”Just because there is technology to ‘make a linear channel’ does not mean that a multi-tool, or one-size fits all solution is going to offer the best-in-class option for ad sales,“ Next OTT founder George Rausch says
To launch a 24/7 digital channel or not to launch a 24/7 digital channel, that is the question. In a world where online video consumption is exploding and cable subscribers are dwindling, content creators are exploring old methods — linear channels — in new environments such as OTT.
And with today’s technology, a company doesn’t need to be Comcast to launch a channel. However, companies that go down that path should be prepared for a unique set of obstacles: bandwidth costs, producing enough content to fill a 24/7 block and monetization can become a big headache.
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To help provide some clarity on the subject, we reached out to industry veteran George Rausch for some tips on the subject. Rausch has over a decade of experience in the OTT business, working at Pluto TV as its founding director of content before moving to Frequency Studio, which runs a suite of cloud services for content management and distribution. Rausch now operates Next OTT, a Playa Vista-based over-the-top content programming and distribution strategy consulting firm.
Here are some of the most important things to consider, according to Rausch, as well as a few common mistakes to avoid.
1. You don’t have to make all of the content you program on your linear channel.
Rausch noted that no traditional (non-news) channel produces 100% of the content it puts on the air but instead licenses shows and movies, negotiates rights to air live sports or events, etc. “You have to remember, linear TV isn’t the same as a YouTube channel where you upload a handful of three-minute videos a week and call it a ‘channel,'” he said.
First, he recommends that you create long-form content — at least 10 minutes in length — with natural break points for commercials. “Then you have to create a programming strategy around your owned and operated content and consider licensing content that fits your programming voice for other times of day,” he said. “You’re going to need a minimum of 250 hours of content to launch a linear channel that looks fresh day-over-day with a percentage of new content per month thereafter.”
2. Be a partner in the distribution of your AVOD linear channel.
Rausch emphasized that the distribution strategy for VODs is completely different from what’s required for a linear channel. “Generally speaking, for VOD, you give your content to a distributor and the distributor is responsible for programming it,” he said. “Typically, 100% of the catalog is exposed inside a consumer experience for viewers to watch at anytime.”
You have much more control over programming on linear, Rausch said. “Therefore have an opportunity to work more closely with your distributor to promote new programs and events,” he said, adding that you can also create unique programming blocks for each distributor if your scheduling and playout system allow it. “Today, linear channels delivered over-the-top do not get carriage fees from distributors,” he said. “As a result, you and your distributor end up being more partners in the distribution of your channel. You’re both mutually invested in the success of your channel.”
3. Re-edit your videos for the “linear” experience.
“What you produce for YouTube will not work off of YouTube,” Rausch said. “Opening credits on a three-minute video, end cards with thumbnails and calls to action to ‘Like and Subscribe’ will stop viewers from engaging with your content in a linear experience.” Not to mention the fact that programming vertical or square videos is non-starter on a linear TV set.
“As you plan for what you’re going to program on your linear channel, you’ll have to take a hard look at your current catalog and figure out what is worth salvaging and re-editing, and what you need to make new,” he said, adding that it’s important to factor that process into both your budget and your timeline. “Creating 11-22 minutes episodes out of three-minute YouTube videos can take a long time to editorialize with natural commercial breaks,” he said. And don’t forget to clear all your rights if you didn’t do that the first time!
4. Don’t rely completely on your software vendor and/or distributor for monetization.
“Just because there is technology to ‘make a linear channel’ does not mean that a multi-tool, or one-size fits all solution is going to offer the best-in-class option for ad sales,” Rausch said, noting that many distributors handle nearly 100% of the sales while others allow you to sell against your content/channel. In some cases, you will be 100% responsible for bringing advertising and the technology to serve ads.
While many software providers may offer monetization services, Rausch noted that they’re also handling that service for dozens of other partners. That means your content may not get the extra attention it needs. “You know your content the best and should be selling against it directly,” Rausch said, advising to factor in ad operations and direct sales as part of your linear channel strategy.
Rausch emphasized that creating a scheduled linear channel — not a “pseudo-linear” with a looping playlist — with all the primary events (e.g., channel bugs and idents) and secondary events (e.g., lower thirds) of traditional linear TV costs more than delivering VOD. However, he said, “With good ad sales your tech costs will remain the same, but your monetization can potentially double, or more.”
5. Negotiate bandwidth costs into your distribution contracts.
Bandwidth is coming down in price, Rausch said, but a successful linear channel should still be prepared for streaming petabytes (1 million+ gigabytes) per month. Some, but not all, AVOD linear platforms require you to be the content delivery network (CDN) that delivers the live linear stream to viewers. “This is a real cost that you must account for as part of your negotiation, or else you may end up owing more than you take in,” he said.
Rausch suggests three approaches: (1) Ask for more rev share to cover your bandwidth costs. (2) If you’re splitting ad inventory, split the bandwidth costs along those lines. (3) Require the distributor to pay for bandwidth in exchange for something unique for the distribution of your channel on their platform. (“Option 3 is a hard sell unless you have really compelling content,” he noted.)
“As the world of AVOD linear evolves, I believe that more distributors will take bandwidth on themselves as they can operate at scale to bring down costs and it will improve the overall quality of service to their viewers,” he said. “It’s still early days and everyone is finding the optimal way forward.”
6. Don’t treat your linear channel like “just another AVOD” distribution deal.
Creating a “true” linear channel, as opposed to a playlist refreshed maybe once a month, cannot be accomplished if you treat programming your channel as another task for your content operations person to handle, Rausch said.
To produce thoughtful programming, day-over-day schedule refresh, motion graphics and more, you need to invest in a specialized team. According to Rausch, that should include at least one of each of these: an OTT broadcast engineer “who understands what the heck is going on under the hood,” a channel programmer, an ad ops person (or an ad ops managed service) and a motion graphics designer. “As a result, the returns of a well-crafted linear AVOD channel will make a meaningful addition to your overall revenue stream,” he said.
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