Parks Points

The Impact of OTT on TV Content Distribution Strategies

by Glenn Hower | Feb. 8, 2017

Television maintained its status as broadcast and pay TV for decades. However, the Internet and emergence of streaming video services has greatly impacted the content industry’s windowing strategies.

Digital distribution creates an abundance of monetization opportunities, in contrast to previous television models which relied on advertising revenue, home video sales, and subscription revenue from pay-TV service operators. Important strategic trends in digital television content distribution include live digital streaming of sports content, the early authenticated and transactional VOD window, the early and mid-subscription VOD window, and digital syndication.

Emerging Trends in Streaming Media & OTT

For live sporting events, fans often struggle with local broadcast rights to out-of-town teams. These transplants are left with the options of watching local teams only, going to a location with an expanded sports package (such as a restaurant or sports bar), paying an incremental amount for an out-of-market sports package, or illegitimately accessing games. Expanded streaming models through digital distribution apps like WatchESPN and Fox Sports Go provide displaced fans with instant access to their teams even if the local feed is broadcasting a local team.

These streaming services also play a role for live events with geographic time shifts. For international events such as the Olympics, broadcasters may delay coverage and put together a primetime broadcast package that includes a select number of events. Such was the case for NBC during the 2016 Olympic Games in Rio de Janeiro. Despite being in a similar time zone to the U.S.—only one hour ahead of Eastern Daylight Time—NBC still packaged popular daytime events into a primetime broadcast. NBC used their streaming capabilities to create a hybrid broadcast model, streaming most of the events live while retaining a primetime broadcast format.

Consumer uptake of OTT services has also proven to have significant influence on the industry, with 64% of U.S. broadband households subscribing to an OTT video service. Netflix boasts the greatest market share in this space and continues to be a dominant force globally.

Netflix and its OTT competitors employ a whole-season release strategy for original series, contrary to the episodic release model employed for decades in television. However, releasing the whole season, which allows consumers to partake in binge-watching behavior, does not work for traditional network television due to restrictions in the linear television model including audience aggregation, value of scarcity, and cliffhangers/buzz. Content providers can therefore use binge-watching to their advantage, building synergy through the previous season as a supplement to viewing current season episodes.

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Glenn Hower

Glenn Hower

Senior Analyst

Glenn Hower currently studies entertainment content and delivery services. Glenn is experienced in entertainment content production and distribution systems with a particular emphasis on radio, television, and film content.

Glenn earned his BA in music with a focus on the music business and industry from the University of Texas at Austin. He earned his MS and MBA from Texas Woman's University in Denton, Texas.

Industry Expertise: TV & Video Content Production, Content Licensing & Distribution, Television Services, Broadband Services, OTT Services, Digital Music

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