The Evolution of Over-The-Top in 2016
From my perspective, 2015 was the year that over-the-top television stepped onto the big stage. We’ve seen so much creative activity from programmers, distributors, the wireless industry and device providers, all of which points to our collective thesis: that Internet-delivered video at home and on the go is a great idea, especially for younger audiences.
It has been a common misperception that millennials do not watch as much TV as older generations, largely because only 64% of millennial households subscribe to traditional pay-TV. However, according to a recent TNS research study of 60,000 internet users, when the definition of television is broadened to include watching mobile and online TV & video, millennials watch 4.6 hours a day, which is on par with Boomers and even more than Generation X. Turns out, millennials like watching TV and videos like everybody else, if not more—they just want it to be mobile and on their terms. We have seen this in the success of Sling TV and expect this trend to continue into 2016.
Here are some themes I’ve been thinking about for 2016 and beyond:
Advertising for OTT comes of age – Addressable, dynamic and programmatic ad buying, direct ad insertion—these are all concepts that take on a higher profile in 2016. Not only are these technologies rapidly maturing, so are the marketplaces to traffic these products, which will empower brands to start to meaningfully embrace them at scale. Advertising will bring a step change benefit to brands, programmers, providers and, most of all, consumers. I think we can agree that the November 2016 elections will really help accelerate these developments.
The user experience advances – The flexibility of IP-enabled television creates incredible freedom for smart designers to rethink how video is presented and sorted. The most difficult design challenge is honoring the viewer who wants to come home at the end of a long day, sit back and watch some TV. As wonderful as many of the new services are and the abundance of choice they represent, there are still too many button clicks to evoke a new golden age of TV.
Net neutrality heats up – Streaming as a general means of consuming long-form TV is set to launch through the stratosphere. Consumption of video over wired and wireless Internet networks—and the volume of data that entails for a household—will accelerate faster than most people anticipate. Given the proliferation of streaming and OTT services and the consumer embrace of those services, net neutrality moves from an abstract Washington D.C. policy concept to one that means something to everyday consumers. Net neutrality becomes water cooler talk in 2016.
Premium video becomes truly mobile – Imagine if Spotify told you that you could only listen to your music in your home. Sounds crazy, right? Yet, that is how the pay TV industry works today. In a few years, we will look back and laugh nostalgically at the time when TV was shackled to the set top box in your home. The next generation of TV will not impose archaic rules on viewers like only being able to watch their channels in the home—it will be mobile and on your terms.
Over the next several years, a whole host of new OTT streaming services will be run through the gauntlet of the marketplace. Many will be cast off as irrelevant—but a few will really capture the imagination of the public and we will once again enter a new golden age of television.