By Darren Lepke, Head of Video Product Management
Not too long ago it was easy to connect with huge numbers of viewers. Everyone watched what was on broadcast TV. The entrance of cable diversified viewing options and audiences, making it harder for programmers and brands to capture the attention of consumers. And now, there's even greater audience fragmentation. Here are some of the market forces at work today driving these changes:
Cord cutting: The era of mass cord cutting is officially upon us. According to a 2018 study by eMarketer, the number of U.S. cable cord cutters has climbed to 33 million, outpacing even industry predictions from a year ago.
Netflix and Hulu domination: As more and more consumers choose OTT video over cable, a few dominant services have emerged. In most cord cutter households, established platforms like Netflix and Hulu absorb an estimated 60-75 percent of all viewing time. Less well-known services must jockey with each other for the remaining viewing time, and it's not an easy fight.
Audience churn: It's incredibly easy for a consumer to cancel their OTT service with the click of a button. The increasing overlap of content across platforms only makes the problem worse, as it becomes crucial for every provider to offer something unique.
To prevent audience churn and capture viewing time, it's essential for services to catch a viewer's attention by delivering relevant, engaging content and seamless, well-targeted ads that enhance rather than diminish the user experience.
The key to meeting all of these needs is personalization. It's impossible to define your core audience and deliver appropriate recommendations without a one-to-one relationship with individual viewers supported by targeted, relevant content. Thankfully, technology partners and vendors can increasingly use second- and third-generation AI-powered software to serve their viewers the most tailor-made content possible.
To personalize its content, an OTT service must build a robust and detailed record of the preferences of each of its users. Anonymous users are harder to track across viewing sessions or different devices, so it's crucial to get users to create an account on the OTT platform, app or site. Many services incentivize account creation by giving viewers access to new content, email updates or free trials in exchange for their email address or other information.
A user profile is only as good as the metadata schema it resides in. Organized data make ad requests easier to process regardless of whether a salesperson or an automated algorithm are selling ads. However, data integrity is particularly important for programmatic ad sales, which are the lifeblood of smaller OTT providers. To effectively sell programmatic ad space, OTT services need user profiles that speak the language of advertisers. That means getting the user's permission to provide the kinds of granular geographic and demographic data that can be used for effective targeting. Automated advertising exchanges rely on this sophisticated and detailed information to get the right ads in front of the right audience, without the need for human salespeople to lift a finger.
As different OTT services increasingly achieve content parity, the new question is how each service can retain viewers on its platform. The key to audience retention is a recommendation engine that suggests the next piece of content for viewers to binge on, keeping them from drifting to another service or canceling altogether once the season of their favorite show or sport is over.
Recommendation engines have existed for years, but now a new generation of AI-powered engines are drawing on new data sources and additional computing power to suggest content with unprecedented accuracy. For example, some engines pull outside data such as linear TV schedules or Rotten Tomatoes scores to point customers toward the most relevant and highest quality content available on a particular OTT platform. Other engines can enrich video metadata by analyzing every frame or performing logo detection, actor detection, and scene detection, which can assist in everything from ad placement to choosing an appealing thumbnail image.
As more Americans cut the cord, media companies have to shift their focus. Instead of developing and honing the pure technical capability to deliver OTT content, they now must use technology to speed user acquisition and capture users' attention, joining the race to acquire more viewing time and market share.
That means that content delivery networks (CDNs) and other vendors are not merely technology partners, delivering the bits and bytes of content – they're also business partners. By ensuring that data is collected, managed and organized in ways that meet advertising and subscriber management needs, tech vendors increasingly have a visible impact on revenue.
To thrive in the media landscape of tomorrow, OTT providers will need to choose the right partners today – partners with the business expertise, as well as the technical expertise, to deliver maximum personalization.