2016 TV Year in Review: David Mowrey, VP of Strategic Planning & Business Development, IBM Cloud Video

When mainstream OTT services began launching in 2015, everyone working in media knew that the game had officially changed. The floodgates were open, and direct-to-consumer offerings were no longer seen as optional. This past year, we witnessed the explosive growth of these services – as of this writing, more than 100 SVOD services are currently available in the United States alone.

There’s no reason to believe that the proliferation of direct-to-consumer streaming video will slow down in 2017. Looking ahead, providers will need to navigate increased competition from other SVOD services and as well as skinny bundles. They’ll need to find new ways to attract and retain users, especially in light of new research that shows only 13% of SVOD subscribers have three or more services.

As a result, two key trends will emerge: 1) the OTT bubble will eventually burst, and services will need to stave off consolidation, and 2) data-driven decision making will emerge as a necessary tool, arming services with the information they need to make adjustments immediately.

To win in OTT this year and beyond, service providers need to own their data. Having full access to the intricacies of user behavior on their platform opens the door for intelligent decision-making around content acquisition and creation, targeted marketing, and subscriber retention.

The catch is that automating these processes is not enough. Given the current landscape, every minute in front of a subscriber counts. Service providers, therefore, are faced with a slim margin of error – if a user isn’t happy, they can quickly find another offering that meets their needs. In order for SVODs to thrive against the competition, they must leverage data and analytics in real time.

Let’s take real-time marketing campaigns as an example. Instead of solely relying on what a user previously watched, service providers can layer on advanced analytics to create targeted communications. By using cognitive capabilities to glean insights from social media feeds, services can align their outreach with the user’s current mood or emotional state, as well as the content of their social conversations. For example: a prospective user is live-tweeting the Grammy Awards, and during performances by both Beyonce and Justin Bieber, their tone has been detected as happy or excited. Cognitive analysis would identify the tone and content so that marketing could target the user with relevant videos – perhaps one of the documentaries about either of these artists, or a music video for their latest single. This doesn’t mean that every user who tweets about the Grammys receives the same marketing message, as not everyone enjoys the same performers; rather, the goal is to tailor the campaign to the individual using cognitive insights.

The differentiator is that the content is relevant to the viewer’s interests and mood at this exact moment, and is delivered right now. This adds value for the user, making the service more appealing to potential customers and keeping current subscribers coming back for more.

Looking ahead even further, the services that combine disparate data points will be the ones that thrive. Combining usage analytics, catalog inventory, subscriber behavior, licensing windows, and social engagement will enable SVOD services to paint a holistic picture of the state of their offering. This will make business decisions easier, as providers will have the information needed to optimize internal resources and make informed content acquisition choices.

SVOD services will continue to face pressure in 2017, but data-driven insights can alleviate these pain points. Competitors are evolving their offerings at an incredibly fast pace, and consumers are constantly making decisions and adjusting their spending. By leveraging cognitive insights, providers can automate the decision-making process and identify relevant touch points to engage users in real time. The future of OTT isn’t a content arms race; it’s about who can use data to optimize available content and effectively target potential and current subscribers.