The Norwegian Broadcaster Corp. / NRK just finished it so far last round on launching VOD services OTT on new devices. This fall we launch services on Samsung, LG, Sony, Panasonic and Phillips Smart TVs.
In addition to the Smart TVs -Sonys Playstation 3 and 4 including various Blu-ray players from manufacture’s mention will have our service. And as one of the few public broadcasters in Europe we are also this summer launch our VOD app for Apple TV.
These launches now complete our vision on reaching out directly to our viewers on relevant platforms with good Norwegian content. We already have a variety of applications and HTML5 based services in place for PCs, mobile and tablets. All the services is based on the same layout and user experience so the users can find their way regardless of platform. Our «Nett-TV» service include catch-up and archive of 99% of all aired programs and contains over 40 000 program titles available free to air for viewers in up to HD quality.
Now that TV content is back were it originated – on the living room TV as a comprehensive VOD service it made me reflect a little on how the industry is changing with the fast uptake of OTT services.
The challenges are many both for us as a broadcaster and for other stakeholders in the traditional value chain. However the possibilities are enormous if you embrace the possibility given with Internet distributed content.
First of all for a broadcaster there are three main challenges as I see it. The rights issues, lack of standards and quality of experience. The rights issues are more easy to handle when we are talking about an OTT solution served from the broadcaster it self and handled within our own right clearing regime. That is why we prefer to be the best provider of our own content. The mature Internet with its developed CDN services also guarantees a better experience for end users consuming video over the open Internet. With these two factors more or less out of the way the big head ache is the fragmentation and lack of overall standards. Developing services for a wide range of device and models from different manufactures using slightly different technologies is a costly affair. That is why we and other European broadcasters are gearing up support for the HbbTV standard. This standard will lower cost and give us additional functionality coupled with linear TV. Our next generation OTT service will be HbbTV 1.5 based.
Overall demographic between OTT and linear services differ little when it comes to content. What is popular on broadcast is also what generates the most traffic online. Basically if it’s good TV it’s consumed on every other platform. Quality TV content seems to get a higher total reach using OTT in addition to the traditional broadcast programming.
We see very interesting patterns on the use of TV content on tablets however. One example here is the younger generation – and especially kids. Our main OTT service generates on average 5 stream starts per unique user per week, but for our specialized kids and young people service the average is 25 starts a week! Live channels that are available on some of the platforms stand for about 30% of viewing time – the rest is on-demand. Looking at our kids service again (NRK Super), the live part only stands for about 9%: the rest is on-demand. So, if you want to know how media consumption will develop in the future look at today’s 5-6 year olds!
As an established broadcaster, these partnerships with the right content partners are already in place. We produce content ourselves, and buy and contract content from other Norwegian and international producers. If it is popular on the big screen it will also work over the top. As a market leading broadcaster we know what works. OTT is more about the distribution of content and, at the other end, the pattern of consumption. It’s when the content reaches the audience that the value of the content is unlocked. The audience wants to consume on their terms. We have to meet them there.
On-demand and OTT will be taking over more of the market for drama series, movies, short form entertainment and so on. This is a trend we already see with successful services like Netflix, Hulu and HBO GO, including broadcasters and cable operators’ own VOD services. However, linear still has and will continue to have its place, both for social reasons and for live events like sports and news. It will also become more important as a showcase window for content discovery.
Another argument for the endurance of linear broadcast in its traditional form is its cost effectiveness. Serving a million simultaneous viewers in 4K OTT in singelcast would probably take down the Internet. Even if it would work it would waste a lot of precious bandwidth and generate a pretty substantial CDN bill. Multicast OTT still has a way to go. As a public broadcaster financed by the people for the people we also have an obligation to serve everyone. Fiber to the home for everyone is still a far cry with our topography. Also, as a public broadcaster we have obligations to inform in times of crises and need a robust and all-covering network to do so. So we still believe that traditional broadcast has relevance for some time to come.
But, ultimately – given the time, better IP infrastructure, video compression and multicast technology, as well as lower cost, we will get there. I just don’t know quite when. In the meantime we can use the best of broadband and broadcast technology to give the audience cost-effective linear and on-demand services. Using HbbTV we can close the gap.
Are cable cutters killing the industry? Throughout history, whenever a new disruptive technology is introduced into a traditional value chain it often ends up making some players more or less obsolete. That is what we are seeing today. Broadcasters, studios and other content rights holders use the open Internet to reach their audiences more directly. Traditional cable and satellite companies need to rethink their business models and product strategies. You already find segments ending up as cable cutters because they don’t see the logic in paying 30-40 dollars a month for a linear TV package containing 30 or more channels they hardly watch any more. That doesn’t mean that it’s not a willingness to pay for content. On the contrary – people are paying more now for video content than ever. It’s just that they want to pay for services they actually use.
