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How to monetize an OTT platform

Journal Article from ATEME

Mon 17, 01 2022

How to monetize an OTT platform

The television viewing experience has changed in many ways over the last few decades, with several trends that improve the quality of the experience (QoE). The most obvious one is the arrival of UHD and 4K content, which are gradually becoming mainstream and improving image quality. But beyond that, we are now seeing truly customizable and personalized experiences. Viewers increasingly expect to see content tailored to their activity and potential interests. And the arrival of technologies such as Dynamic Ad Insertion (DAI) are making it possible to tailor not only content, but also ads to specific regions, households, and viewers.

Meanwhile, there is a growing appetite for content. Big household-name content providers are going the D2C route, such as Disney+, who have the opportunity to expand globally and reach billions across the world, with many eager to watch what they have on offer. But to do this, they need a global reach.

All these trends create new opportunities for monetizing OTT platforms, with a range of technological advances helping to make this possible.

To cloud or not to cloud

The first of these advances is the cloud. The need for a global reach makes versatility a crucial aspect of any OTT platform strategy. In fact, to be able to reach new geographical markets, an OTT platform must migrate to a hybrid infrastructure, blending on-premise and cloud capabilities. This enables providers to use the cloud to reach new regions, while relying on an on-premise architecture when the cloud isn’t available.

Open Caching and the CDN

Another major advancement is Open Caching, which transforms the role of the content delivery network (CDN). A CDN network generally caches content in various nodes across a specific region or country. But to send video to a different country, it will be necessary to access other CDNs.

Open Caching is an encouraging innovation for streaming in the OTT industry. It enables a network of interconnected caches intercommunicating via APIs. With numerous ISPs already running CDNs with caching capabilities, global content providers have the opportunity to go direct to consumer and partner with ISPs in different target markets. The technology facilitates a new approach in caching and delivering content, helping to reduce complexity and facilitate caching closer to the end user.

The opportunities for monetization lie in the ability for content providers to delegate traffic to Open Caching compliant ISPs. This has the added benefit of further enhancing the viewing experience. Accessing Open Caching nodes hosted in ISP networks on the edge of the network, typically close to the last mile, enables providers to ensure that content retains its premium quality. Open Caching also enables market diversification, where end users can be reached in different ways and budgets can be more closely scrutinized. While Open Caching is an emerging technology, a major entrant into the OTT market, Disney+, is already trialing the solution.

The foray into 5G

5G brings better bandwidth capability, and this is key to the enablement of HD and 4K streams on a wider range of content thanks to one gigabit per second streaming. It is also key due to its support for higher-quality audio, such as Dolby Atmos, which adds to the overall viewer experience.

But beyond better images and sound quality, 5G makes multi-access edge computing (MEC) possible, pushing storage and processing capabilities further down the network and closer to viewers. It’s here that the real power of 5G comes to life and personalization takes on a whole new meaning as it is no longer just about watching content; it is about making video part of a wider experience, linking the content you watch with social media, retail, and your community, and providing the interactivity and responsiveness that viewers are used to in these other platforms. This way, viewers can feel on-boarded with a story that is bigger than the content itself, expanding on the monetization opportunities available.

Personalizing the experience

Currently, the offer is fragmented. There is too much content dispersed across too many services. One major frustration viewers face (and also one of the top four reasons for churn) is not finding what they want or spending too much time looking for it. So imagine being able to reach viewers with the content they want, based on where they are (at home or commuting), the time of day (morning or lunch break), their preferences (sports or news), and the type of entertainment they ask for (augmented reality or just a show). With 5G, content suppliers can adjust their offering, the content itself, and the surrounding experience, leading to a win-win situation with viewers who are fully engaged with the content, and suppliers who see increased loyalty, reduced churn, and increased revenue.

Pushing for personalization and dynamic ad insertion (DAI)

Beyond a MEC architecture, you need technologies such as DAI to offer personalized experiences that help to increase content value. With DAI, specific content can be replaced right before it reaches the viewer, which means that service providers can deliver personalized channels with content tailored to a specific viewer’s tastes or interests. This increase in value to the viewer is likely to equate to them being more willing to pay a premium price to access it.

Personalization of course also works for advertising. Using the same content-replacement technology, advertisements are replaced to tailor to specific people. This could be applied regionally, encouraging people living in a certain location to visit their local store, which is looking to attract nearby customers. This increases the value of the ad for the advertiser and thereby increases monetization.

DAI is also likely to play a key role in easing the issues created by OTT market saturation. End users are now overseeing a number of monthly fees leaving their bank account for every OTT platform they subscribe to. As a result, more viewers are turning to platforms with integrated advertisements to avoid accumulating too many subscriptions. OTT providers could employ a DAI strategy and use targeted advertising to offset a lower subscription price for end users, making it more likely for them to sign up to a cheaper service.

Proving the value

A range of emerging technologies are providing opportunities for monetization of OTT platforms. Providing better video quality to end users is just the tip of the iceberg when it comes to enhancing the user experience and opening up new revenue streams. Now, OTT providers can empower their platform thanks to cloud infrastructures, Open Caching, Dynamic Ad Insertion and the emerging prominence of 5G, helping them provide personalized and customized services. Technology will play a crucial role in proving the value of OTT offerings in an expanding and competitive market.

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