by Mariel Alison L. Aguinaldo
The list of players in the over-the-top (OTT) industry grows longer every day: HBO Max and NBCUniversal’s Peacock launched in the second and third quarters of this year. Disney+ Hotstar, another new player, expanded from India to Indonesia and Singapore. This is great news for audiences as it gives them even more options for content, especially now that they are stuck at home due to COVID-19.
OTT media services are direct-to-consumer streaming services done through the Internet. This includes subscription-based video-on-demand (VOD) platforms such as Netflix, Amazon’s Prime Video, and the aforementioned new players. While a chunk of these platforms’ offerings are licensed content, viewers are hungry for more. According to SG Analytics, a research and contextual analytics services firm, eight media and entertainment companies in the United States spent $105 billion on original content production in 2019 alone.
“Original content can also help streaming services attract new audiences and entice them to subscribe to the platform,” said Paolo Cuttorelli, vice-president and general manager for APAC at Evergent, a revenue and customer lifecycle management solutions provider for telecommunications, media, and entertainment companies, in an interview with BusinessWorld. Consider how The Handmaid’s Tale, which is streamed exclusively on Hulu, led to a spike of daily sign-ups when it first came out in 2017.
However, more demand means more production, which can be challenging during the pandemic. While eased lockdowns have allowed the resumption of shoots, crew capacity remains limited and sanitation guidelines are stringent.
The Film Development Council of the Philippines imposed a maximum of 50 individuals on set at a time and required regular disinfection of equipment, wardrobe, props, and vehicles. According to Kriz Gazmen, creative director of local production house Black Sheep Productions, these measures are affecting their budgets and the kind of material that they can produce.
“We had to think small. No out-of-the-country shoots… We’re happy that at least now, we can resume production of our scripts that we developed pre-pandemic, but we had to do a lot of adjustments based on protocols. We had to minimize the number of sequences so as to minimize the number of days that the whole cast and shooting staff are locked in. The budget also ballooned because of all the safety measures that we had to implement. Everyone had to be locked in a week prior to the shoot, everyone had to undergo swab tests, et cetera,” said Mr. Gazmen in an interview with BusinessWorld.
Expansion to other markets would require more than just setting up new staff and offices. As latency and user experience are key factors for OTT platforms, Mr. Cuttorelli said that companies will need to partner with additional solutions providers, such as Evergent, or on-demand cloud computing platforms like Amazon Web Services, Microsoft Azure, and Google Cloud Platform. Localization also entails its own set of costs, whether it is original content production or the acquisition of licenses for local films and programs.
The repercussions of COVID-19 on related industries have also affected OTT. When cinemas were initially forced to close, production houses found themselves with movies in release purgatory. While others chose a delayed theatrical release, which was the case for the James Bond film No Time To Die, others opted for a Premium Video on Demand (PVOD) premiere. In this model, streaming platform subscribers would be charged an additional fee to view a particular movie.
Perhaps the most notable example is Mulan, which was released exclusively on Disney+ in September for an additional payment of $30. Audience reception for the move was mixed. Some questioned why they had to pay on top of their monthly subscription fees, while others found it reasonable considering the usual expenses of a night at the cinema. While Disney said they were “very pleased” with the outcome, they have yet to release any numbers.
Unfortunately, customers who are disgruntled by such offers often resort to alternative means. According to the Asia Video Industry Association (AVIA), nearly half of Filipinos use illegal streaming or torrent websites. Of this number, 47% suspended their subscriptions to OTT platforms.
“This is Southeast Asia… people are not willing to spend for content unless it’s really exclusive, really high value, and you’re fighting against pirates,” said Esther Nguyen, chief executive officer of POPS Worldwide, a Vietnam-based digital entertainment company, during a virtual session on the democratization of online entertainment held in September.
CREATIVITY IN ADVERSITY
The pandemic has pushed the OTT industry to be more creative more than ever before. According to Mr. Cuttorelli, animation projects have become more popular since production can be managed online: illustrators submit their work through the Internet, while post-production staff edit at home.
Workarounds were also made for processes that used to require on-site attendance. “[Voice recording] was the biggest challenge of creating animated content virtually. To ensure quality audio, most studios would send their voice actors the right equipment and would teach them how to record on their own. Voice actors would then record their lines on their computers,” said Mr. Cuttorelli.
Even live-action projects found ways to push through despite the quarantine through “Zoom productions.” Host, a British horror film released in July of this year through AMC Networks’ OTT platform Shudder, was shot during the lockdown from the actors’ homes. They were virtually taught how to operate their own cameras and execute visual effects by the production team. Hello Stranger, a queer romantic web series by Black Sheep Productions which premiered in June, was also shot during the quarantine. It is available on Facebook, YouTube, and iWant TFC, ABS-CBN’s OTT platform.
These smaller-scale productions with smaller casts could be a gateway to the creation of more intimate stories. “We want to look at these as opportunities to still be able to tell relevant stories to our audiences now,” said Mr. Gazmen.
Marketing, pricing, and distribution will also be crucial in communicating value and reaching the right audience. A product may be fantastic, but it will not sell if it is priced unreasonably or targeted to the wrong market. On the other hand, a great product for the right market with the right price may be expected to yield great returns.
According to Jil Go, vice-president of Get Entertained Tribe at Globe Telecom, the Philippines has a low average revenue per user (ARPU) for OTT content at around $5. However, their new partnership with VLive, a Korean video-streaming app focused on K-pop artists, saw customers who were willing to pay up to $30 for a concert or fan meeting. K-pop fans are generous spenders in their enjoyment of content, with an appreciation for the exclusivity of certain products or experiences.
“It’s a very good example of knowing who you’re creating the content for, and how do you actually find the best distribution partner to reach your customer base. How do you talk to the customer? It’s actually also the key,” said Ms. Go during the same virtual session on the democratization of online entertainment.