A OTT Pioneer Looks At Where The Business Is Now

Rajeev Raman, is the CEO and co-founder of 1 Mainstream, a turnkey platform for content creators that helps them monetize the distribution of their businesses by creating apps that can be quickly applied on myriad devices. In the past, he was the lead product manager at Roku and helped launch Roku 2, and so he’s watched the distribution of digital content grow from its infancy. In this Q&A, he gives the perspective of a rare veteran in a very new business.

VB: You must be amazed by the complicated moves in the broadband world of a sudden, it seems.

RR: The U.S pay TV business and TV business haves gone through about three years' worth of change in the last three months, basically, with the Comcast-Time Warner thing and with the AT&T- DirecTV announcement, and with so many of the media-related moves. It’s quite dramatic how much has happened in the last four months. The Aereo case is coming up [for a decision by the Supreme Court].

For a variety of reasons, the pace of change has picked up. You see these combinations, and you see some failures, but one thing for sure is you see a lot of money being put in these eco-structures to fuel this next wave.

VB: Yet it seems if you are a consumer, all that action in the market, and all the competing devices might keep you on the sidelines. Don’t you think consumers are a little confused? Like, should I buy Roku, or a $35 Chromecast dongle?

RR: That particular example you gave is a thorny one. We’re in this business, right?  And it would take us two or three sentences to describe how to make Chromecast work.

You go to the store ,and it’s in the same aisle as Roku and Apple TV and other devices. It has a $35 price tag, so everybody’s going to gravitate to that. They’ll ask the guy in the blue shirt from BestBuy, ‘Is this the one I want?’ and that’s where the craziness begins. 

If it takes us a few sentence to explain how it works...well. I’m not saying it’s a bad product. It’s really quite good, but it’s not easy. The space has gotten quite muddled.

Now you have this Playstation TV thing that was announced a few days ago. There is a lot of stuff that is happening in this business.

It really comes about because device makers take a parochial view. They only care about themselves, which they should, right? The responsibility for elevating from this clutter of different device and interfaces and what not has really fallen to Netflix, which has just gotten tired of all these variables and said, ‘You know what, you will be able to get Netflix on any of those devices. There will be a button somewhere, so you can watch on my Roku, watch on my AppleTV, watch on my FireTV. We’re going to simplify our end.’ 

Netflix can do that, but what about the other companies that don't have the same technical push to make this happen? This is a big issue. How consumers are going to figure out which device is for which.

VB: At some point, won't  ad-supported OTT have to get bigger?

RR: Look at games for a second. Before, you had to get a console so you had to pay $45 first, right? Then mobile came along and said here’s a mobile game for $4.99, here’s an iPad game for 6.99, or 99 cents. I guess the question is: Are you just going to keep buying these things at ar $4, $5, $6 at a time? How many of these [pay OTT apps ] are you really going to do? 

And I think the answer is a lot. There’s a lot of headroom in there.

Once you start offering that variety, it’s a little like that Costco experience. You go in there and before you know it, you’re walking out with a $250 bill every time. So yes, there may be some kind of ceiling--oh you want a martial arts channel, that’s going to be two bucks, you want another kind of channel, that will be five bucks. 

I don’t disagree with you when you ask: Don’t OTT providers have  to have an advertising model?

But pay is going to have an equally big role. I mean Netflix has no ads, right? Amazon hasn’t done ads in video yet but if you look very fundamentally at the ad strategy, the Kindle was a discounted product offset by ads, so you can see lots of different aspects coming together. In the end it’s a big, giant screen in the living room. You’ve got this screen, and you’ve got  this opportunity to connect with the consumer.

VB: It seems very big and very small screens are where the action is.

RR: I don’t dispute that notion. But this is one of those where the details really matter. Somebody’s got to double click into that data, looking beyond the Mary Meeker data that says look, mobile is actually greater than tablet viewing and not a hell of a lot behind TV viewing.  But when I say details, the number of mobile screens outnumber TV screens by something like a magnitude of three or something like that. There are so many more of them, if you could grab a minute from the many more devices it would move the needle substantially by a minute, two, three at a time.

So when I say bigger screen leads to better outcomes for video, I mean it from a one-user-at-a-time engagement standpoint. Someone streaming TV is going to watch TV for a much longer time than someone with their headset on watching on a mobile device.

From an ad perspective, if you have somebody watching TV for 30 minutes and you’ve got somebody watching for three minutes on an Android or iPhone, certainly an advertiser is TV even if it is just a 15 second or 30 second pre roll.

VB: Where do you think we are in the evolution of OTT?

RR: I recall two and a half years ago there was some stat that came out that said the average OTT viewer was spending somewhere between 8 to 10 hours a week watching on those devices. Now at the time I remember saying, ’Wow, that’s shocking, it’s now approaching 25% of what Nielsen says is traditional TV viewing. To me that was the beginning. OK we’ve arrived, people know we’re here. I don’t think we’re anywhere near the end. With all that has gone on this year and the end of last year, there’s chum in the water for sure now.

pj@mediapost.com

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