We all knew The Office was leaving Netflix…

But we weren’t sure of its new home until NBC’s Upfronts 2019 presentation, where it was announced it would stream on their own service, coming in 2020.

But… Netflix’s licensing deal for “The Office” runs through 2021...It’s unclear if NBCU will need to wait until the Netflix deal runs out before bringing  the show to its own service…

And that’s just the tip of the iceberg at this year’s Upfronts.

Here are a few more headlines that anyone producing or distributing online video should continue following throughout the year.

Beyond “The Office”, other older yet top performing shows like “Friends” are “coming home” according to NBCUniversal’s ad sales chief Linda Yaccarino, who spoke on stage at their upfront 2019 preseentation at Radio City Musical Hall.

They aren’t the only ones pulling their older content from streaming partners like Hulu and Netflix.

With the DisneyPlus streaming announcement just a few weeks ago, it’s clear that old shows and content can be an acquisition and retention tool for subscription video as DisneyPlus will be the exclusive home for top Pixar and Disney movies.

Which might be bad news for Netflix as “more than half of the top 50 shows on Netflix are made by media companies planning to launch rival streaming services, according to Jumpshot data cited by Recode.”

CBS News’s live streaming news network, CBSN, now has one million daily video streams, with 80% watching the content live.

Millennials are likely to consume their news through other media forms like print and digital words. In fact, sixty four percent of millennials use digital outlets to find out what’s happening in the world. Millennials still watch TV, but only 24 percent of them, compared to 51 percent of the 55+ generation.

So it makes sense that live news streaming is gaining in popularity. CBS News also has a five year head start on other news channels… So it will be interesting to see how the news streaming wars plays out.

 Digital Publishers are Producing More Long-form Shows 

Buzzfeed announced that their video strategy will moves to more TV-like digital shows tied to specific verticals.

You may not have known this, but Buzzfeed’s move to longform, serial content has been slowly occurring over the last several years. One of their top millennial media video series shows include “Worth It,” which features a host trying similar foods at three different price points to select the best.

The show, which has run for five seasons, has collected 4 5.3 million video views and 323.4 million minutes of watch time on YouTube in the past three months.

If you’re not analyzing what top digital publishers are doing in video...you’re falling behind.

Did you know Meg Whitman was running a “mobile first TV” company?

Quibi came out of the woodworks at the perfect time to announce...they’re raising $2 Billion.

While they were not an official part of the 2019 Upfronts, it’s clear this was a strategic announcement on their part.

But...does it really take that much money to compete with Hulu, Netflix, and other digital streaming services?

Well, they’ve already raised $1 billion...so some venture capitalists must believe them.

When Netflix is spending over $15 billion in 2019 on producing and licensing content, the number begins to make a little sense.

With a mission to “entertain, inform and inspire with fresh content from today’s top talent—one quick bite at a time”, we’ll see if they can take a bite out of the streaming wars when they launch in the fall 2020.

 Upfronts 2019: Streaming is Here to Stay but TV isn’t Dead 

There were dozens of other Upfronts 2019 headlines...and to be honest, it was hard to pick just four. However, we think these headlines will be the most interesting to follow over the next year, especially for those in the streaming and digital video verticals.

4 Upfronts 2019 Headlines to Follow in the Age of Streaming Media

Netflix serves over 140 million hours of content per day, globally around the world.

Building a system to be able to scale to that many customers, while delivering high definition video, with no lag, requires significant engineering effort. Today we will deep dive into Netflix’s technology stack and cloud infrastructure to examine exactly what tools, processes and architecture they use to deliver their high-quality content streaming services.

Understanding Netflix’s tech stack can help OTT and other digital-video providers get a view into the backend required to support these types of services; or you can just use Zype, and let them handle online video delivery for you.

 The History of Netflix’s Digital Architecture 

First, a lesson in the history of Netflix to set some context. Before the era of “Netflix and chill”, the company physically delivered mail-order DVD’s to your doorstep.

Netflix racked and stacked physical servers in on-premise data centers that they owned. These data centers housed databases and applications Netflix used to track customers, maintain inventory and customer billing.

By the time broadband became commonplace, and everyone owned a smartphone, Netflix needed a way to deliver videos to computers, internet connected tv’s and mobile phones as part of their strategy to evolve the company. This meant moving away from a traditional data center and harnessing the power of the public cloud. Beginning in 2008, Netflix started migrating their on-premise servers & applications into Amazon Web Services (AWS) after experiencing an on-premise data center outage that stopped the business for three days. Startled by the lack of resiliency, over the course of seven years they were able to move 100% of all assets into the cloud and remain one of the pioneers of cloud computing.

Netflix is prominent in the cloud community for sharing their knowledge during the migration to the cloud.

Taking a peek into their architecture, Netflix maintains hundreds of AWS accounts that isolate the various parts of their business from Subscriptions, to Content Delivery, to Personalized Recommendations.

Netflix is able to quickly develop features because all of their engineers are empowered to launch resources in their appropriate accounts, without having to get approvals from various parts of the company. By utilizing AWS Organizations and Account Units, Netflix is able to organize their applications by engineering teams, providing autonomy and speed for engineers.

Within these AWS accounts, engineers use a myriad of technologies to deliver high fidelity video streaming.

Let’s start with how Netflix is able to serve videos. First and foremost, all content is stored in object storage like Amazon S3 and cached by using AWS CloudFront. This enables Netflix to distribute video content all around the world with low latency speeds.

Videos need to be ultimately transcoded into various formats for optimal viewing based on the device you are watching content. Mobile video is transcoded differently from Desktop videos, because of the different screen sizes, resolution, and network availability.

Take for example streaming on a phone. You will go in and out of signal depending on where you live, and in order to continuously deliver video, it needs to dynamically adjust & buffer, so you have a consistent viewing experience. This transcoding is called H.264, and Netflix is able to do this by harnessing the power of AWS Elastic Transcoder, which takes videos and formats them appropriately.

Video streaming is only a small part of the picture.

Customers have a smorgasbord of choices when watching videos on Netflix. In order to keep customer engagement & retention high, Netflix employs a personalization algorithm to help uncover videos that a customer may be interested in based on their previous viewing history. This means that all interactions when watching a video must be recorded. Netflix is able to do this by utilizing data streaming technologies like Kafka, and storing data in NoSQL databases like DynamoDB. Their engineers then write applications that are deployed on AWS EC2 or AWS Lambda that accesses this data to compute personalized videos to show.

Not all data is stored in a database. Some data is better suited to be stored on disks. Netflix is known to employ the usage of Hadoop to aggregate various types of data and move them into data warehouses or other databases across the company. Netflix has data science teams that sift through this data to do business analytics, like determining how many customers are watching a certain movie, or how likely someone is going to unsubscribe from the service.

While it is impossible to analyze every part of Netflix’s business the above describe a few major components for delivering online video.

In order to enable these features, developers need to be able to quickly deploy their code, that is tested and can be rolled back if a bug is introduced. This is no easy feat, and Netflix has developed a very sophisticated Continuous Integration & Continuous Deployment (CI/CD) pipeline for providing a mechanism to deploy cloud applications. Netflix invented and open-sourced their tool, called Spinnaker which allows developers to make small changes, test them with automated tests, and then get them live to a small subset of users, which then automatically rolls out globally over time after the confidence level that a bug has not been introduced increases.

One of the major discussion points when moving to the cloud is security. Netflix has publicly documented their security practices. Content is locked by region so movies in Europe may not be available in the United States. This is done by employing DRM solutions in the cloud.

Internally, Netflix uses AWS IAM to lock permissions for employees, and applications with least permission privilege, so that even if a user becomes compromised the damage they can do is minimal, as they would not have access to the entire set of assets in the cloud.

Being in the cloud, also means using SaaS products internally to improve productivity of the workforce. Netflix uses JIRA for managing engineering tasks, and Confluence for documenting requirements. With a large workforce, managing passwords is difficult, so Netflix employs single-sign-on technologies like OneLogin to allow access to various SaaS products without having to remember hundreds of different passwords. SaaS tools are always changing, and knowing Netflix, they will be adapting to be more efficient.

 Building Netflix’s Tech Stack & Backend...The Easier Way 

That concludes our breakdown of Netflix’s technology stack and cloud architecture. Developing video on demand requires a large engineering staff, hundreds of millions of dollars in cloud computing (if you are going to operate at Netflix scale) and a decoupled architecture that allows applications to scale so that they are resilient in the face of performance issues and outages.

Zype can help offload many of the heavy lifting operations required to deliver OTT video, I encourage you to check us out.

Netflix's Tech Stack: Breaking Down Netflix’s Backend for OTT Providers in 2019

OTT has democratized video distribution and created the opportunity for smaller content owners and creators to launch their own direct-to-consumer video business. This also means that it’s more difficult than ever to capture and keep viewers attention. Acquiring subscribers is costly in today’s saturated market, which would be one thing if customers stuck around for the long haul, but that isn’t always the case.

The video industry average for subscription length is 21 months —high churn rates are challenging for subscription video businesses across the board, even for the biggest players in OTT. Although customer acquisition is a vital piece of the puzzle, it’s retention that is the game changer— it’s four times cheaper for subscription businesses to keep existing subscribers versus acquiring new ones.

When it’s so easy for customers to sign up… and cancel, how can content owners combat churn and retain their customers for longer? Here are a few strategies out of the leading OTT services’ playbooks.

 Incentivize Customers to Commit to Longer Subscriptions 

The longer your customers stay subscribed, the less likely they are to churn. Many of the major OTT services are packaging their subscriptions to make it more attractive for customers to commit to longer subscriptions upfront. For example, SlingTV and DirectTVNow offer new subscribers a free set-top device if they pre-pay for the first few months of their subscription.

Smaller services may not have the budget for freebies, but there are other creative ways to incentivize new subscribers to commit to a longer subscription period, whether it’s offering a discount, free merchandise or access to exclusive content. This not only makes revenue more predictable, it also gives content owners a longer period of time to encourage repeat viewing. The more new subscribers engage with your content, the more likely it is they’ll stick around.

 Always Give Your Subscribers Something They Can’t Get Anywhere Else 

If your subscribers have watched everything in your library, what’s the reason for them to stay? The key to customer retention is to have a regular supply of new options that keep your subscribers engaged and gives them a compelling reason to stay.

Netflix’s content strategy has been instrumental in their success and it’s very simple—always have content subscribers can’t find anywhere else. Although Netflix’s library of exclusively licensed content has always worked well for them, it’s their pivot to a steady stream of original content that’s making them the leader of the pack, and services like Hulu and Amazon have followed suit. Their subscribers don’t cancel because they fear missing out on the next ‘13 Reasons Why’ or the next season of ‘Narcos’, it’s why they have the best retention rates in the business.

Leveraging viewer data to continually optimize and improve your OTT service for subscribers is vital to retention. In an industry that’s always evolving, remaining stagnant isn’t an option. The best OTT services constantly experiment and test new things, from content to new user-experiences, and then use that data to refine what it and isn’t working.

Amazing original content isn’t the only thing that sets Netflix apart, they are also the pros at using viewer data to improve their subscribers' overall experience. They pay close attention to their engagement metrics, introducing features to automatically play the next episode and the option to skip an intro that improves their user’s engagement.The easier and more engaging a subscriber’s experience is, the more likely they are to keep the service long-term.

One of the reasons that people prefer their OTT service over cable is because it offers content recommendations. The more personalized your subscriber's experience is, the easier it is for them to find something to watch, the more time they spend with your service and the less likely they are to cancel. All the major OTT services, including Netflix and Hulu, prioritize content discovery because it is essential to subscriber retention.

Churn is inevitable, so instead of putting all your efforts into acquisition take a step back and focus on the entire lifetime value of a subscriber. If you're focused on keeping your current customers happy, you’ll naturally build a service that attracts new subscribers, in addition to keeping your current subscribers. Use your active churn as a learning opportunity to gain insight into what your users want and take action to make improvements.

Ultimately, customer retention comes down to providing an exceptional user experience and having the data to gain the insights needed to improve and refine. Video distribution platforms, like Zype, help content owners run their subscription video business like the pros with extensive analytics and superior content delivery across devices.

How to Reduce Future Churn - Subscriber Retention Tips from the Leaders in OTT

<strong>If You Build It, Will They Come?</strong>

This timeless question has made its way across virtually every content creator, content owner, and digital marketer.

The OTT revolution has fundamentally changed how content owners and distributors interact. Content owners are entering the distribution space by building audiences online, and distributors are going into the content space to invest and create their own content.

As a content owner, you may be considering building your own OTT channel. There is also a chance you are already streaming your content, but aren’t happy with your licensing revenue. Either way,  you will want to take steps towards owning your own distribution channel and developing your own relationship with customers. This guide is designed to help you refine your understanding of OTT and help you make the right decision.

OTT stands for “over-the-top” and refers to the way content is delivered via the Internet where viewers don’t need to be subscribed to traditional services like cable or other paid-TV services.

You are probably very familiar with the OTT platforms Netflix and Hulu. These services disrupt the traditional cable models by allowing users to receive more value for less money and the freedom to cancel at any time. Many content owners have started to create their own standalone OTT services so they’re not relying on content aggregators or distributors to provide the bulk of their income.

As you can imagine, the disruption has created friction between traditional industries and  OTT providers. The Netflix OTT model is driving more and more customers away from traditional cable services and the trend is only accelerating in the last few years. Netflix now has more subscribers than the largest cable providers in the country.

OTT gained market traction quickly due to the culmination of a growing dissatisfaction with the traditional TV services. 73% of people feel that cable companies are predatory and take advantage of their subscription-based models at their customer's’ expense and 53% would leave if they had the chance. This is why cable TV’s market share has been nearly cut in half over the last two decades.

Traditional providers have had no choice but to adapt. The spike of Internet TV (IPTV) is traditional media’s response to OTT as they have started to distribute content on the Internet for free with sites like YouTube.

OTT is more than just another option. For any content creator, OTT is a dream come true. In fact, as OTT slowly becomes the standard for content creators, brands that have not gone OTT are struggling to keep up.

 OTT is a Good Start, But It’s Only a Start 

OTT is an incredible opportunity for content owners, but don’t be disillusioned. OTT is only the first step to completely owning your audience, owning your revenue, and total independence from middlemen.

Building your own OTT service provides an excellent foundation to grow your video business. When viewers interact with your content, they will download your customized branded apps on Apple TV or Roku, not Netflix. Or viewer can go directly to your brand’s owned-and-operated website. With a newfound independence, content owners no longer have to rely on the traditional distribution channels that once held all the control.  OTT video platforms such as Zype help to democratize distribution and empower content creators to take back control of their content and audience.

Once you have built and published your OTT platform, it’s exciting to see your branded app among Hulu and HBO GO as you scroll through Roku or Apple TV. Although it’s important to remember this is only the beginning. Just because you built your app, doesn’t mean viewers will come automatically. It’s time to focus on your viewers and start driving as many traffic as possible to your beautiful new app. This requires an unrelenting focus on distribution and audience development. Your OTT platform is merely the foundation for which your content marketing efforts are built upon.

Video content marketing goes far beyond what most content owners are prepared to do, let alone having the resources to execute on it. Before you consider going OTT, first determine whether you have an established audience and marketing bandwidth to make your video business successful.

 Owning Your Own Distribution Channel and Beyond 

In order to scale your distribution channel successfully, you must have a long-term strategy for building and maintaining your relationship with your viewers. With a myriad of different content marketing strategies, it’s easy to become overwhelmed quickly, so it’s important to find something that can sustainably work for you. Here are a few questions to ask when developing your own distribution channel:

Do I have the resources to execute this successfully? Overcommitting to a content marketing strategy and then realizing it’s exhausting your time, effort, and money is a pitfall that should be avoided at all costs.

Am I willing to experiment? You may find that the content strategy that has worked for you in the past, doesn’t cut it for OTT. Don’t be afraid to get outside of your comfort zone continually experiment with new ways to reach audiences.

Will this distribution channel reach my target audience? In order to drive traffic to your content, not only do you need to know who your target audience is but where they are. For example, if your video content is primarily crafting tutorials, you might find some success in targeting audiences and users of Pinterest and Etsy.

How will I retain my customers? It’s one thing to get someone to view your content for the first time, but a completely different ballgame to turn them into a loyal fan. Retention must be built into everything from your marketing efforts to your content.

While there are no guarantees that viewers will come just because you build an OTT channel, but it is certainly the first step in building and scaling your direct-to-consumer video business.

Is OTT the New Field of Dreams?

Are you still on the fence about launching your OTT video network? Maybe you think that OTT is just a fad and your audience couldn’t possibly be on it. There is no hurry because streaming video is more of a Millennial and Generation Z thing, right?

You’re wrong! OTT is now actually MORE popular than cable and that trend is only accelerating. So hop off that fence NOW.

For the first time ever, more Americans are using streaming video services than cable subscriptions as of May 2017. Take note: not just Millennials, ALL Americans. Another first? Netflix, the popular video-streaming platform, now has more subscribers than the largest cable providers in the country.

While it shouldn’t come as any surprise that Millennials have adopted streaming services more quickly than non-millennials ( 77% vs. 65%), it’s noteworthy that non-millennials (35 years and older) also used streaming services more than cable ( 65% vs. 63%).

It’s not just Americans making the switch. Online video is dominating the Internet globally. Our friends across the pond in the UK are turning to streaming video on their mobile devices as well. Nearly half of France’s internet users are using OTT services. So it makes sense that video accounted for almost three-quarters of global IP traffic in 2016 and it’s steadily rising, by 2021 video is projected to be four-fifths of traffic.

It’s no longer a question of when to launch your video network. It’s time.

Zype is the leading video distribution platform for OTT.

Request a Zype demo today and find out how easy it is to get started streaming on every screen.

Still on the Fence about OTT? You Shouldn’t Be. The Time is NOW.

If you’re following OTT news, you may already know that Netflix has downsized the number of titles in its library by more than 50% since 2012. From a peak near 11,000 active titles four years ago, the total count now stands at only 5,302 titles in the Netflix US library.

Why the huge drop in content and what does this mean for the larger world of OTT? It may help to put things in context.

Just Released! OTT and Beyond — The Ultimate Guide for Your OTT Service is the perfect asset to guide you through the process of launching and scaling your on-demand or live video business into an OTT service. Get it now.

Back when Netflix launched its streaming video service, most people knew the company as the DVD-by-mail alternative to Blockbuster. So when Netflix added streaming, it made sense for their library to have a wide selection of every kind of movie imaginable — just like a Blockbuster.

Netflix grew into the SVOD behemoth we know and love, studios and distributors increasingly hiked license fees on their films in an effort to halt the growth of a Hollywood outsider all-too-eager to disrupt the traditional content distribution ecosystem. But Netflix was already one step ahead of the game back in early 2013, when Ted Sarandos publicly confirmed the company’s long-term strategy :

The goal is to become HBO faster than HBO can become us.”

That meant diverting a lot of money away from licensing content and into producing original content. So far it’s worked out pretty well for them, racking up fourteen Emmy Awards for huge crowd-pleasers like House of Cards and Orange is the New Black , but with Netflix becoming the new HBO, who’s going to become the old Netflix? Do we still need the old Netflix?

One of the things that the old Netflix did very well was to curate movies and (to a lesser extent) TV shows into verticals that really appealed to certain specific viewers. For example, documentary lovers could find a veritable treasure trove of films covering topics from American politics to the lives of city-dwelling raccoons and everything in-between. Netflix’s Kid’s content category grew to be so successful that the site actually got an entirely separate section just for those films and shows.

Now that Netflix has moved so strongly into originals, whatever budget it has left for licensing 3rd party content will likely continue to be spent on big-ticket film deals like the $300MM+ exclusive output deal inked with Disney earlier this year. That means that fans of lesser known, niche and cult films that were once found on Netflix will now have to go elsewhere.

Because Netflix is no longer purchasing this type of content in bulk, it’s time companies step in and fill the void. There’s going to be a resurgence in the popularity of niche OTT content destinations, as Netflix not-so-slowly transitions into more of an HBO-like entity. Places like Night Flight, a home for 80’s counterculture movies, or The Film Detective, a treasure trove of purely vintage films.

So the question becomes: what kind of content do you own, and you do you have enough to cement yourself in a niche market? If you have that locked down, Zype can help.

At Zype, there are already technologies in place you help you launch and corner the unique side of content you’ve chosen. Here are some of the ways you can leverage the power of Zype:

Zype offers incredibly robust analytics that anyone can read. If you’re a small team jumping into the land of horror, you don’t need to hire dedicated employees to pick apart data: keeping it easy to understand can lead to great ideas from everyone at your business on how to scale and grow.

There’s nothing stopping you while using Zype to find the perfect way to monetize on your niche content. Maybe the audience for musicals prefers a subscription model over advertisements, so the flow of the music doesn’t get interrupted. Maybe vintage TV watchers would rather watch an ad before or in between shows in their playlist. You have the freedom to try it all out, mix and match, and find the right way to keep your video business making money with just a simple flip of a switch.

Multiplatform distribution, multiplatform discovery.

Zype can publish your apps to any ecosystem or set-top box you want, from iOS to tvOS, from Roku to Amazon Fire TV, from smart TVs to your own website. The more places you are, the more likely fans of your niche will see you. Just because you’re niche that doesn’t mean you have to be hard to see.

The Zype platform can help you build incredible playlists. Go as niche or as broad as you want, tee up specialty playlists for specific holidays, put them behind paywalls or monetize them in any other way. If you can curate a niche better than anyone else, your fans will notice.

With Netflix’s content strategy clearly focused on originals, and no longer being the one-stop-shop for licensed content too, fans will begin to look elsewhere. There are OTT niches to fill and customers who need to find a new place for their favorite content. If Netflix wants to become HBO, great, because it’s time to make room for the new royalty in the niche OTT video business.

Netflix & New Opportunities for Niche OTT Operators

Zype's CEO on DEW Webinar: Optimizing OTT Distribution

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Zype's CEO on DEW Webinar: Optimizing OTT Distribution

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4 Upfronts 2019 Headlines to Follow in the Age of Streaming Media

Netflix's Tech Stack: Breaking Down Netflix’s Backend for OTT Providers in 2019

How to Reduce Future Churn - Subscriber Retention Tips from the Leaders in OTT

Is OTT the New Field of Dreams?

Still on the Fence about OTT? You Shouldn’t Be. The Time is NOW.

Netflix & New Opportunities for Niche OTT Operators

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