Where Are We Now: The New Bundle
In mid 2015, the marketplace hit the fulcrum point of OTT adoption with two events that, though they occurred a few months apart in 2015, were one and the same: the launch of HBONow in April and Robert Iger’s three words --“some subscriber loss”-- in August that sent Disney’s stock tumbling.
According to Watchwith CEO Zane Vella, these two events signify the “dam bursting,” allowing “the most desirable, most premium, most socially relevant water cooler content to be available without a television subscription.”
This ended a decade of speculation by industry observers and its import has become even clearer with the recent findings showing that people would remove ESPN and ESPN2 if it meant saving $8/month. With so many streaming services coming into play, it may be time for curated bundles. Iger’s three words set off an “over-reaction” that impacted not only Disney’s stock price, but the entire media market’s.
This served as a starting gun for the race for traditional media companies to recognize that the dam had cracks and it was officially time to experiment. “Shortly after HBO’s announcement, we saw a slew of announcements from media companies on their OTT plans,” Vella relates. “One had to assume these direct-to-consumer OTT services were in the works, but now they were quickly trotted out and ready to go”
The economics of the cable bundle aren’t wonderful for the MVPDs. With the propagation of streams coming into existence, “we’re going to see what’s convenient for the consumer,” says Vella. “ And some of that is smart marketing. From a broader industry perspective, we’re going to wait to see what the general public and the smart marketers come up with in terms of bundles, as it’s inconvenient to create MVPD packages.”
Vella sees this new landscape as being a prime launching pad for aggregators, where companies like Hulu or SeeSo can step in and aggregate a range of content and services into something affordable and easily consumable by consumers.
So where are we now?
The premium video experience has evolved to a point where we are now on the other side of the dam. Content holders are under pressure to improve the consumer experience and are experimenting more, and new ad products can be adapted within an advertising based model.
We can look forwards to the evolution of new ad products that can keep the user’s attention while mapping out user experiences.
And where may we wind up looking for those innovations?
YouTube.
For years, YouTube did one clever thing that lead to an increase in engagement time and subscriber rates. It’s something so commonplace now that you don’t even think about it while watching videos. That thing is the video annotations that get you to keep watching, enabling you to subscribe to the channel, and keep you in the recommendations loop.
Traditional media companies aren’t doing this to keep their viewers engaged after they’re done watching, even though this is the basis of binge watching. Vella’s Watchwith provides a platform to media companies to add this kind of native video features to their content, without relying on YouTube.
These new experiences can drive audience through the simple act of encouraging subscribers - and are a stepping-stone to new revenue.
For Vella, these simple changes, along with the new ad units, are the future of bundled streaming services.
Once the marketplace settles on the amount they’re willing to spend for skinny bundles, consumer experiences will be shaped by something that looks like YouTube or Netflix right now. It’ll be personalized and make recommendations dynamically based off past viewing behaviors. It will encourage you to subscribe. And these will in turn build audiences. Ultimately that in-program real estate becomes the most valuable property a media company has to sell.
