The OTT Revolution Is Upon Us, and MLB Advanced Media Is Leading the Way

It seems that, with each passing week, there’s a new over-the-top streaming service that allows consumers to directly access video for a fee without the need for a pesky cable-bundle subscription. Streaming-industry heavyweights Netflix, Hulu Plus, and Amazon Prime Instant Video have been joined by the likes of CBS All Access, HBO Now, Sling TV, and Sony PlayStation Vue in just the past year, and plenty more are on the way. À la carte and slimmed-down packages are an answer to viewers’ drastically changing consumption habits, driven by a generation of millennials, who expect easy access to video content when, where, and how they want it.

“It is really interesting to see the divide in behavior between an older generation, [which] is used to cable and [expect] that they would never get rid of cable … [and] teenagers, [whose] behavior and expectations are completely inverted,” said VHX CEO/co-founder Jamie Wilkinson during a panel at the recent Streaming Media East. “The idea of waiting to watch something and not having it available on a variety of devices is insane. I think it’s less about cord-cutting than it is cord-always and cord-nevers.”

Sports Content, MLBAM at Heart of OTT Action
Much of the OTT action is focused squarely on live sports content, highlighted by the launches of NFL Now and WWE Network last year and the recently announced PGA Tour Live, set to debut this summer. These direct-to-consumer services join established players MLB.TV, MLS Live, NBA League Pass, NHL Game Center Live —not to mention authenticated TV Everywhere offerings Fox Sports Go, NBC Sports Live Extra, and WatchESPN.

At the center of many of these streaming outlets is one company: MLB Advanced Media. As major media organizations look to develop OTT offerings, many are finding it’s no easy task to build the backend infrastructure required. As a result, several content owners (sports and non-sports) have tapped MLBAM to build their OTT platform. HBO Now, PGA Tour Live, Sony PlayStation Vue, and the WWE Network have joined long-time MLBAM clients WatchESPN, Turner Sports’ March Madness Live, and Glenn Beck’s TheBlaze.

The question for MLBAM becomes how to build platforms and serve the needs of such a widely varied clientele.

“Consistently, it’s pretty inconsistent,” said MLBAM VP of Media Operations Roger Williams. “Each of our partners is trying to do different things. ESPN is distinctly different from WWE, which is distinctly different from HBO. We always try to apply basic principles of delivery and distribution: codification of platform behavior, platform compliance with chip sets, and resource allocation. But, at the same time, what I think positions us better than a lot of folks who attempt to do it on their own or as a service provider … is, they are trying to make this a cookie-cutter, one-size-fits all solution but we see different variations of distribution and what the product looks like.”

He cited the example of ESPN strategies vs. WWE’s. Where ESPN looks to make as much content as possible available on WatchESPN at all times, WWE is focused on creating a continuing narrative throughout the year, building to its largest PPV events, such as WrestleMania and Summer Slam. HBO is another beast altogether, promoting its top-tier original programming like Game of Thrones.

“Whenever we talk to new people and they say, We want to do what HBO is doing, I tell them I don’t know if the HBO [model] is right for you,” said Williams. “I think that is what folks ultimately have to learn. Maybe you don’t look for just a subscription product or a pure-play advertising product. Or maybe it doesn’t necessarily need to be live; it can be VOD. It’s all exciting and changing every week. For our portfolio, we are splintering off a little bit on how we service and support them, but they all represent new challenges.”

Golden Age for Consumers, Tough Times for Creators
With the launch of more and more dedicated OTT services, it’s a good time to be a video consumer: viewers can find nearly anything they desire as long as they are willing to pay for it (or pirate it, in many cases). But it puts new pressure on content creators to find ways to monetize their video.

“It’s never been a better time to be a consumer of video; you can get almost anything you want whenever you want for a pretty incredible value,” noted Sam Landman, managing director, Philadelphia and New York offices, Comcast Ventures. “But, on the content-creator side, there are not a lot of people making money. It is not a great business to fund video on spec and hope to get tens of millions of views and monetize that through advertising.

“By in large,” he continued, “the only way I have seen it work at scale for companies the size of Comcast, MLBAM, and Sling TV is a dual-revenue model with consumer pay and advertising. The number of folks who have actually been able do that in the digital world is really small. The outcome is, the consumer is getting great content and the platform [it is being streamed on] tends to reap the reward. But the individual content owner isn’t doing all that well.”

The Advertising Exodus: From Broadcast to Digital
A resounding theme at this year’s upfront presentations was the increasing wave of dollars leaving the broadcast-television market in favor of digital advertising. And the onslaught of OTT and authenticated-streaming services is more than happy to oblige.

In March, Dish Network’s Sling Media began applying advertising on its free Web browser and standalone PC applications for Slingbox devices for the first time. While Sling caught its share of customer pushback, it believes ad placement is necessary to offset costs tied to ongoing engineering and technology-testing requirements.

“We don’t have a recurring business model from a monthly-access-fee standpoint,” said Sling Media VP, Worldwide Marketing, Mark Vena. “The margins we make are based on the hardware we sell, and there is not a tremendous amount of margin in the sale of hardware in 2015. So, for us to support the backend infrastructure, we have moved to an advertising model.

“But,” he continued, “there is no question, from an advertising standpoint, this is exactly where the boat is going. All the advertising dollars right now are shifting in a very dramatic way toward digital platforms, and we are just part of the flow.”