Making an OTT service profitable is a complicated proposition in Asia, and the session saw several different models presented and discussed. James Miner, MD of MinerLabs, moderated.
As OTT services like Netflix and Hulu eat into the pay-TV market, pay-TV operators are reporting falling numbers of net subscriber additions, but also responding with their own OTT or 'TV Everywhere' initiatives.
Brian Lau, vice-president of content and communication at Fox International Channels, said he spent the last 18 months testing technology so Fox can modify and advance its apps for market acceptance.
Right now, only a small part of a "huge array of content" becomes available on these services, so Lau is looking for deeper traction in the OTT ecosystem. Even so, Fox is limited by the rights obtained from content sources; it can be more flexible with original content.
On the whole, trial services help in the conversion to subscriptions, which is also a broader strategy for Jeremy Carr, vice-president of digital and syndication at Turner International Asia Pacific.
His approach to growth is to drive consumption of "our huge library of content by coming out with more innovative services" based on a foundation of already strong penetration of, say, its Cartoon Network channel. "We need to identify new niche channel-brands to get into the market to appeal to difficult-to-reach audiences, such as 16- to 34-year-old males who love snackable and humourous content," he said.
Snackable and humourous content...sounds like what you find on YouTube.
Traditional TV operators have largely shifted their mindsets on whether YouTube is a friend or foe, Carr said. YouTube now partners with pay-TV operators, music companies, and sports organisations to launch paid channels, and those channels that boast more than 10,000 subscribers can charge users to access the content.
"Our business models are based on revenue-sharing," said Anthony Zameczkowski, head of music at YouTube APAC. "These are complementary opportunities for these partners to reach out to a wider audience and also for us to monetise." Throughout the session, Zameczkowski tried his hardest to position YouTube's core audience—connected Generation-Z members who switch between different devices 27 times a day—as a valuable target.
On the flip side, Carr said revenue-sharing is great, but the real threat is a middle-ground pricing strategy. "With a mass audience, we have to bring down the pricing," he said. "But for us as a premium channel, we have to think about how to maintain a premium price for our bread-and-butter long-form content, which is an asset we have to protect," Carr said.
Lau pointed out that YouTube still has a great deal of unlicensed content. "I can find entire films on YouTube," he said. Gesturing toward Zameczkowski, he continued, "Unless you make the move to take all of those unauthorised content down, it's impossible to monetise the same content in another window." This prompted applause from the CASBAA delegates.
"This is problematic," Lau repeated, to which Buddy Marini, MD of Hulu Japan, played the peacemaker by saying, "in terms of piracy, you can beat them at the end of the day if you are on all the available mobile devices and have great UI".