Interview: How to Better Monetize OTT Content

In this interview, Nichole Janowsky from OTT Exec Magazine tracks down castLabs CEO Michael Stattmann to get his insights on how OTT service providers can better monetize their content and provide quality experiences for their customers.

Nichole: Having invested in content, OTT service providers are of course keen to monetize that content, usually through either a subscription-based or ad-based model. What are the best ways to facilitate content monetization?

Michael: The largest volume of views is indeed found within SVOD and AVOD business models, but I would like to add transactional models like TVOD (rentals) and EST (purchase for digital ownership) to the list of viable monetization models. We also see an increasing trend of combining multiple models within a single service. Having said that, each model has its unique strengths.

AVOD promises the highest volume of views with revenues related to these views, SVOD provides plannable revenues while posing risks on losing money on binge watchers. Transactional models offer highest margins but require a large catalogue of latest releases to succeed. To facilitate and maximize monetization of these different models you have to build flexibility into the video players.

For transactional models a player with highly secure and flexible DRM capabilities is needed due to stringent studio requirements on early window content as well as the requirement to offer download-to-own capabilities for EST.

For SVOD that’s largely in the flexibility of controlling the data consumption as a primary cost factor, enabling DRM controlled restrictions on the number of concurrent streams and offering audience measurement and content tracking capabilities like Nielsen.

With AVOD that flexibility comes from supporting a varied range of ad formats such as skippable linear ads, non-linear ads, and sequenced ad groups known also as “ad pods”. For example, our “PRESTOplay” range of video player SDKs facilitate these through the common VAST ad framework with IMA protocol.

To another point though, maximizing monetization also means protecting the value of content. Studios, wary of piracy and protecting IP, demand that content providers use DRM secured platforms. You need to facilitate DRM protected content in your players, and also provide a DRM license management service supporting all the major DRM systems available today.

Forensic watermarking capabilities through a content processing service are also important.

Nichole: Adopting new technology is often both time-consuming and costly. In what ways can customers face these challenges?

Michael: Service providers will often have a large library of content, not necessarily in the same or latest streaming format, and require license keys across multiple DRM systems for full multi-device compatibility.

Player SDKs and cloud-based video toolkits need to support MPEG-DASH, HLS and Smooth Streaming formats, and automate Smooth Streaming to MPEG-DASH conversion on-the-fly. No need for server-side changes. It’s crucial to keep extending your player SDKs by the means of plugins which enables customers to adopt new technologies by simply loading an additional plugin.

For DRM licensing, the license management service needs to allow just one integration to support all major DRM systems across all screens, streamlining the entire process.

At castLabs, we constantly evolve the DRM capabilities offered while keeping the interfaces to our customers stable. That way our customers can always rely on having access to the latest DRM capabilities without investing development or maintenance efforts.

One way to speed up player development is to adopt a more flexible JavaScript framework for the browser player, and offer pre-built integration with certain streaming technologies often requested by our customers. This may require forging close relationships with companies like Conviva, Nice People At Work, Wowza, Elemental and Unified Streaming.

Nichole: Monetization is the goal of your customer, but that has to be set against a good quality experience for the end user. How is this realized in today’s OTT environment?

Michael: From the player you want consistent playback without rebuffering, which is still cited by streaming users as a key concern (such as Accenture’s “Digital Video and the Connected Consumer” report), but ultimately not difficult to resolve using a common adaptive bitrate (ABR) algorithm and leveraging integrations with QoE and CDN switching technologies. Where interruptions can delay streaming is with DRM services, waiting for license authorization to access content.

Compared to some other DRM services, castLabs utilizes a highly scalable multi-region key delivery to minimize the licensing turnaround time globally to ensure fastest playback startup times.

As mentioned before, we recommend leveraging pre-integrated video analytics technologies such as Conviva’s Intelligent Control Platform or Nice People At Work’s Youbora. These technologies enable you to analyse users’ QoE, benchmark to industry standards, and act upon that data to improve content delivery quality.

PRESTOplay-Example-UI-1

Modern video streaming players need to embrace future standards.

Nichole: Consumers of streaming video are consuming online and offline, on more screens in more places than ever before. What are the challenges in providing offline services?

Michael: First, you have two types of offline markets here, emerging markets where internet connectivity is not prevalent and offline is seen as a necessity for consumers to view content; and enabling “content everywhere lifestyles” where there’s an appetite for offline playback on WiFi-less flights or public transport where WiFi can be intermittent or non-existent – or simply to save data on a limited mobile data plan.

Last but not least are the many entertainment systems in airplanes or busses that are completely offline but need to work on devices brought by the consumer.

In certain regions, India and Sub Saharan Africa in-particular, where data costs are high and internet availability poor, live/VoD streaming can be uneconomical. Where we’ve worked with clients in these regions, consumers typically download content overnight and watch it the next day, or the service syncs content with the consumer device when connected over Wifi.

The player has to be intuitively designed to meet that preference for offline, so we help to facilitate that. With the “content everywhere” market, you need to enable management of downloaded content, as storage on mobile devices is limited, and support DRM restrictions on downloaded content.

Our PRESTOplay SDKs for iOS and Android realize online and offline playback with minimal effort from the user. The service provider doesn’t need to provide special files for download, PRESTOplay can download content encoded for streaming.

In working with the airline industry, we also offer an offline DRM solution for in-flight entertainment (IFE) systems as well as streaming networks on other forms of transportation. This offline version of DRMtoday can be deployed in environments with little or no internet access, or where license keys can only be stored locally.

Nichole: HTML5 has become the new online standard as proprietary plugins including Adobe Flash and Microsoft Silverlight are being depreciated by every major browser. How is castLabs interpreting these developments and reacting to them?

 
HTML5 with Silverlight fallback
 

Michael: castLabs has enabled a migration to HTML5 video since 2015. Our PRESTOplay SDK for Browsers utilizes HTML5 and MSE/EME with either Common Encryption (CENC) or FairPlay Streaming for DRM and is the only player SDK supporting pre-existing content encoded in SmoothStreaming even for HTML5 playback in all browsers. We believe this is currently the most secure and futureproof configuration for multi-browser video playback.

Yet we have to acknowledge some users have not yet transitioned to HTML5 compatible browsers so the need for a fallback option still exists. For us that fallback is Microsoft Silverlight. Silverlight uses PlayReady DRM, which is also used in Microsoft Edge and IE 11+ browsers for native HTML5 playback.

Unlike Adobe Flash Player, it doesn’t require an additional license from Adobe for use of their proprietary DRM [Primetime] which also isn’t required for any other cross-browser compatibility.

Nichole: Finally, what does the future trajectory of monetization look like in the OTT space as it relates to your future product development?

Michael: An increasingly crowded subscription space is going to set niche services into either fighting each other or pairing together. There’ll be a need for more differentiation, new integrations and features that satisfy the increasing expectations of their subscribers. Though ad spend is rising, ad-based models have a challenge to deliver more relevant ads to users in order to retain customers. We’ll be looking at how to better facilitate that with our player SDKs.

In the immediate future we will be implementing support for the emerging Common Media Application Format (CMAF) which promises significant cost savings across our player SDKs.

This interview was originally published by OTT Exec Magazine for the Spring 2017 issue. You can read OTT Exec Magazine by going to ottexec.com/magazine.