opinion


OTT outfits play their cards close to their chest

Facebook is set to launch a branded device on Thursday.

To celebrate its 20th anniversary, the Cable and Satellite Broadcasting Association of Asia (CASBAA) put together a blockbuster CASBAA Convention 2011 in Hong Kong in early November. But some of the expected fireworks at the convention were not quite as explosive as many delegates had hoped.

Made up primarily of executives from cable and satellite pay-TV operators and content-producer types, the CASBAA delegates packed the auditorium on Nov. 1 to listen to a panel made up of top executives from what the CASBAA chairman, Marcel Fenez, referred to as the “dark side” of the over-the-top (OTT) players.

With OTT players represented by Michelle Guthrie, formerly CEO of blue-chip broadcaster STAR TV but now director of strategic development at Google, Johannes Larcher, senior vice president of international at Hulu, and Jayne Leung, director of North Asia at Facebook, the “dark side” was capably represented.

What delegates wanted to hear, of course, was specific details on how the OTT players would be attacking the Asia Pacific market, largely in order – for the platform operators, at least – to be able to start drawing up plans to defend themselves from the inevitable attack, which has already started, with the launch of Hulu Japan in early September.

All gong and no dinner
Well, like so many times when you come to an event expecting a great confrontation, what transpired was ultimately somewhat disappointing, with the OTT panelists long on cliches and meaningless corporate speak, like “we need to work together,” and short on details of how they are going to crack the golden opportunity that awaits them in Asia Pacific.

Now, the charitable among the delegates might have been unsurprised at the lack of any really sharp details being put out there by the OTT panelists. After all, if you are fighting for the heavyweight title, you don’t march into your opponent’s training camp and tell him your fight plan. These things are best kept to yourself for as long as possible.

However, the more cynical out there – and that’s a camp where you will usually find me well-ensconced – might say that the OTT players did not share details of how they will break into the Asia Pacific pay TV/video market because, quite frankly, they really don’t have much clue themselves at this stage. And how would they? What mystical powers does Google or Hulu have that will enable them to crack a region that has seen off numerous foreign pay TV investors over the past two decades?

We all know that OTT is going to be a huge factor in the future of television, both globally and here in Asia Pacific, and Hulu’s Larcher is dead on when he says, “You can’t stop the OTT revolution.” But it’s not that simple. The wider questions are how OTT players actually persuade content producers to cooperate and how they are going to make money.
Larcher told delegates that Hulu Japan – the company’s first foray into Asia Pacific – was “going very well,” though he provided no data to back up that claim. And considering that the service is still in its infancy, it’s way too early to be making any informed judgments on the service’s success.

The difficulty for Hulu Japan will be in persuading key Japanese content providers to supply Hulu with content. But the big question is: Why would Japanese content heavyweights (or any Asia Pacific content producer) want to partner with Hulu?

Larcher told delegates that with the cost of producing content increasing rapidly, it makes sense for content producers to sell their content to the OTT players in order to recoup some of their production expenses, noting that “linear channels really need to find new ways to innovate.”

He also insisted that dealing with the OTT players would not mean that content providers were cannibalizing their businesses with pay TV operators and would instead produce a new revenue stream entirely, which would create value for the entire industry – a claim whose veracity remains largely unproven.

YouTube shakes it up
Google’s Guthrie enthusiastically talked up subsidiary YouTube’s new content strategy, in which the company will launch 100 channels of new content – financed by an ad-supported business model, which continues to dominate the online-video market.

However, as with Hulu’s Larcher, Guthrie did not really put any meat on the bones of how YouTube would break away from its Western-centric content focus and put together the kind of content channels that would interest Asia Pacific viewers.

Guthrie – unsurprisingly, considering that she is relatively new at Google – talked more in generalities of how the industry as a whole needed to focus on creating ecosystems that supported collaboration between the different players.

Guthrie said that YouTube would be looking to work with content players large and small in every market as it seeks to drive viewer usage of its content and that the company hoped that the revenues generated by its initial 100-channel approach would in turn help the company finance the creation of more new and exclusive content.

Facebook looks for answers
Perhaps the most intriguing of the “big three” OTT players was Facebook’s Leung, principally because although the TV world has at least a vague idea of how Google/YouTube and Hulu plan to eat their lunch, they are still unclear on what Facebook is up to in the TV market.

Leung talked a lot about how Facebook was being used by content providers to drive viewers to their content and how social media in general was enabling viewers to discover new content in different ways. But she failed to really explain how Facebook plans to engage more broadly in the TV market.

Several well-credentialed industry commentators say that Facebook is in prime position to operate as an OTT-based pay TV operator, considering the nature of the relationships it has with its hundreds of millions of users. But Leung played it safe and talked more of Facebook’s being a facilitator for other content companies rather than being in the main game itself.

One of her most interesting comments came with her disclosure that Facebook had a company culture in which it was OK for executives to “build stuff, break stuff and fix it after,” with the implication clear that Facebook would not be afraid to take a few risks as it searched for the right strategy in the TV market.

Who can pick the future anyway?
Perhaps it’s a little harsh to expect any of the OTT executives to be able to pick – let alone publicly outline – a winning strategy in an industry that is moving so fast and in which these days the shots are called by consumers rather than content providers or platform operators.

If the CASBAA crowd needed any evidence of this, it came in the final panel session of the conference, which was made up of a number of CASBAA veterans, including former STAR CEO Gary Davey and legendary Indonesian self-labeled “crony capitalist” Peter Gontha.

On the panel, former Sony Pictures and Star executive Todd Miller reminisced about how in the early 1990s Star TV initially focused on Taiwan as the key to succeeding in Asia and only stumbled onto its success in India by mistake after hearing anecdotally that its channels were getting huge viewership in the then barely heard-of Indian cable-TV market.

That proved once again that game-changing events can often happen well outside of the control of operators, whether they be traditional pay-TV players or new-age OTT operators.

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