Johan Bolin, Chief Product & Technology Officer, Edgeware
It’s no secret that the momentum behind the OTT TV market is showing no signs of slowing, which is what should be expected. Internet and on-demand simply offer a superior user experience, range and quality of content, as well as outstanding video quality. Viewing habits are continuing to move towards on-demand streaming services where viewers are in control of what they watch and when they watch it, with younger generations now growing up considering internet the only relevant platform for video entertainment.
For example, the number of UK subscriptions to TV streaming services such as Netflix and Amazon Prime overtook those to traditional pay television for the first time in July 2018 – primarily driven by millennials and gen Z – highlighting the shift that is taking place.
However, despite more and more viewers switching off from linear TV, OTT platforms and content providers are coming up against some significant challenges. They now face an ongoing battle to ensure that their content can attract new customers, while being able to retain existing customers in an increasingly competitive landscape. This competition isn’t just coming from OTT natives. Traditional broadcasters are also getting in on the act, adopting OTT delivery models in an attempt to meet customer demands.
And, while the rush towards internet-based distribution models continues to grow among all actors, driven by the vison of a user-centric fully on-demand and interactive ecosystem, there is also a paradox emerging.
The wide range of different streaming services and the rich catalogues of titles available introduces something that in psychology is referred to as Decision Paralysis. This is when the brain gets overwhelmed with options and alternatives, so the user instead choses nothing and walks away.
This is a new challenge introduced by OTT TV. And it is a risk not only for each content provider or broadcaster, but for the industry as a whole. Viewers not watching TV means they decided to do something else, most likely on the internet where there are many options.
Ironically enough, the traditional linear TV model did a decent job in avoiding this. Yes, there were fewer alternative options available, but turning on the TV was still a pretty lean-back and relaxed way of watching. There wasn’t as much content, but you could still typically choose between entertainment, drama, a documentary, or sports.
In fact, according to the Nielsen Total Audience Report Q1 2019, there is a phenomenon starting to arise where users, after attempting to decide what to view on one of many on-demand platforms, end up turning on the good old traditional TV just to get out of the paralysis. Similar observations have been described in several recent articles and conferences.
This is not because there is a lack of content on the on-demand platforms, or that users don’t want to be involved in selecting what kind of content to view. It simply means that there is a gap between the expectation of a lean-back experience and the user interaction flows and formats of today’s on demand platforms.
The most common answer for how to address this is with recommendation engines, although there are a couple of challenges associated with that. For example, while it typically does bring down the number of presented options to choose from, it still requires the user to actively make a selection. Another challenge is that it generally only works with VOD assets and not live content, so it does not give the user quite the same lean-back experience as “just turning on the TV”.
The desire for an experience more similar to the classical way of consuming TV becomes clear when you ask the users. According to research we carried out with YouGov of more than 6,500 adults across the UK, USA, Hong Kong, Mexico and Spain, the vast majority (89%) would be interested in watching TV content aimed at their personal interests.
The research also found that 68% of consumers would be interested in content aimed at their local area and content aimed at their age group would appeal to 64% of people. If that’s not enough, 68% said they would be more likely to watch a traditional TV channel if programming was more tailored to their personal preferences.
This clearly illustrates that there is a demand for content that can be adapted to fit the preferences of different audience segments. Whether it’s related to age demographics, regional programming or fans of different sports teams, consumers recognize that having access to customized content can provide an enhanced viewing experience.
And, while viewers generally don’t appreciate commercial breaks, advertisements are more accepted and perhaps even appreciated if they are personalized. Globally, more than two-thirds (67%) of respondents said they would be more engaged with TV adverts that were aimed at their personal interests, with this trend being higher among younger demographics.
With an evident demand for content personalization, the good news for providers is that with OTT TV comes the ability to create more tailored or theme-based content and channels.
Recent advancements in the technology infrastructure of Dynamic Ad-Insertion offer a glitch free broadcast-like viewing experience, even when the ads are personalized. Significant steps have also been taken by many OTT TV providers to improve both the user experience and, perhaps more importantly, boost revenues.
Although there has been a gap between the personalization of content powered by recommendation engines in the VOD portals, and the lean-back experience of linear broadcast TV, this is about to change. With the evolution of TV Playout to more OTT First solutions, new technologies enable Live and VOD content to be stitched together and presented as a traditional TV Channel, while at the same time being personalized. These channels could consist of content that is selected based on viewers’ interests or demographic, enabling the development of new innovative campaigns and offerings to attract new users and create new revenue streams. The combination of personalization served as a curated flow of content gives the viewer the option of a fully lean-back experience, while also opening up opportunities for entirely new concepts.
This is particularly effective for live events, where temporary virtual channels can be built around the main attraction. Let’s take a sports match as an example. Complementary content can be stitched into the main programming to let fans follow their favourite team both before and after the match.
Marrying the personalization possibilities from on-demand with the valued lean-back aspects of traditional broadcast is unlikely to be the final and ultimate way of packeting TV in a fully digitalized way. I hope it is not, as there is much more to be done. But it certainly is a new tool taking us one step further on the journey.
To learn how Edgeware solves this problem, download our Virtual TV Channel Creation Solution Brief.
Fill out the form below and we will get in touch with you.