The Future of Video Content Convergence: Consumer engagement opportunities in multi-platform video and over-the-top TV

• Publication date: August 2010

The convergence of broadcast, broadband and mobile technologies is creating a dynamic content everywhere consumer market context, forcing major transformation and potential restructuring in the consumer electronics, technology, telecoms and media industries, and especially for content creators, owners and publishers. It is the consumer that is driving these changes, forcing the seamless convergence of video content, and this is the essential back...

The convergence of broadcast, broadband and mobile technologies is creating a dynamic content everywhere consumer market context, forcing major transformation and potential restructuring in the consumer electronics, technology, telecoms and media industries, and especially for content creators, owners and publishers. It is the consumer that is driving these changes, forcing the seamless convergence of video content, and this is the essential background to this report. This report lays out the business case for the strategic adoption of video-centric direct consumer engagement, across multiple devices and multi-platforms, with a special focus on Internet connected TVs and other connected CE devices. These devices will create the opportunity for content publishers and brands to develop future over-the-top TV engagement and monetization strategies using a converged content planning discipline. The search for a winning consumer proposition is reflected in the convergence of a number of businesses onto the same ground, creating strong competition as well as potential for consumer confusion in the short term.

This report presents a situation analysis from a video consumption perspective as the basis for making a business case for content owners to move into direct, multi-channel engagement planning with their users. This will include chapters on the back-end platform issues surrounding multi-channel delivery of video, the new over-the-top TV landscape and the issue of monetization of video in this new content everywhere context. Finally, a chapter looking at Brand Generated Content and related over-the-top brand engagement opportunities arisng from a converged video consumption model.

Key Features of this report

• Overview of consumer consumption of video content across PC, mobile and TV
• Identification of the key challenges facing traditional broadcasters and content providers in delivering seamless multi-channel VOD services
• Actionable insight on content monetization in the evolving converged video consumer market
• Examination of the alternative distribution opportunities & routes to market for content providers in ‘over-the-top’ TV apps /content portals
• Spotlight on over-the-top brand engagement & the rise of strategic branded video content and their impact on ad agency models

Key findings of this report

Users are not interested in device convergence; it is content convergence that counts. They are not aware of or interested in how their content is delivered and are increasingly looking for a unified experience that is location independent.

We are now entering the Internet era of TV whereby users can expect an increasingly ondemand and personal viewing experience and multichannel video consumption across multiple devices will have a profound effect on future content publishing and monetization.

Over-the-top TV effectively allows content owners to by-pass existing TV platforms and take their programming directly to the TV screen from the Internet, in effect becoming a media owner themselves.

Use this report to:

• Gain a thorough understanding of future direction of the consumer-driven, converged ‘Video Everywhere’ landscape
• Understand the emerging commercial models / opportunities for the monetization of content in a multi-platform delivery future
• Compare how different consumer platform owners, video aggregators and CE manufacturers are positioning and developing their OTT offerings
• Gain an understanding on how to organize content for multi-channel leverage
• Understand branded content /direct brand engagement strategies

Questions answered by this report

• What are the significant trends influencing the development of the converged ‘Video Everywhere’ consumer market?
• How is this shaping the commercial future for content providers and TV broadcasters?
• How can this content be monetized in a user driven content consumption environment?
• What are the current and emerging commercial models/opportunities for the monetization of video content?
• How are different content aggregators and CE manufacturers developing their consumer offerings?
• What are the alternative distribution routes for content providers to cost-effectively distribute ‘over-the-top’ content services?
• What is the best way to organize content management in order to achieve optimal benefit in quality, cost and syndication power?
• What is the future impact of BGC (brand generated content) on the existing ‘old media’ brand communications/advertising model?

Global Television Broadcasting Industry

Table of Contents
The Future of Video Content Convergence
Executive summary 12
Situation analysis and market context 12
Multichannel video content delivery 13
Over-the-Top TV 14
Video monetization 15
Brand generated content 16
Chapter 1 Introduction 20
Background 20
Scope of this report 21
Who is this report for? 23
Key definitions 24
Over–the –top TV / Internet TV / Web-to-TV 24
VOD – video on demand 24
DTO – download to own 24
10-foot viewing experience 24
BGC – Brand Generated Content 24
Multichannel content 25
Chapter 2 Situation analysis and market context 28
Summary 28
Introduction 29
The content user, viewer, consumer 30
Towards a more interactive user experience 30
Converging content – a user-driven “triple play” 31
Fixed and mobile broadband Internet – the tipping point for video 32
Time spent on the Internet driven by increasing broadband speeds 32
Adoption of Web-to-TV 33
Over-the-Top video is forcing a complete restructuring of today’s online video and TV broadcaster services 35
Mobile broadband uptake 35
Multi-platform media consumption - user segments 37
Connected TV behaviors 37
Online video consumption 39
Online video has been around since 2005 39
Who is paying? 40
Reasons for watching online video 41
Key content genres are driving online video viewing 42
Viewer engagement 42
Consumer platforms for video content 44
Existing distribution routes to market 44
Video software units: DVD and Blu-ray 44
Catch-up TV / iPlayer phenomenon 45
Online video 46
Social networks 47
Mobile apps 48
Emerging distribution routes to market 50
Internet TV / Internet Connected Devices 50
Social TV 53
TV on the PC 53
Mobile Video 53
Digital Out-of-Home 54
Conclusion 56
Content owners, media owners, brands, ad agencies 56
User experience – choice, convenience and control 57
Chapter 3 Multichannel video content delivery 60
Summary 60
Introduction 61
The stakes are high for existing content services operators 62
A game of multichannel video platform (MVP) smoke-and-mirrors 62
Multichannel video delivery chain 63
Video platform providers 65
Brightcove 67
Ooyala 67
Miomni 67
Video asset management 68
Importance of content centralization 68
Importance of metadata 68
Lack of DRM consensus and standards 69
Integrated content management 71
Unified asset and content management unlocks key user benefits 71
Interactive services to drive engagement/monetization 71
Converged content becoming a reality 72
Dynamic online video distribution: ad serving and social media 72
Users expect a unified, multichannel experience 74
Will ‘channels’ and ‘channel brands’ be a thing of the past? 74
HD television becomes ubiquitous 75
3D 77
First 3DTVs on sale 77
The 3D cinema experience is new and exciting 79
Chapter 4 Over-the-Top TV 84
Summary 84
Introduction 85
New battlegrounds emerge 86
Managed Internet services should hold their nerve 88
Cutting the cord 89
TV apps 89
User interface and experience 91
Personal screen or shared screen? 91
User experience is everything 92
Rovi 93
Content discovery will be key to a successful user experience 93
‘Suggested discovery’ 94
Gesture-based controls are coming to TV 95
Broadcasters / Pay TV operators 96
Opportunity for multi-platform content aggregation 96
Hybrid Broadcast Broadband (HBB) standards development 97
Multichannel catch-up TV services 98
Enhanced TV – broadcast interactivity with BBC red button 99
Green button interactivity 100
Broadcast/broadband signal synchronization is a big advantage 100
Sky Green Button and AdSmart 100
Content owners as media owners 101
Independent production companies 102
Sweat the archive 102
Clearances are a potential issue 103
Niche/specific interest content owners 103
Time to take full control of digital distribution 104
Brand owners/advertisers 104
OTT distribution landscape 105
Consumer choice – the race is on to build the most popular service 106
Delivering the Internet isn’t free 106
The net neutrality debate 107
ISPs and telcos are potential OTT gatekeepers 108
Content commoditization 108
Connected TVs 110
TV manufacturers are actively building OTT propositions 111
Yahoo! Connected TV 113
Google TV 114
Apple TV 115
Connected games consoles 116
Nintendo Wii 116
Kinect for Xbox Live 117
Other connected devices 117
Blu-ray, DVD, PVR players 117
Stand-alone digital video/media players 119
Video aggregators 121
YouTube 122
MSN video 125
Hulu 126
SeeSaw 128
Canvas 128
Telcos, ISPs and IPTV services 130
TV to PC / tablet 131
TV to Mobile 132
Chapter 5 Video monetization 134
Summary 134
Introduction 135
Dimensions and dynamics 136
Who will own the OTT TV customer? 136
Current monetization strategies 137
Ad sales and ad inventory 138
Commercially, content in context is the true king 139
Collaborate for critical mass 140
Real-time analytics drive monetization 140
CIMM – coalition for innovative measurement 141
Monetization strategies 142
Commercial fundamentals 142
Sky – a blueprint for success 142
The hybrid ‘freemium’ business model 143
Emerging opportunities for added value engagement 144
v-commerce 144
Plinking 145
iAndBuy 146
Product placement/embedded advertising 146
Program/channel sponsoring 148
Targeted advertising 148
Live streaming to TV and mobile 150
Mobile advertising - Apple iAds 150
Mobile-TV audio triggers 151
Chapter 6 The future of brand generated content 154
Summary 154
Over-the-top marketing will drive brand engagement and ROI in marketing 155
The currency of engagement is ‘attention’ 155
Cost per engagement models will prevail 156
Over-the-top brand engagement – a new marketing discipline 156
Ad agencies need to rethink and not protect an old media model 157
Lack of applied data skills and affinity for the technology are big
disconnects for agencies 160
Traditional agency model creates unproductive conflicts 161
Brands as media owners and publishers 161
Brands can also ‘commission’ content from consumers 163
Strategic branded content 163
Strategy before creativity 163
“Online” video has a short shelf life 165
3D video 165
Index 167
List of Figures
Figure 2.1: Consumer mobile broadband subscribers by region (m), 2008-2014 36
Figure 2.2: Connected TV viewer segmentation 38
Figure 2.3: Active reach of major online catch-up TV services in the UK (% of all Internet users visiting site), 2008-2009 46
Figure 2.4: Global mobile applications downloads (m), 2008-2014 49
Figure 2.5: Global sales of Internet enabled TV sets, 2009-2013 51
Figure 2.6: Digital and static advertising display views and displays by day (% of footfall, average viewing duration) 55
Figure 3.7: Multichannel content (video) delivery chain 65
Figure 3.8: Video platform provider competency comparison 66
Figure 3.9: Global LCD TV shipments (m), 2008-2012 76
Figure 3.10: Global 3DTV shipments (m), 2010-2015 78
Figure 3.11: Number of 3D digital cinema screens globally, 2005-2010 79
Figure 3.12: Consumer responses to 3D in cinemas, UK, 2009 80
Figure 3.13: % of UK viewers watching 3D adverts in the cinema, 2009 81
Figure 4.14: Stakeholder convergence in the OTT video content chain 87
Figure 4.15: Most popular YouTube categories (% of UK users watching on a regular basis), June 2009 123
Figure 4.16: Popularity of YouTube channels in the UK (number of views and subscribers), 2009 124
Figure 4.17: Hulu and YouTube videos viewed online, US, Nov 2009 127
Figure 5.18: Total online TV revenue (£m), UK, 2004-2008 137
Figure 5.19: Methods used by web businesses to price / sell video ad inventory (% of Brightcove clients), Q1 2010 139
Figure 6.20: Over-the-Top marketing – blueprint for brand owners 159
Figure 6.21: The strategic content planning chain 164
List of Tables
Table 2.1: Typical Internet connection speeds in different regions of the world, 2009 33
Table 2.2 Devices used to watch video (% US population aged 18-34 yrs) 34
Table 2.3 US online video consumption, March 2010 40
Table 2.4: The top reasons for using online video on websites (% of Brightcove customers), Q1 2010 47
Table 2.5: Global mobile applications downloads (m), 2008-2014 49
Table 2.6: Global sales of Internet enabled TV sets, 2009-2013 51
Table 3.7: Global LCD TV shipments, 2008-2012 76
Table 3.8: Global 3DTV shipments, 2010-2015 78
Table 3.9: Number of 3D digital cinema screens globally, 2005-2010 79
Table 4.10: Popularity of YouTube channels in the UK (number of views and subscribers), 2009 125
Table 4.11: Hulu and YouTube videos viewed online, US, Nov 2009 127
Table 5.12: Total online TV revenue (£m), UK, 2004-2008 138