Tuesday, November 3, 2015, 9:47 PM ETPosted by:Kurt Michel
Senior Marketing Director, IneoQuest
Why did companies pay more than $9 million per minute for commercial time during the last Super Bowl? The answer: they knew that tens of millions of people would be watching their ad. Advertising rates during any broadcast are tied to viewership – the more eyeballs, the more the spot is worth. Viewership is the currency that determines how much an ad is worth, and ad revenue keeps the broadcast industry running. But what happens when you want to place an ad during a show streamed online? How much is 30 streamed seconds worth to an advertiser when there is no viewer currency to trust?
As a result of this lack of online viewer currency, Subscription-based Video on Demand (SVOD) providers like Netflix – that charge people a flat monthly rate for unlimited access to a wide range of programs – have led the way in over-the-top (OTT) streaming success. These providers collect viewership numbers for their own use, and have no business need to share them. In fact, keeping those numbers proprietary gives them bargaining strength in license negotiations.
In ad-driven streaming, there’s been a lack of the “dollars for viewers” currency that drives the traditional broadcast ad model. Until now, that is. CBS’ recent announcement that its “CBS All Access” subscription video on-demand service and live streaming will include Nielsen measuring capabilities marks an important step forward for the streaming media industry. CBS is now on the path toward offering trusted viewer statistics for their OTT video offerings.
This is also important for the broadcast industry. As consumers continue to spend more time viewing online content, traditional broadcasters need something to counter “the Netflix shift.” Competition between ad and subscription-based streaming should now heat up, and hybrid ad-subsidized subscription models may emerge as an offering between “free” and “premium.” In the short term, this competition will result in new, interesting viewing options. In the long term, it will lead to higher quality online streaming because of one question: Does an OTT video view count the same as a traditional TV view?
When was the last time you turned on the TV to watch Modern Family at its scheduled time and waited for it to start while the content buffered? Unless you’re experiencing a power outage, your TV always works. Your favorite shows always get to you – uninterrupted – and the advertisements always reach your living room, without delay. There is no question about quality because broadcasters, cable companies, and engineers spent decades measuring and testing quality from content conception to the last mile. With OTT video, it is more complex. No single company owns the networks over which OTT video is delivered.
When Homeland won’t play on Showtime Anytime, whom do customers call? Their Internet providers? Showtime Anytime? The truth is that most of the time neither knows where the problem lies. While Showtime Anytime can assure that the quality of its content is perfect as it is fed into the OTT distribution system, it is at the mercy of the performance of its selected vendors, and network elements that are beyond its control. The job of all of these vendors (content delivery networks, encoder/transcoder processors, software players, etc.) is to collaboratively provide a high quality viewing experience from chaos – and viewers expect it. It’s impossible to quickly or efficiently pinpoint the problem without agreed-upon real-time quality and performance benchmarks.
For ad-based OTT video to compete with SVOD offerings including Netflix, consistently high quality is a minimum baseline. Achieving this baseline will require end-to-end performance visibility, and content owners and service providers will be forced to demand it from their vendors. Those that do not will lose viewers, and be left to wonder how much better ratings would be if the content played well. Was viewership low because the video was constantly stalling, or, was the content simply not compelling?
Thinking about OTT video quality in this way defines it as a business problem instead of a technology problem. If currency is viewership but quality isn’t guaranteed, ads won’t sell. If CBS’ deal with Nielsen creates a domino effect and more content providers share their viewership numbers with advertisers, the spotlight will shift to quality. Companies will need to know their ads are reaching the intended number of viewers they are paying for. And once the industry responds, the term “video buffering” will join “tape rewinding” in the annals of media history.