‘Content king as SVOD sector grows but CX focus must keep pace in longer term’: Q&A with Ooyala’s Jim O’Neill

Ooyala Principal Analyst Jim O'Neill

Telecom Times welcomed the opportunity to discuss some current over-the-top video streaming trends with Jim O’Neill, Principal Analyst at Ooyala, who also shared some of his insights into what the future may hold for this emerging high-profile industry.

O’Neill, who’s based in Michigan, was in Sydney to present a paper on the subject of OTT’s Evolution to Mainstream at the ABE 2018 content production and delivery tech event.

Ooyala, a Telstra company, specialises in providing software and services to optimise the production, distribution and monetisation of media, with offerings including the Ooyala Live platform and Ooyala IQ analytics.

While global markets are experiencing differences in how OTT is rolling out against the backdrop of shifting consumption habits, OTT is set to become a US$65 billion market globally by 2021 and is undoubtedly the future of video, according to Ooyala.

Introducing O’Neill was the firm’s APAC and Japan VP Patricio Cummins who offered some specific insights into Ooyala’s strategy in the region over the next five years.

“In the APAC region, we expect the market to keep evolving, as the demand for content continues to grow and the users for subscription video on demand (SVOD) services are expected to more than double to over 351 million by 2023,” he told Telecom Times.

Patricio Cummins
Ooyala APAC and Japan VP Patricio Cummins

“Our strategy is to focus on revolutionising the content supply chain for broadcasters, operators and content owners, so they can deliver content to market faster, get cost efficiencies, and drive more revenue,” he added.

“With recent customers like Korea Content Platform, Turner Asia Pacific, Discovery Asia Pacific and Fox Sports Australia in the APAC region, we have excellent momentum and look forward to continuing our expansion in this thriving region,” Cummins said.

On ‘competition metrics’, meanwhile, O’Neill forecast that content alone would not be the very last area of competition, but added: “It will be a major driver of competition and a determinant in who wins and who comes in second or third.”

Telecom Times    Can you elaborate on that?

O’Neill    The consumer has become so important in this – much more so than they have been in the past – that they are driving this new content acceleration. If you’re an operator, you had better have enough content, especially premium content and sports, to keep your customer engaged because they can, and will, otherwise churn aggressively.

Telecom Times    Do you expect this to apply broadly to all markets?

O’Neill   No doubt. What we’ve seen is a pretty consistent culture among millennials across the world; they really are the first global generation. They consume content the same way, adopt technology willingly and are very comfortable in, for instance, consuming content on mobile devices. It’s second nature to them. The following generation, Gen Z or Gen Edge, is all of those things and more. So, that demand for new content stretches across all markets.

Telecom Times    And, do you see it becoming more of a deciding pivot than say customer service in the long run?

O’Neill    Great question. You can have great content and survive with so-so customer service, or so-so content and great customer service and do OK as well. But here’s a recent experience that I had that I think demonstrates the need for both… and a sea change in the industry.

Watching the England-Croatia World Cup game in the U.S. on YouTube TV, the stream stopped just after halftime. I pretty immediately receive an email that told me they were working on a fix and then, when it didn’t happen until an hour later, I received a follow up apology with a link to a recording of the full game and a free week of service.

That would never have happened with a legacy provider, at least it hasn’t happened to me unless I demanded it from a customer service agent. And I think that shows the difference in how customer service/content has been done and how it could be done.

I do think content is more critical during this phase of the industry, a period of growth and subscriber grabs, but customer service will catch up. It’s too hard to replace a churned customer and too expensive.

Telecom Times    Thoughts on how 5G will impact the industry?

O’Neill    We’ve seen video consumption on mobile devices increase in recent years to the point where more than 60% of video plays in Asia Pacific region are now on mobile devices, and that’s not something that will go backwards. Mobile is too central to our lives, regardless of where you live.

5G will expand bandwidth, increase speed and – probably – mean uncapped data consumption and perhaps even lower prices.

For operators, the biggest question will be how to monetize that new technology in a time of declining ARPU. The answer, for many operators, will be to increase the number of revenue streams they can generate by offering prioritized delivery of content, by launching their own streaming services – multiple streaming services – and by partnering with content providers to offer those services with a degree of exclusivity.

Operators hate the term dumb pipe, and they should, because their pipes can be very smart and will be used to deliver personalized content, services, and likely personalized ads as well. There is a ton of opportunity available, especially if they can automate, streamline and accelerate their delivery of original and personalized content and ads to their customers.

Telecom Times  Are you seeing any trends around multi SVOD subs ownership which suggest signing up to several services looks set to become a notable feature in ANZ going forward?

I am 100% positive that the current 43% of Australian households that subscribe to an SVOD service will quickly increase to the 70% range in the next two years. And, I’m just as sure that users will happily subscribe to more than one service to get the content they really want to get, especially if the price is appropriate.

There’s no way, for example, that someone would be willing to pay $10 a month each for multiple Netflix-type services. But they are likely to pay $10 for a Netflix-type service, $10 for a bundle of sports, and a few extra dollars for a few extra niche content services.

Especially, if those services make it easy to subscribe and unsubscribe without penalty. Churning across subscriptions will be the norm.

Telecom Times     Do you expect we’ll see any significant consolidation within the OTT, video, SVOD sector?

O’Neill   We are seeing consolidation globally on several levels, distributors buying content creators, content creators merging etc. But even as those consolidations occur, the barrier to entry into the SVOD space has been lowered so much that there will be plenty of new services launching.

For the broadband operators who desire to offer video, as opposed to simply supplying the pipe to deliver content, I’d expect many broadband operators to opt for ad-supported or subscription-supported video on demand. Transactional video is really seeing a slow down, which is one of the reasons Apple is looking to become a player in the SVOD industry in addition to offering iTunes content. It’s another way they can create more value over their networks.

Telecom Times     Looking ahead, what type of innovative capabilities do you see SVOD users demanding as part of their providers’ service?

O’Neill    There’s no doubt that delivery to mobile devices will be table stakes, just expected by all subscribers. The ability to download and watch shows offline will be the same. If you pay a premium for a service consumers want a premium service in return.

Obviously, recommendation and discovery is important, although younger users can find any content with a traditional guide. But it’s always helpful to surface content they might not have thought about.

Social-ability will be important, but I’m not sure it will be as important as some think it will be. I see it more as window dressing. In the interim, operators will offer skinny bundles – smaller collections of content – that will allow them to offer less expensive bundles of content.

But that’s an interim step as, eventually, it’s more likely that content owners will go direct to consumers with their products, offering true a la carte choice as well. That is really where the consumer wants to go and, frankly, they’ve directed this revolution this far and they will continue to drive its evolution.

Telecom Times    What is your realistic assessment of potentially huge markets like India and China opening up for major OTT players?

O’Neill    No question India becomes a great market for companies like Amazon and Netflix; both are spending to develop local content, which is critical. Challenge for the likes of Amazon and Netflix is overcoming local taste barriers. Both India and China are very strong cultures, with large local TV and cinema industries.

Chinese and Indian audiences have a huge preference for local content, and it’ll be a challenge for US-based players to tap these larger audiences efficiently unless they invest heavily in local content.

On the flip side, that demand for local content also creates opportunity for local players with local content. Both markets are big enough to allow both local and global entities to have a slice.

Telecom Times    Can you also see some key challenges around this large-scale opportunity?

O’Neill    Of course. Both markets pose challenges. China can be a difficult place to do business because of of the regulatory environment and both markets have limits of disposable income.

An $11 service is going to have a limited market to appeal to, but those markets are so big even a little slice can be profitable.

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