Broadcaster D2C Requirements For The 2020s - Part 1

Most national broadcasters in developed countries have app-based OTT services, many of which have been in place for over a decade. Less-developed national broadcasters still rely on YouTube, Social Media platforms, or their own websites to deliver OTT content to their audience.

So, what is it like for these “non-App” broadcasters when they decide, in the 2020s, to launch their own OTT App? What have they learned from those that have gone before them that helps them to leapfrog directly into using the very latest technologies and customer engagement methods?

Broadcaster OTT services have now been available for over a decade since multiple apps were launched in Europe in the mid-late 2000s, including BBC iPlayer, ITV Hub, RTE Play, RTVe a la carte, RAI Play, Mediaset Play, RTL Videoland and more. In the 2010s, US services launched, first with HBO Go, and by the end of the decade all of the major US networks had launched clearly defined streaming services. Throughout the rest of the world, major broadcasters launched app-based OTT services during the 2010s including Globo TV, Doordarshan, NHK, Astro and more.

These services naturally started with VOD and catch-up TV. Then linear channels were added to the OTT services, carrying live events as part of their line-up. Those channels with rights to major sporting events like the Olympics, Football World Cup and Super Bowl have all observed very fast-growing live audiences on their streaming platforms. As we survey the landscape in 2022, Broadcaster OTT services are becoming full linear and on-demand services, and many are becoming the exclusive home for original content productions or at least are offering early launch windows for new content before later launching on the linear platforms. The sophistication of these services is developing quickly, and in head-to-head competition with the major SVOD (subscription VOD) players like Netflix, Amazon Prime and Disney+.

Recently it has become clear that SVOD services are reaching a ceiling in terms of household budgets. A line-up of Netflix, Amazon Prime, Disney+, 2-3 other leading OTT services, and the cost of broadband are approaching the same price as the traditional pay-TV package. In some countries, this mix of video and broadband services represents an overall cost-saving for the consumer, which is naturally a big reason for their success. Because of the financial pressures, demand for free advertising-supported services is therefore growing, which is where the broadcaster community starts to focus even more on their own D2C services. As we know, selling advertising around content is the business model of commercial broadcasters. In D2C services, the promise of potentially more valuable addressable advertising is attractive to the broadcasters to increase the value of their advertising inventory. As noted in previous articles, the mix of addressable advertising in D2C services and the broad-reach advertising approach in linear TV is a powerful mix for broadcasters and their advertising partners to take advantage of.

So, for a broadcaster in the 2020s that is launching its first app-based OTT service, what is it doing to take advantage of the learnings that have gone before?

The typical scenario is that a broadcaster is looking to move from a YouTube-hosted channel to its own App. YouTube has given the broadcasters an easy way to make content available to its audience. But it has also limited the monetization of that content, because the advertising revenue generated from the content is either very limited or not available to the content owner. Instead, the content owner is paid based on views/clicks, while YouTube earns the advertising revenue. Not only do they earn the advertising revenue, but they also control the ad placements, meaning that inappropriate ads (from the broadcaster’s perspective) may be placed alongside the content. This highly restricted model means that OTT content on YouTube will always be a very small fraction of the total revenue generated by the broadcaster. To earn more revenue means taking a direct route to the consumer where the broadcaster can properly monetize the content. Making the transition to a broadcaster-owned App means building out the various technical and operational capabilities necessary to deliver and monetize content to a large, generally nationwide, audience.

While many of today’s D2C Broadcaster Apps are custom developed, the broadcasters embarking on their D2C journey in 2022 have a choice of commercially developed solutions to consider. The Cable TV and Telco IPTV services of the last 20 years have had a range of suppliers for content management systems, set-top-box middleware, and multi-screen applications. These suppliers have been focused on the content search, navigation, and selection features that we are used to from our satellite, IPTV and Cable TV services, and they are now able to offer a very similar set of features for D2C Broadcaster services. While every broadcaster has its own set of required system integrations, their functional requirements are broadly similar. An analysis from recent broadcaster public tenders shows the following headline requirements. 80-90% of these requirements can be considered out-of-the-box features, while others require custom integration to achieve. However, as a set of D2C Broadcaster requirements, they can be considered a standard set for 2022.

These requirements can be summarized into two broad areas in which the D2C service will succeed or fail – Content Delivery and Content Monetization.

For Content Delivery, the model is still relatively new for broadcasters and is in its early growth phase when compared to the legacy broadcast video delivery models of satellite, cable, and IPTV. Summarized, the requirements cover the areas of content management, audience reach, content delivery quality, and the economic scalability of the platform. Performance and scalability of the streaming platform are normally the two primary concerns for the broadcasters as they consider delivering major live events to national audiences through their OTT platform.

For Content Monetization, the direct to consumer (D2C) relationship is particularly new to broadcasters, which is why it often has special focus in dedicated internal “Digital” departments. The core technical requirements today cover user management, user analytics, advertising, and e-commerce integration. But there are also operational management requirements to proactively address Digital and “traditional” operational integration and alignment, to streamline what has typically been two separate parts of the business for the pioneering Broadcaster D2C streamers.

The broadcasters who are now joining the “D2C App Party” in the 2020s need to deliver advanced services right out of the gate. The competition from well-established streamers is already intense, and examples of high-performing OTT services are everywhere to be seen. The good news is that these late-joining broadcasters can benefit from lessons learned and advances made in technology and business models since D2C Broadcaster Apps were first launched 15 years ago.

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