Addressing a conference session on ‘Lowering OTT Cost Barriers, without, Sacrificing Security’, Jahr told delegates that many operators struggle to make money in OTT, with high investment and operational costs, as well as stiff competition, for example Netflix, HBO, GO/NOW and Viaplay, a particular challenge.
“Many of the operators that approach Conax are frustrated with high investment cost and high operational costs when they are struggling with finding the actual cash in a new OTT service,” he advised. “Most operators are crunching numbers trying to figure out how to find profitability in OTT but we see that achieving a good return on potential OTT investments is not that easy.”
Despite these challenges, Jahr noted that short format content had proven that there is significant money to be made from OTT content – YouTube giant Blame Society Production’s channel has more than 110 million views, while American filmmaker Casey Neistat achieved five million views on his Make It Count film within 10 days of its release.
With these impressive figures comes real earning potential through advertisement, merchandise and even ‘meet and greet’ opportunities for the viewer, while overheads are kept relatively low.
According to Jahr, the key to taking advantage of this opportunity is to tap into consumers’ ever-growing demand for convenience with a TV Anywhere Service and a strong digital rights management (DRM) solution across multiple platforms.
“TV used to be fantastic – great margins meant that return on investment was easy to calculate, but that has changed,” said Jahr. “This is a case of evolution, not revolution. The migration to digital did not do anything to the linear model – it just added more channels. But now, any operator that wants to compete needs to go beyond that and offer multiscreen solutions to avoid losing customers. Return on investment in pay-TV is now based heavily around customer churn rather than margins.”
Jahr stressed that consumers are expecting operators to reach their existing Smartphones and tablets, regardless of manufacturer and operations systems. Operators need to support the vast majority of active consumer devices in their market – all of which are unmanaged and bought and maintained by consumers, creating a huge number of legacy devices and operation systems.
“If operators are to be truly successful in the OTT market, it is essential they secure the content within the rules of the content owners with the implantation of a strong digital rights management (DRM) solution across multiple platforms,” he declared.
The three largest manufacturers of the operation systems – and sometimes the devices – have their own proprietary DRM technology embedded. Using the embedded DRM is often available for free and can sometimes provide a hardware root-of-trust, which increases security even further.
Security is the foundation of a profitable OTT solution, concluded Jahr. Managing service and content protection, while maintaining that quality content is available over all devices, is becoming increasingly important in an age where the consumer is more demanding than ever.