Content fragmentation is the largest threat to OTT

If you are a big fan of Prince (the artist formerly known as ... but now again known as Prince), you surely had a tough choice to make, when he recently released his new album.

The thing was, that it was only released as streaming initially. Now this is not exactly news, the music industry have been completely transformed to a streaming-centric market, with all the benefits for the consumer. What is new, is that the new album was exclusively released to Tidal. While most have heard about Tidal, I personally do not know anyone who is actually a customer. Which of course might just be the reason why the exclusivity deal came to be in the first place.

So, while the damage was not so great - all you had to do was wait 8 days until the album was generally released (yes, to "CD" as well), the case in point is a grim example of what might lie in wait for consumers, in particular when it comes to OTT services for premium entertainment, ie. movies and TV series.

The music streaming services that have proliferated have done so, because they basically had every track you wanted to ever hear - and then some. The "great jukebox in the sky", if you will. And while artists battle it out on a regular basis with the services over the compensation to artists, it have generally remained an issue of whether Taylor Swift was on Spotify or not. Not which streaming service had which artist.

Jumping to the video services, Netflix have also gone from victory to victory based on their original idea of being an aggregated service, which generally had so much content, that you would not want (or have time rather) for any alternative services. The big "Movie theater in the sky". Netflix initially did not care to have the newest movies. Instead they want out and vacuumed the territories in which they launched for (cheap) content rights. The result? A service with loads and loads - criticized by movie buffs for not having "this or that" movie, but embraced in general by the huge general consumer group, to which this did not matter.

Now, this is changing. Netflix is investing massively in original content, and their ability to remain the central hub of a massive catalog of content, will change - also due to other factors. For consumers, this trend have some pretty grim perspectives.

Take the streaming of Sports as another example. Initially, in the Nordics, MTG ViaPlay had the rights to almost any football game worth watching. Which means the choice for consumers basically came down to "Do I want to pay for a large Cable TV bundle, or do I want to stream from ViaPlay?". A question which can be tough enough in itself - but nevertheless 1 decision you had to make. Now, as the digital channels increase in importance, right to carry stream begin to scatter. Meaning a subscription to ViaPlay today is no longer enough, if you want to follow for example the Danish Prime Soccer League. You will have to sign up for multiple SVOD services, to get full coverage.

The importance of Sports rights in this whole trend cannot be underestimated. It has been a prime driver of the traditional Cable TV operators sales of the larger channel bundles, and the whole sports ecosystem have depended on this continuous revenue stream from 100-thousands of cable subscribers who indirectly funded sports they never cared to watch. The recent case where ESPN actually threatened to sue Verizon over being pulled off the minimum bundle is a clear sign of the momentum of this shift in an established business model.

So non-fans have paid for fans. A fragmented future will radically affect the whole ecosystem of the sports industry. And will ultimately lead to even more fragmentation as brands (teams, leagues, regions, etc.) will launch their own OTT services to capture the consumer relationship for themselves as the model of content aggregation crumbles.

While the increase in cost for the consumer is apparent, even more concerning is the lack of decent cross-service search capabilities, which will let you find out, which service has which content. We are only beginning to see the outlining of an OTT world scattering into fragmented silos of exclusivity. A far cry from the original value proposition of Netflix - and very far from what has lead OTT to the success so far. Ease of use.

OTT offers a far better distribution platform than traditional TV. It more accessible, better quality, cheaper (so far) and just .. digital. Everything you have come to take for granted such as user profiles, recommendations, skipping, etc. etc. is a result of using the Internet as distribution channel. Not to mention the huge benefits to content owners in terms of gathering user data as well as how advertisers wet dream of "automatic advertising" has that whole industry goes nuts these days over how they can surgically strike to maximize ad spending results.

But if content fragments into a multitude of different services, the ease of use will crumble and consumers might reconsider if the allure of the traditional Cable TV bundling is to prefer over trying to find out which god damn OTT service has Pulp Fiction or todays Soccer game.

Solutions to avoid consumer frustration is popping up, mainly from the hardware based solution such as Roku and TiVO, which lets you do great things in terms of easy content discovery. Also specialized providers within content recommendation such as ContentWise and Cognik are adressing this issue - but mainly within a single OTT service, not cross-service. Websites that help and guides users are also emerging, like Vionel and PlayPilot in the Nordics and surely many more across the net.

But unless some much more generic and user friendly solutions will emerge, the current dominance of the SVOD OTT business model is sure to come under pressure, as consumers will either demand generic services that has "almost anything you would want to watch", or a model where "I pay only for exactly what I watch". That is, if you can even find what you are looking for.