Broadcasters Mull OTT Possibilities, Payouts

NEW YORK — While revenues from over-the-top (OTT) video services may still be nonexistent for most broadcasters, stations need to consider their OTT options now in order to secure their slice of the future pie, said digital experts speaking at a TV2020 session at the NAB New York Show in New York on Wednesday.

“OTT is here, and it’s not going away — we’ve already jumped out of that box,” said Mike Bloxham, SVP, national TV and radio for research firm Frank N. Magid Associates, speaking on the panel “OTT & Digital Opportunities” moderated by TVNewsCheck Special Projects Editor Michael Depp.

Bloxham said broadcasters would be “negligent” to not be thinking hard about whether they need to get into the OTT game. He cited research indicating that at year-end 2016 73% of U.S. households had access to at least one OTT service, and 14% had access to four.

“That alone says this is significant, and this is going to impact every other way of consuming video,” said Bloxham.

While binge-watching has been technically possible since the days of the videocassette recorder, he said, the convenience and reach of OTT services like Netflix have given viewers “a seductive way of watching everything, and every kind of content we want, and that is now impacting ratings.”

In the past Magid would focus much of its research on dayparts, but OTT is turning the television industry’s reliance on the daypart model on its head.

“Ellen’s key competition today isn’t necessarily somebody else with a daytime show,” said Bloxham. “It’s Outlander or NCIS or whatever else I want to binge on as a daytime television viewer. The whole competitive set has changed.”

OTT isn’t for everyone, Bloxham conceded, and Magid has counseled several clients not to launch OTT services because they would cannibalize their existing businesses. He said the whole industry is waiting to see if ratings declines from OTT continue or begin to flatten out.

It’s competition among OTT providers themselves that has gotten broadcasters like Tribune Broadcasting interested, said Kerry Oslund, its VP of strategy and business development. While there are OTT customers looking to pay more for binge content, there are also “a lot of customers willing to pay less for less” through “skinny bundles” like Hulu Live, YouTube TV, DirecTV Now and Playstation Vue.

More important, there are now seven of these “virtual MPVDs” that are willing to compensate stations for linear live programming, often through network proxy deals that set a per-subscriber rate for major network affiliates.

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