for OTT, and they don’t want to pay.”

Blatchford also made the important point that you know when a programme is being broadcast, so you can place commercials which are appropriate for that time.

His company, Starfish, makes advertising replacement technology, has users which need to change or simply block commercials. “Nearly everyone has a requirement to block ads, either because it is the wrong time of day or just because there is no revenue. We have a reasonable number of channels just putting up a slate.”

For other content providers, where there is a determination to drive up revenues, there is the option of just-in-time packaging for OTT services. As its name suggests, this assembles, transcodes and encapsulates content at the point of its request by a consumer. This allows the package to be tailored to the individual, not just technically but also in what is sent, and particularly highly targeted advertising.

“To optimise revenue opportunities, advertising needs to be personalised accurately for the user, and delivered so that it does not impair the quality of a viewer’s experience,” Lionel Bringuier of AWS Elemental told the IBC2016 Conference.

“The industry is moving towards server-side advertising insertion, a single uninterrupted stream containing both programme and commercial content at a consistent quality, with commercials personalised for each individual stream at the moment of delivery.”

Yuval Fisher of Imagine Communications concurred. “Though advertisers selling in broadcast have been slow to adapt from a ratings-based approach, marketers are increasingly recognising the value of reaching a targeted group of viewers with relevant information.”