By Chris Carey, chief strategy officer, Verizon Digital Media Services
Streaming video has become a ubiquitous part of American life. Binge watching has become a weekend phenomena and we have access to not only the latest, but also decades worth of classic shows and films, all at the touch of our fingertips.
Yet we take it for granted that we can easily access our favorite shows and movies on our phones, laptops and smart TVs. While audiences in the U.S. rapidly reach saturation (or at least run out of hours in the day to watch any more shows), streaming video is only beginning to take off in many international markets.
Cisco’s 2017 data forecast predicts that mobile traffic around the world will increase sevenfold by 2021. Africa and the Middle East are expected to lead the boom, with a twelvefold surge in traffic. Much of that growth will be in video. Around the globe, 4G and 5G infrastructure is reaching places once considered too remote to make streaming feasible, subsequently finding audiences hungry for accessible platforms and engaging content. For global media companies, this is the beginning of a gold rush, but the broadcasters who come out on top will be those willing to experiment with strategies as unique as the markets they hope to reach.
Bringing Infrastructure to Mobile-First Markets
Today’s high-growth regions often leapfrog straight to mobile-first and mobile-only viewership. In fact, OTT video revenue is predicted to more than double in Latin America by 2023, according to a report by Digital TV Research. Throughout the region, the smartphone is the primary internet device, despite the fact that broadband speeds remain barely adequate for streaming.
This steady growth of streaming can strain emerging content delivery infrastructure and pose a challenge for media companies committed to serving high-quality video content. That’s why breaking into emerging OTT markets will require broadcasters to find technology partners that can optimize for mobile-first markets. That means a content delivery network (CDN) designed specifically to leave a smaller footprint, manage traffic proactively, and cache content effectively. Recent investments in the region have proved that if you build it, they will come. For example, when we launched a new point of presence (PoP) in Johannesburg, South Africa, latency improved by 80 percent and traffic increased ninefold, in two weeks.
Global Markets, Local Content
OTT growth opportunities abound on every continent, but there is no one-size-fits-all strategy for content. Rather, broadcast publishers must collaborate with local content creators to deliver programming that will appeal to local audiences.
Sports, particularly soccer, are often a region’s entry point for OTT. For example, ESPN Play already offers exclusive streaming sports — from local games to the NBA — in markets in over a dozen nations. There’s no substitute for that perfect cocktail of content that has local appeal, high production values, and is delivered on an intuitive and reliable platform.
Going forward, the demand for locally-produced video may go beyond a preference and become a mandate. In October, the European Parliament passed legislation requiring that any streaming service which wants to operate in the EU must produce 30 percent of all its content there. Thankfully, OTT providers can enter into licensing arrangements with traditional broadcasters, as well as mine social media for original programming and local talent.
Tailor-Made Monetization Models
The question of how to successfully monetize OTT services requires as much creativity and patience as acquiring content and developing infrastructure. In many regions with high growth potential, piracy is rampant. For example, a 2016 report by the Alliance Against Pay TV Piracy revealed that half of all South American internet users consumed pirated content, via illegal torrenting sites, streaming and cyberlockers.
One way to fight piracy is to improve access to legitimate (and monetizable) OTT platforms. However, in regions where few people have credit cards, monetizing via a subscription model can be difficult. Some companies have tried using gift cards that customers can buy with cash and redeem online; however, the jury is still out on the efficacy of this approach.
Companies looking to expand quickly may wish to deploy alternatives to pure subscription plays, including a pay-per-view model, embedded advertising, or a Hulu-like hybrid where customers can pay to eliminate ads. Developing market-specific payment models will doubtlessly require experimentation, and platforms that are nimble enough to quickly pivot from one method to another.
Regardless of the monetization strategy best suited to individual markets, beating piracy will largely be a matter of delivering can’t-miss content that is faster and higher quality than the black market competition.
The winners in the global OTT race will be the broadcasters who develop both the platform and the programming, not for the internet the developing world has today, but the one it will have tomorrow. That way, when a market opens up to high-quality video streaming, their binge-worthy shows are already waiting for them.
About the author:
Chris Carey is currently Head of Sales, Strategy and Business Development at Verizon Digital Media Services, leading global sales organization, including Solution Engineering and Sales Operations. Chris was an instrumental player in growing Verizon Digital Media Services during the company’s early development. As former Chief Product Officer, he was responsible for product, profit and loss, definition, strategy, delivery and market rollout.