The television landscape has undergone a remarkable transformation with the advent of Connected TV. For TV content providers, it is crucial to closely monitor the evolving CTV trends and changing viewer preferences to stay ahead in this dynamic and increasingly competitive environment.
As more and more households are equipped with CTV devices, and OTT platforms continue to pick up new audiences across generations, Connected TV ad spending is escalating rapidly and is expected to reach global growth of 13.2% in 2023, raising to $25.9 billion, according to GroupM's forecast.
At the same time, and as a consequence of that, the number of players in the field is increasing significantly, both on the publishers and the technology side.
It is therefore fundamental for traditional broadcasters and telco operators with TV offerings to take advantage of these promising but also challenging conditions embracing new differentiation, retention, and monetization strategies.
Relying on our expertise and our top-tier partner network, we summarized the key actions to consider for companies with premium video offerings to stay ahead of the CTV curve:
Develop Original Digital Content
The rise in the cost of licensed programs such as Tier 1 sports content along with the increased competitive intensity in video entertainment makes it essential to invest in quality original content that can differentiate from the competition.
“We inspire positive change for our viewers and our communities. We nurture new talent, showcase strong storytelling, and celebrate the best of the UK’s entertaining and informative series. For us, content is the springboard to wider motivation, engagement, and participation beyond the TV screen. We have been personalizing our viewer resources and campaigns across our digital platforms for several years – we are embracing this for the viewing experience across content discovery and CTV.“ Alexander Kann, Chief Executive at Together TV
While this would be a normal consideration for a TV broadcaster, investing in original productions has gained popularity in recent years for telecom operators as well.
As telecoms networks are the primary distribution channels for the digital economy, most telcos are in the entertainment business to a certain extent which has increased over the years.
According to STL Partners, television, or premium video offerings in general, are shifting from the periphery, in terms of telcos’ top management focus, onto center stage. That is why the world’s largest telcos began to invest in securing exclusive drama and sports content, and some of them are going as far as developing their own entertainment programs.
And you, do you really want to be found unprepared in this increasingly competitive scenario?
Adopt Hybrid Business Models and Multi-Platform Distribution
To reach a broader audience and adapt to changing viewer habits, TV broadcasters and telcos offering entertainment services should embrace multi-platform distribution. Distribute your content through traditional TV channels, your own CTV platform, and smartphone app, through a website optimized both for the browser and for mobile, etc.; this will enable you to extend your reach across generations and engage viewers wherever they are and whenever they prefer. Ofcom, the UK’s regulatory authority for broadcasting and telecommunications states that nine in ten 18-24-year-olders bypass TV channels and head straight to streaming, on-demand, and social video platforms when looking for something to watch, while, six in ten (59%) 55-64-year-old viewers and 76% of those aged 65+ still turn to linear television first using a traditional TV screen.
Given these very different viewing habits, it is therefore fundamental to embrace the TV anytime anywhere paradigm creating and adapting TV content to different platforms, devices, and audiences.
”As our customers tend to have highly fragmented usage patterns, the diversity in their device preferences is very noticeable and sometimes changes by the time of day and mood. Particularly by creating flexible ABS (Adaptive Bitrate Streams) while utilizing device-agnostic dynamic ad insertion, we ensure all of the viewers are served with the best possible user experience in our different products on Magenta TV in Germany.” Dr. Jörg Richartz, VP Marketing and Sales TV, Deutsche Telekom
Consider also offering a combination of free ad-supported content and premium subscription-based services. This approach will allow you to tap into both advertising and subscription-based monetization opportunities, thereby mitigating the risk of user churn and differentiating revenue sources.
Leverage the Power of Data Analytics
Use data-driven insights to understand your viewer preferences, behaviors, and consumption patterns. Analyze data from CTV platforms, social media, and other digital channels to gain valuable audience insights. This information can guide content development decisions, scheduling strategies, and targeted advertising campaigns. Utilize data analytics to stay relevant and create content that resonates with your target audience.
“There is a key difference between data and other user insights. Data gives us models of people's behavior, interests, and even more subtle attributes in a dynamic way that could not have been realized before. We integrate data along the entire process of content creation, monetization, delivery, and performance.”
Jörg Blumtritt, Strategic Advisor, Raudio.BIZ
Additionally, analytics-driven content tagging and metadata enrichment improve search accuracy, making it easier for users to find precisely what they are looking for. As a result, viewers spend more time watching content they enjoy and less time searching, leading to improved user satisfaction and increased usage-based ad revenue.
Once you have the (big) data, it is fundamental to understand it and deploy it in the correct way, otherwise, you’ll end up in a data pond… without the ability to swim. That doesn’t sound too tempting, right?
Take Advantage of AI and Personalization Algorithms
Utilize recommendation algorithms powered by AI and machine learning to provide precise and personalized content suggestions to viewers. Amazon was using recommendations from algorithms for its marketplace already in 1998 and Netflix has been deploying algorithms for recommending entertainment since 2007 when it was still sending DVDs. By analyzing viewing habits, preferences, and demographic information, these technologies can suggest tailored content to each user/household, leading to increased user satisfaction, longer viewing sessions, and improved retention rates.
"Cognitive AI transforms the way viewers understand and engage with content. With our Cognitive AI Video Metadata Solutions, we're pioneering the next era of user experience. Our AI Video Metadata Solutions assist streaming services, entertainment companies, telecoms, software companies, and advertising platforms in crafting user experiences that are seamless, non-disruptive, and deliver content tailored to each viewer’s preferences that truly resonates." Marcus Bergström, CEO Vionlabs
And as somebody has to pay the bills in the end - it’s also super useful to increase revenues with the help of targeted advertising. By channeling the user, content, and behavioral information through a DAI platform like Serverside.ai, multiple connected SSPs can provide access to valuable advertising demand, hungry to reach this kind of audience.
Another employment possibility for AI is in the video encoding process with content-aware encoding solutions for live and VoD streaming with substantial storage savings maintaining the same video quality.
"A lot of media processing is useless replication of existing frames. With content-aware encoding, we can massively reduce resources and costs within the content delivery chain.” Stefan Arbanowski, Director of Future Applications and Media at Fraunhofer FOKUS
Embrace Programmatic and Addressable Advertising
TV commercials had a long-standing history of being perceived as unpleasant generic interruptions rather than useful tailored shopping tips.
This was until Programmatic and Addressable Advertising stepped in: the first one enabling publishers to sell ad inventory more easily, the second one delivering personalized ads at a household level or even to a single viewer, suggesting relevant answers to specific individual needs.
That’s why switching from traditional advertising to Addressable TV Ads is no longer just an option but becomes a necessity for every broadcaster and, more in general, every relevant TV player who wants to succeed and boost its monetization.
The successful combination of programmatic and addressable advertising, in fact, enables targeting specific demographics and optimizing ad placements, ensuring maximum impact and revenue generation.
“Embracing advertising as a revenue driver for video entertainment offerings is a solid first step to tackle the increasing subscription fatigue that SVOD services face. Anyhow, there is a lot of missed revenue on the table when the advertising ecosystem is not properly set up or held hostage in the black box of walled gardens.” Ana Paula Rangel, Sales Director CTV/Advanced TV EMEA at Equativ
What is needed for a TV provider to switch to programmatic/addressable advertising? The basic ingredients for a properly working ad ecosystem are a Supply-Side Platform (SSP) and an Ad Server, helping publishers to sell available ad inventory, connect to the demand side, and manage, store, and serve ads. These tools then need to be linked up with a capable Server-Side Ad Insertion platform that integrates ads smoothly into VOD and live-linear content.
Deploy Advanced Ad Insertion Mechanisms
Dwelling on the last point, there are several methods of Advanced Ad Insertion, that are superior to the traditional client-side ad insertion (CSAI) approach that has been used over the years:
The already mentioned SSAI (Server-Side Ad Insertion) or DAI (Dynamic Ad Insertion) solution seamlessly stitches personalized ads into live-linear or on-demand video streaming content.
DAS (Dynamic Ad Substitution), enabled by HbbTV (Hybrid Broadband Broadband TV) where the generic broadcast TV commercial is substituted with an addressable spot, tailored to the household watching. This procedure is enabled by accessing the internet connection available in nearly all common TV devices on the market today.
A new technique related to the first one is called Server-Guided Ad insertion (SGAI) and is used for instance by Disney/Hulu. Here, insertion opportunities are outlined by the server into a common manifest for the main content, with instructions for the client on how to reach out to the ad server. Afterward, DASH manifest updates or HLS Interstitials are used by the client to modify the manifest accordingly.
No matter which of the three advanced ad insertion methods is most suitable for the respective use case, Nowtilus Serverside.ai makes the personalized ad break integration process smooth and seamless with no interruption for the viewer, neither player crashes nor buffering on both streaming platforms and traditional TV channels.
Foster Community and Social Interaction
Most people watch TV with their smartphone at hand so lead the conversation and integrate social media platforms increasing engagement through real-time discussions, interactive campaigns, and user-generated content.
Leverage social media channels to promote shows, engage with viewers, and create a sense of community around your content and your brand. Social media integration can amplify your reach and drive audience engagement.
Moreover, according to an independent study for Thinkbox by COG Research, More than two-thirds of viewers (81%) are more likely to stay in the room during an ad break or not change the channel if they have a second screen compared to 72% of viewers who stay for the ads but do not use another internet-connected device. One more reason for encouraging your audience to use their mobiles while they are watching your shows on a TV screen.
Switch to Green Streaming
According to the International Energy Agency’s (IEA) September 2022 report, the data centers and transmission networks that facilitate streaming accounted for 1-1.5% of the world’s total electricity consumption and 1% of the planet’s total energy-related GHG emissions in 2020.
To give a measure of comparison, In 2022 aviation accounted for 2% of global energy-related CO2 emissions (www.iea.org). Fraunhofer FOKUS reports that in 2020 only, also because of the pandemic, streaming services consumed around 333 TWh. More generally, video is responsible for 65% of internet volume. Luckily, awareness of energy efficiency and sustainability related to broadcast and OTT production, distribution, and playback of digital media along the entire media chain is growing rapidly among TV companies but also among viewers.
Fraunhofer tech researchers propose an AI-based optimization of the streaming value chain with cloud-based workflow control and orchestration and real-time measurement that can be adopted by any player in the field.
“Our green streaming activities are focused on innovations, concepts, and energy-efficient solutions addressing the entire video streaming value chain from video creation to processing, delivery, and their usage on consumer devices. We develop technologies for a measurable and thus assessable streaming value chain that can enable the sustainable operation and use of streaming content in terms of its carbon footprint in an automated, adaptive, and self-learning manner.” Robert Seeliger, Project Manager and Video Sustainability Lead at Fraunhofer
The streaming experts from Fraunhofer are not the only ones working to help broadcasters and telco operators to build more sustainable energy-efficient streaming solutions.
You should definitely take sustainability into account when it comes to building or optimizing your streaming ecosystem!
As this article attempts to demonstrate, the future of television lies in the realm of Connected TV, and by adopting the overlaying strategies, TV broadcasters and telco operators active in the streaming field can successfully navigate the evolving landscape in a sustainable manner, capture new audiences, and deliver compelling content experiences that resonate with viewers in the digital age.
If you feel like discussing any of these CTV trends further, don't hesitate to reach out!