Mobile and tablet apps have changed media consumption forever. Many people, particularly those under 30, are now spending more time in mobile apps than on TV. And while TV has held up remarkably well over the last decade, it's now hitting the tipping point where consumers are cutting the cord and spending more time consuming digital video. The premium content that has been kept under lock and key by the successful dual revenue stream of cable is coming to mobile and over-the-top (OTT) services. But as consumers move to mobile and OTT, new business models will have to evolve to compensate content creators and distributors.
The premium content coming from TV and bubbling up from the best of the digital creators will be monetized in every way we know--via subscriptions, advertising and hybrid models. Some of the early subscription services--think Netflix--will eventually have to offer new tiered services with advertising as their subscriber growth slows. And there's no way the world can accommodate the 100+ niche subscription OTT apps that have launched in the last few years. Some will inevitably become advertising supported offerings.
As advertising re-emerges as an ingredient to the model for premium OTT content, things will have to change. The TV ad experience is broken: painfully long ad breaks, ads irrelevant to me, no two-way communication. Yet, the video commercial is still the best storytelling, brand building tool there is. Likewise, the current web/mobile video ad experience is broken. Much of it is intrusive, in-page, in-game, in-feed, silent, low-res, auto-play, non-viewable, toll-taking annoyance. So the question is: what will ads look like in the hybrid OTT apps of tomorrow?
OTT video ads will have to be more engaging and more targeted so that the consumer sees the ad as highly relevant, entertaining and consistent with the content already being consumed. Branded content that feels authentic and is consistent with other content being consumed through a particular OTT channel or app will also be more appealing and more effective in the app-based video world.
Apps already dominate mobile and tablet video consumption and the next generation of TV will follow. Smartphones, tablets, connected devices and smart TVs will consolidate to leverage a few core app frameworks (Apple, Android and Roku). The user experience will be similar to the ones consumers have become accustomed to in mobile. As Tim Cook has said the future of TV is apps. It will be exciting to see advertising evolve to better work in the new app-based video paradigm, and expect interesting, new business models to emerge in the not-to-distant future.