Is Over-The-Top Video Ready For Advertising?

Is Over The Top ReadyLast week’s news out of the Consumer Electronics Show that Time Warner Cable had struck a deal with streaming video delivery device Roku had ad industry attendees wondering whether “over-the-top” TV was near to having an advertising moment.

So we put the question to a mix of video ad observers: “Given news such as this week’s Time Warner Cable and Roku partnership, does over-the-top finally impact advertising this year?” The answers contain some hope about finding a way to connect advertising to connected TVs, but mostly, we’re still going to be waiting.

Click below to read their responses:

Ashley Swartz, founder, Furious Minds

The Roku and TWC partnership is a great step forward for the industry and future of OTT. It is not however a disruption. The inherent business model has not changed for cable by virtue of TWC or other MSOs making their content available on IP enabled devices. In the end, a subscriber is still beholden to a monthly cable bill, filled with content they have no interest in watching, forced to buy more than they will ever consume. The TWC application on Roku is simply an extension of TWC’s TV Everywhere offering to an additional platform, as it will surely require authentication. In the end, TWC owns the subscriber and the costs to the end user have not changed except for the fact that they must buy the Roku box in lieu of having a set-top box provided for them.

There will be services and platforms released this year that move the needle even further, closer to the holy grail of unbundled premium content. Distribution is not a disruption if the economics of linear TV have not changed. This is a partnership that provides choice and improves upon the user experience; easing discovery and getting closer to fully integrated search for linear and VOD content. For this reason, and many others, I am quite excited about what this means for our industry.

2013 will be a year of big announcements and one where the definition of a “television service provider” changes. OTT will become a value proposition of affordability, choice and ease for premium linear content…and I can’t wait to see what happens next.

Todd Gordon, EVP/head of US investment for Magna

The most interesting thing here is that instead of Roku being seen as a direct competitor to Time Warner Cable, it’s showing how these technologies can serve as a partner. Embracing something like a Roku is simply a smart thing for Time Warner Cable to do. That said, the advertising implications are more complicated. In the short term, there is no impact on advertising – it’s a cheap way for TWC to wire up additional users without issuing another box to subscribers.

But you look into the future, you’re going to have a seamless balance between content delivered through the internet and content that’s delivered through the cable wire. The opportunity to target using a variety of digital systems to dynamically place and replace ads is what we’re all waiting for. Capacity-wise, we’re not moving toward a world where everything can be delivered through the internet – the costs of the infrastructure are so great – but the traditional cable model will be supplemented by the internet.

That model is still emerging. Right now, people are streaming a lot of content like Netflix, which is not ad-supported. But being able to deliver content to the big screen in the living room through those various channels will be gradually more meaningful to advertising.

And even though these connected TV systems aren’t scalable at the moment, things have certainly moved beyond the experimental stage. At CES this year, Samsung just launched another new platform, Google has deals and will be on more devices, Rovi and YuMe have also introduced plans to further monetize the space. Plus, Microsoft’s Xbox continues to make strides.

So it’s not that there are no advertising opportunities in this space now. I just think that compared to where it’s going to be in the next few years, it’s still in its infancy. As the capabilities for more content consumption increase, the opportunities for advertising will follow quickly.

Ran Harnevo, SVP, Video, AOL

While the Roku/Time Warner partnership itself doesn’t directly impact advertisers, it shows that the pay-TV industry is starting to take connected devices more seriously and to leverage them as a new distribution platform. The number one issue plaguing the connected TV market to date has been a lack of quality content, and this move paves the way to address this issue, as other distributors and content owners follow Time Warner’s lead. As a result, this makes the fourth screen a viable platform for advertisers.

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