Digiday Research: Monetizing content for OTT platforms is a growing concern for publishers
This research is based on unique data collected from our proprietary audience of publisher, agency, brand and tech insiders. It’s available to Digiday+ members. More from the series →
At the Digiday Video Summit in May in Scottsdale, Arizona, we sat down with 51 executives in the digital video industry to discuss their ambitions and pain points with over-the-top services. Check out our research on publishers’ plans to increase their video production here. Learn more about our upcoming events here.
- The amount of publishers planning to produce more OTT content has remained mostly the same compared with six months ago, according to respondents to Digiday’s survey.
- Monetization has become publishers’ biggest challenge with creating OTT content.
Publishers’ plans to create OTT content remain relatively unchanged
Even before the market for short-form video series dwindled and Facebook announced it would de-emphasize publishers’ video in its news feed, publishers were starting to create more long-form content for OTT platforms. Of the executives Digiday surveyed at the Digiday Video Summit in May, who were almost all from publishers, 76 percent planned to increase the amount of content they create for OTT platforms. That’s slightly less than the 81 percent of publishers who planned to increase their OTT content at Digiday’s video summit seven months ago.
Amid a larger shift by publishers to diversify their revenue streams, publishers are incentivized to create content for OTT platforms by content licensing fees, subscription revenues, and yes, advertising dollars. Food-focused Tastemade is even using its content on YouTube TV to promote commerce deals for its owned retail products. Content licensing fees are particularly attractive because of the billions of dollars companies like Apple, Netflix, HBO, Amazon and others are spending on publisher-created shows.
Monetization challenges increase while worries about reach lessen
U.S. consumers are increasingly dumping their traditional TV packages for subscriptions to OTT services. An April study from Convergence Research predicts that OTT subscribers will outnumber TV subscribers by 2020. However, paid-TV revenues still far exceed those from OTT despite OTT’s millions of new subscribers and strong revenue growth.
Research conducted by Digiday at the May and November video summits mirrors those findings. Publishers concerned most with the reach of their OTT content dropped from 29 percent in November to 14 percent in May. Meanwhile, publishers that said monetizing their content was the biggest OTT challenge grew slightly from 22 percent in November to 27 percent in May.
More and more people are turning to OTT platforms like Netflix or Hulu to watch shows and movies, but Facebook’s struggles to build an audience for its OTT platform, Watch, shows that consumers are less comfortable going to the social media platform for long-form video content. With a $90 million budget to create news shows for Watch, Facebook has enlisted publishers like ABC News and CNN to create shows that will only exist on Watch. Publishers are happy to take the funding to create news shows, but not all are convinced those programs with draw significant audiences. Facebook itself was unclear about how much it would promote the shows, saying the primary responsibility rests with publishers.
Additionally, content discoverability remains a problem for some publishers, with 22 percent of the respondents in Digiday’s May survey saying it was their biggest OTT concern, though that number was down from 28 percent in November. Content discoverability on Netflix, specifically, was a sore topic. As one executive at the May summit said, “At the end of the day, even if you do sign that Netflix deal, you may not get discovered.” Another anonymous executive added: “If Netflix improved its algorithm, we’d actually see things instead of the 15 things they’re promoting this month.”
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