How Publishers Are Venturing into Subscription Video on Demand (AKA OTT)
Over the past decade, video has become a standard component of the content mix for media brands. Most publishers have ramped up their video-making and monetization capabilities, increasing quality and volume of in-house video production and hosting them on their own sites and distributing on social media platforms such as Facebook, Instagram, YouTube, Twitter, and many more. Some publishers have even “pivoted to video,” making video the focus of their content strategy, with widely varying degrees of success.
Now, publishers are beginning to expand into new video territory, eyeing the growing opportunity presented by what is known as “over the top” (OTT) video or “subscription video on demand” (SVOD).
Still a new (and somewhat cumbersome) term, it’s worth defining what exactly OTT is before looking at the opportunities it presents publishers. The term “over the top” refers to the distribution model at hand: On-demand video that is delivered via the internet directly to viewers independent of traditional cable and satellite services. OTT video can be viewed through websites or apps on desktop computers, mobile devices, game consoles, smart TVs, or commonly, video streaming platforms such as Roku or Apple TV. The OTT viewing experience is characterized as being non-linear, on-demand viewing, as opposed to the “appointment viewing” of traditional television. When we talk about “cord-cutting” we’re talking about people accessing OTT video content.
While Amazon Prime Video, Hulu, and Netflix are the common examples of subscription-based video-on-demand services, any video producer can distribute video content this way and potentially set up a video-on-demand subscription business. The key is having a significant volume of videos that are regularly refreshed with new content as you would expect with any TV channel or video service.
This article will explore the potential opportunity OTT/SVOD presents publishers, examining potential business models, content and distribution strategy considerations, measuring success, and key challenges to be mindful of.
OTT Business Models
For publishers, the business model for OTT video ia typically a subscription — either as a standalone streaming video service – or as part of a brand’s complete content package. Examples of the types of videos offered include weekly industry news roundups or how-to videos for hobbyists.
Active Interest Media (AIM) launched its AIM Media division, focused on creating video of all types — including OTT video content for their 50+ brands — in 2013. Those brands include titles such as Yoga Journal, SKI, Sail, Backpacker, Climbing, Old House Journal, American Cowboy, and Vegetarian Times. Tom Winsor, SVP of business development and Equine at AIM, is one of the driving forces behind making OTT video successful at the company. Winsor notes that OTT video products are generally either annual or monthly subscriptions that may range anywhere from $10 to $12 per month, up to as much as $50 per month.
In general, Winsor points out that consumers who are willing to pay for access to video content are looking for not just regular updates, but access to extensive libraries with previous episodes, clips, and other content available on demand. Winsor thinks it’s key for OTT video content to be designed with a targeted set of consumers in mind. “I think the broader the scope, the less you can charge,” says Winsor. “The more vertical the nature of the content, the more you can charge for it. There is a cut-off point, but it depends on what you are serving them.”
While OTT video is still new territory for publishers, and many are still trying to find the right combination of content, pricing, and paywall structure that will work best for each audience, those who have made it work are seeing high retention rates and regular audience growth.
“We except growth in our verticals, and I think in general this is going to grow significantly along with other platforms,” says Winsor. “Another platform is voice, which is going to grow dramatically with AI. We see both of them serving the same community.”
The Content Strategy
OTT includes a broad mix of content that publishers can take advantage of. It can be short clips meant to be consumed as sound-bites for when viewers don’t have much time to spare, up to hour-plus programs on in-depth analysis of topics or interviews. The key is to find the content a specific audience wants to consume and is willing to pay to access.
“I don’t know it’s a content type, as much as it is engaging content people want to see,” says Justin Festa, a digital strategy consultant and previously the chief digital officer of LittleThings. “I think that’s really the focus. If you’re a publisher good at producing 4 to 6-minute clips, there’s a market there. If you produce 30-minute shows, there’s something there too. It’s not about a content type, but the content itself.”
At AIM, Tom Winsor notes that what has worked for them has been to focus on the range of consumer enthusiast niches their brands serve, with videos that range from as short as five minutes, up to an hour long. “I’ve always viewed subscribers to a magazine as really a community,” he notes. “They would like to have multiple things served to them, because they are interested in that content and subject matter.”
Specifically, Winsor notes that they have found success with “how-to” videos. One example of this is the Dressage Today Online subscription training video series, which readers can only access as part of a paid subscription.
Winsor notes that it did take some initial investment to get started with subscription video, as they believed they needed a robust library in place before launching to create the value that would entice people to subscribe. But the content shouldn’t just be videos shot and tossed up on the platform without thought. Rather, Winsor says the content needs to be well-edited, with dedicated faces and voices that can build followings of their own.
Of course, how-to videos aren’t the only path to success for OTT video. Festa notes that Buzzfeed employs a completely different approach that has been successful on their platform. The company’s YouTube channel is a mix of a wide range of topics, meant to appeal to an audience looking for quick bites of interesting information. They are designed to be fast watches, with attention-getting headlines meant to pull people in.
Festa cites his own experience going to watch one of the BuzzFeed food videos, part of the Worth It series, on the YouTube app via Apple TV. “They pick a food type and tell you where you can get it and what they like the best. And then the next one played automatically. Before I knew it, I had spent 1.5 hours watching 6 to 8 of them. [Buzzfeed is] producing something engaging, and the user knows what they are getting themselves into. [Buzzfeed] makes it easy — if [consumers] like it, they can continue watching more of them. That’s the key.”
Festa adds that what matters is that this type of content is perfectly suited to Buzzfeed’s brand. For a publisher like Popular Science, science and technology videos would be a clear fit. “Do whatever works for the individual publisher,” says Festa.
Just like with any new product, OTT video does have challenges publishers need to be aware of and plan for before jumping in. Festa notes that the biggest challenge he sees for publishers is the expense of creating a library of original content. Publishers not already equipped to produce video at scale may find OTT cost prohibitive until they have developed the infrastructure.
Determining what types of video an OTT product will offer and the purposes it will serve will help publishers size up potential costs and begin to think of savvy ways of producing that video content.
Following are some questions publishers should ask themselves as they start to plan:
- Audience: Who is the audience? Will the video be geared toward a broad audience or a very narrow niche?
- Content Type: Will the OTT channel be a based around long-form videos or shorter, digestible video clips?
- Production: Does the content rely on video shot at events or other “on-location” settings, or is it produced in an in-house studio?
Winsor also notes that publishers will need to be aware of the lifetime value of OTT video as well. “OTT videos have a short lifetime value. You can’t overmarket it and think it will have a longer value.” Rather, Winsor believes the more successful strategy is to focus on content that is current and immediately accessible, rather than trying to produce pieces that will be “evergreen” and will hold up for years. When it comes to video, consumers are looking for fresh and new, and are far less likely to view pieces created months or years ago.
The second major challenge Festa sees for publishers launching an OTT product is attracting enough customers to make the higher resource investment for video content pay off. “If you write an article and it’s not successful, it didn’t cost a ton, so it’s not an issue. But for video, it’s a bit more costly, so you need a higher percentage of success,” says Festa.
To increase the success rate for OTT video subscriptions, publishers will need to market the product beyond their current subscriber list. Winsor points out that social media channels are a powerful tool for expanding reach for OTT subscriptions. Like with the videos themselves, there is no one right strategy for how to best use social sharing. Rather, Winsor stresses that having a dedicated person on staff, who’s job it is to navigate the constant changes to the social platforms and how to best extract and use the data they generate, is the best strategy for conquering this challenge.
While growing revenue is always going to be a major gauge of success or failure, success of OTT programs will also be measured by data points such as subscriber retention rates, how much time users engage with video per session, or the number of videos the viewer watches per session. Winsor notes that retention rate is one area AIM focuses on in particular. “We are seeing pretty high retention rates,” says Winsor, “and overall nice growth in this area. I think, in general, [OTT video] is going to continue to grow significantly.”
For publishers developing an OTT product, Festa suggests clearly outlining what their goals are and aligning the key performance indicators accordingly. “So much depends on their strategy,” says Festa. “If I were trying to build an app, I would measure based on how many downloaded the video. On a channel, I would look for the number of minutes spent. There are just a number of different ways to approach OTT, so [gauging success will] be very specific to the publisher.”