What you need to build a direct-to-consumer OTT video service

Technology is important. However, it’s only one aspect of what a company needs to launch a direct-to-consumer service. To give you an idea, Netflix only spent around 20% of their revenue on technology when they first launched. Now, they only spend around 8-12%.

It would be ideal to have a tech partner that eliminates the need to procure expensive infrastructures and multiple 3rd-party vendors. This partner will automate previously complex and labor-intensive processes that manage on-going video operations. Over time, the capex and opex will become an investment that yields a tech return, rather than tech debt.

 After being in this video landscape for the last 10 years, my two important pieces of advice are:

  1. There is no such thing as turnkey. Don’t underestimate the other costs of running the business. 

  2. A good platform will increase the revenue potential, but it shouldn’t be the cheapest option.

In my experience, platform providers count on clients to underestimate the total cost of ownership. This is so they can give you a conditional, lower price and then charge you for professional services with additional 3rd party providers.

To build and run a DTOC video service, you need content, distribution, technology, and monetization.  

While technology "platforms” are becoming more and more of a commodity, the right platform should drastically impact distribution, content, and monetization.

Below is a breakdown of how a platform can impact different aspects of service:

Distribution
These four components can give a company access to phenomenal distribution:

  1. Relationships: you need to have a relationship with new media distributors. 

  2. Content: you need to have engaging and refreshing content. Today, every brand has a substantial distribution problem. They lack the amount of content needed to compete for attention.

  3. Technology: getting a feature or high-level placement in an App Store is crucial, and OS providers like Apple and Google place high-value on services that support their latest OS.

  4. Syndication: the platform should be capable of syndicating to all platforms, not just those that are owned and operated. Knowing how to transfer audiences from your Facebook, etc. back to your owned and operated channels is one of the keys to success.

Measuring Content Syndicating Effectiveness
When you are syndicating your content, you must be able to measure the channels that are the most effective.  To do so, aggregate data from all the popular platforms like Facebook, Twitter, Instagram, and YouTube to provide real-time, actionable data on campaign performance and optimizations.

* Knowing how important this is, we built our own customer analytics tool

Distribution and Syndication lead to usage. Once you have the audience, how do you engage them enough to be monetized?

In-App Technology
Apple, Google and others offer core OS features within their platforms– a crucial aspect of this cycle.

Personalizing
The UI via technology and content is critical to optimizing the experience. 

Programming 
Creating simulated, linear channels from VOD assets is also critical. This includes live-event streaming, as well as building electronic programming guides (EPGs). High-levels of engagement lead to more monetization. A program manager would allow a non-tech savvy, marketing person to program the experience for a user. 

Monetizing Through Ad-Insertion
Personalized, server-side ad-insertion (SSAI) for live events, channel play out, or VOD are a must for monetizing the service. Whether you use external sources or house-ads to drive a sale, the service should provide ads that target the geography and demographics of a device. This allows for all ads to be 100% deliverable, with no add-blocking possible.   

Implementing, programming, and monetizing channel play out will open up an opportunity for 3rd party syndication. These vMVPD companies include Sling, FuboTV, XUMO, Twitch, Twitter, Roku, Samsung TV Plus, and more.


The History

The OTT platform was first utilized by companies that needed to figure out how to stream on their own. These companies then began to use their platform as a service business. MLB is a perfect example of this.

In 2006, MLBAM figured out how to stream baseball games. Then they began to host others in need of this service. From 2009-2012, there where only a couple of companies building these platforms for third parties: MLBAM (HBO/WWE), NeuLion(NHL/NBA), Qello, and DramaFever.

MLBAM and NeuLion support the large players in sports, including HBO, WWE, and others. Qello Concerts and DramaFever built their services for mid-market companies and themselves.

In 2012, the market started to take shape and many new companies entered, including most turnkey players and the online video platforms (OVP).

As the market grew, the OVPs began to charge for CRMs and media-management. The business model previously relied on up-charging customers for bandwidth and storage, then a pivot began from this to full OTT solutions.

In 2015, Amazon entered with channels. Now, Roku and others are providing solutions for companies that want to monetize their video content without controlling the customer and technology. This has put further pressure on the space, and some of the turnkey players are laying off workers and at risk to shutdown.

The Landscape of Companies

  • Bespoke providers MLBAM and NeuLion are no longer in the space due to acquisitions with Disney and UFC. 

  • OVPs: Brightcove, Kaltura, Ooyala

  • Turnkey players like ZYPE, ViewLift, VHX (Vimeo), and too many more to mention, are all low-tier, high-volume providers that offer less value-add to the customer. 

The Problem with OVPs

Online Video Platforms have one type of solution, with limited impact to the media and entertainment industry. Most OVPs specialize in solutions like online learning, corporate communication, webcasting and training.

OVPs are not media and entertainment specialists. They are a jack of all trades, but master of none.

 
 
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Online Video Platforms today have the ability to create OTT-type solutions,  but only by relying heavily on 3rd parties. This creates a Frankenstein-like solution, impossible to scale effectively.

OTT Platforms specialize in helping media/entertainment content owners and providers to go directly to consumers. They help cut out the middleman, increasing monetization opportunities.

 

 

Why is iOiO different?

  • iOiO has been an OTT-specific platform from day one

  • iOiO built an end-to-end solution in house and does not rely on third parties to deliver a complete solution

  • iOiO believes in a single-tenant model vs. multi-tenant model

Three major problems with depending
on a 3rd party solution:

  1. Relationship management: More contracts and relationships to manage, vulnerable.

  2. Price: Additional cost factors and possibly additional licensing fee. For example, exceeding monetization forecasts can lead to costly overages.

  3. Integration Deployment and Maintenance: Relying on third-party APIs can lead to lengthy timelines and a fragile infrastructure. This is because API changes or upgrades often break existing syncing code, resulting in lost data.

 
 
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Single Tenant = Living in your own house

Single-tenancy means a single software application and the supporting infrastructure serves one customer. In the software-as-a-service (SaaS) delivery model, a customer is called a tenant

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Multi tenant = Living in an apartment

Multi-tenancy means that a single software application and all the supporting infrastructure serves multiple customers. Each customer shares the software application and also shares a single database.

 

 

What’s the difference?

  1. Custom Feature Requests: Wouldn't you rather control your timeline for changes (like a house) instead of waiting in a long-delayed roadmap queue with other clients (like an apartment HOA board)?

  2. Bug Fixes: Don't compromise your service's performance by getting bogged down by other clients' bugs (like in a multi-tenant shared building). iOiO’s single-tenant solution shields you from outside issues.

  3. Avoiding Downtime: Don't let other clients' issues crash your service (if the multi-tenant building is on fire your apartment’s at risk). Protect your service with its own single-tenant instance (like a standalone house miles away from other houses).

  4. Investment in a Platform: The single tenant tech stack is your own. If something were to happen to iOiO, you are still in control of your tech stack; you still own your home.

 
Key Elements to OTT iOiO NeuLion Ooyala Brightcove Kaltura
CMS: Recommendation Engine, Content Promotion, Personalized User Content Yes, in house Yes, in house 3rd Party Options $ 3rd Party Options $ 3rd Party $
Marketing: Email Management, Push Notifications, A/B testing, Campaign Management, Promotion Mgt, User-Level Targeting Yes, in house No No Email available at additional cost + set up $ through partner Multiple 3rd parties required
Billing: Platform, Dynamic Packages, Carrier Billing (ATT, TMobile, etc) A/B testing for Pricing, Gifting, Promotions Yes, in house Yes, in house Additional cost w/ 3rd party partner $ Additional cost w/ 3rd party partner $ Additional cost w/3rd party partner
Users: Individual User Profile, Purchase History, User Demographics, Dynamic User Segmentation, Devices Used, Email History, Search History, User Streaming Preferences, Session Tokens Yes, in house limited No No No
Analytics: Content and Streaming, Registration, Subscription, Payment, Retention and Churn, Gifts, Copyright, Campaigns, Devices, Customized Reporting, Bespoke Reporting, Dashboards Yes, in house limited Video interactions only Video interactions only Video interactions only
Customers are Single Tenant Yes No No No No
Customers are Multi-tenant No Yes Yes Yes Yes
 

iOiO provides tools for all three elements of launching an OTT Channel

  • Effective Promotion

  • Captivating Programming Strategy

  • Strong User Experience

“This simple framework will give the foundation to build a very successful business. Regardless of your business model (free, ad-supported, subscription, or transactional) or the size of your company or your library, following this tenant will enable you to maximize the lifetime value of your audience.”
-Doug Craig, VP Content & Strategy, Fandango

Important: 3rd party integrations don’t allow systems to intuitively speak to each other. For example, if using a 3rd party for push notifications, you first export list of users, upload them into the 3rd party solution, then send them out. Since the push system is not built within the original solution, there is no insight as to whether people opened the notification, clicked through it, etc. Additionally, you can’t target a specific demographic to send messages to.


iOiO gives you your own house.

 
 
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