At INTX, I had the privilege of moderating a panel entitled Why OTT is their BFF with Sling TV CEO Roger Lynch, Hulu’s SVP of Distribution Tim Connolly, and Clearleap CEO Braxton Jarratt. These three gentlemen are eminently qualified to discuss the ins and outs of OTT distribution. For anyone considering delivering OTT video services, they provided great insights and solid advice. This is the first of two pieces presenting some of the highlights from the panel.
I started out by asking Mr. Connolly about the agreements Hulu has struck with pay TV operators to appear on their set-top boxes. He said that Hulu would pay the operator a bounty for every new subscriber gained through the set-top box. Also, he explained how the integration would work for subscribers of pay TV and Hulu:
“Our brand is linked to great experience and great content. We are very sensitive about how we integrate to all partner interfaces. We will have the Hulu application resident on the set-top box. When I search for Empire on that Cablevision set-top box and launch that episode to start from the beginning …it will fire up the Hulu application that sits on the set-top box. The consumer then comes into that (Hulu) experience and all the things that we have in that experience.”
Roger Lynch talked about why Dish Network decided it had to launch on OTT personal streaming service (PSS.) He said Charlie Ergen (Dish’s CEO) set the wheels in motion over 5 years ago when he realized that pay TV would reach saturation and decline as costs continued to go up. The company decided to go after millennials, a group that seems particularly reluctant to sign up for traditional pay TV, by creating a service that copied how they consume music online. Mr. Lynch went on:
“One of the objectives was to make it as simple as possible. The $20 price point was really critical for us. The easiest thing would have been to do the traditional pay TV deals. We would have completely missed the market we were going after. The more challenging thing was to get programmers to agree that this is going after a different market, so we need a different model.”
Mr. Lynch emphasized that making it very easy to both the sign-up and cancel processes was a critical part of the simple approach. That led me to ask if churn was a problem for Sling TV and Hulu. Both Mr. Connolly and Mr. Lynch agreed that it is something that they focus on, and both emphasized how important it is to get a subscriber past 3 months membership. According to Mr. Lynch: “after you get past 3 months the churn rate is what you see for a traditional MVPD.” He also said that he didn’t necessarily see people cycling through signing up and cancelling multiple signs as churn. “When they come back it’s not like they cost us money to start them up again,” he said, “They’re just paying us money again.”
Mr. Connolly said that people using multiple devices to access the service are much less likely to churn. He went on to explain Hulu explicitly encourages multiscreen behavior: “We know they activated the service through Apple iOS. We will then hit them with a number of promo spots that says ‘enable your living room device’.”
I asked which devices consumers were using to access the service. Mr. Connolly said he saw 60% of viewing on the connected TV, 20% on mobile and 20% on PCs. Mr. Lynch commented that most of the viewing sessions are through mobile devices, but that most of the hours viewed are through the television.
In the second part of this article Braxton Jarratt explains the importance of picking the right platform, and all three panelists relate the number one thing they have learned about delivering content OTT to audiences.