OTT is the Next Frontier for Local Broadcasters

While the crowd at the NABSMTE (National Association of Broadcasters Small and Medium Television Exchange) show in Nashville was already very savvy about the power of digital and how digital and television work together to drive conversions, there was much discussion around another hot topic, OTT and how and when it might affect local broadcasters.

In terms of when, the answer is “it already is.” But in regard to how, the answer is a bit more complex. 

Two Flavors of OTT

For local broadcasters, OTT comes in two very distinct flavors. 

There’s the vamp flavor, which is pretty much a no-brainer for local stations. vMVPDs (virtual multichannel platform video distributors) like Sling, Hulu Live TV and DirecTV are rapidly gaining subscribers—close to seven million subscribers at this point. Once branded “skinny bundles” they’re more like “mesomorph bundles” these days, with upwards of 80 channel options—including regional sports networks—which means few viewers will feel like they’re giving anything up (other than high prices) when they switch from more traditional pay TV services.

That said, local broadcasters are critical to vMVPDs success as, like cable and satellite companies, the vMVPDs can only strike deals with the broadcast networks for their owned and operated affiliate stations (“O&Os”). Deals with independent affiliates have to be negotiated individually and if a vMVPD can’t get all the affiliates in a market, it puts them at a competitive disadvantage.

As of now, hundreds of local affiliates have struck deals with vMVPDs as they realize that OTT is just the latest method of delivering live linear pay TV, the logical next step after cable and satellite. vMVPD packages don’t look a lot different than MVPD packages. And for local broadcasters, there only seems to be an upside: they get to keep their linear viewers (70% of vMVPD subscribers are switching from a traditional MVPD service), reach a newer and younger audience and gain the ability to run more advanced advertising units thanks to the vMVPDs’ digital delivery systems. 

The second flavor is more complicated but can be more rewarding, and that is for local broadcasters to set up their own standalone OTT apps that can live on smartphones, tablets and streaming devices like Roku.

The advantages there, are that by encouraging viewers to set up an email-based log-in, so that they can save favorite programs and receive notifications, local broadcasters will gain valuable first-party data that they can use to better target advertising as well as drive audiences to tune in. Stations can experiment with more advanced advertising techniques like interactivity and t-commerce, and they can reach viewers on a variety of platforms with both linear and non-linear content. So, for example, a local broadcaster could have the evening news show available on demand for viewers who might have missed it or who just want to be able to catch local weather or local sports. OTT apps, if done correctly, can create a deeper bond with the viewer, while also helping to create ties to a new generation of viewer who might otherwise be lost to local broadcasters.

Change is a Given 

OTT is just one of the changes that technology is bringing to the television industry. Along with OTT comes a more automated system for buying and selling local broadcast advertising - one that allows for more precise targeting as well as advanced ad units and even branded content.

Together, they are working to make the television industry more relevant to twenty-first century viewers without forcing TV to give up the things that makes it special: quality programming, brand-safe ad environments, massive reach and loyal local audiences.