Presented by Samantha Stockman: June 11, 2019 Everyone says that TV is dying, but we disagree. TV is not dying, but how we consume content is shifting to OTT. This deck from The Media Kitchen's OTT Committee will give a background on the rise of OTT, arm readers with the basics to navigate and evaluate partners in the ever-changing space, and provide a view on where we think OTT is headed.

1. FINALLY, YOU
PUT MY LOVE
OVER THE TOP
June 11

2. AGENDA
● TMK loves OTT...but has some questions
● Rise of OTT
● More content than ever
● Opportunities & best practices
● The future
2

3. T M K
L V E S <3
O V E
R T H E T O
P T
V
O
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4. TMK VIEWING BEHAVIOR
51%
have a cable
subscription
45%
subscribe to 4-6
services & 96%
subscribe to 1+
are the top
streaming services
83%
share logins with 1+
HHs & 30% share
with 3-5
Sample size n=53 4

5. TMK TOP SHOWS
Dead to Me on Netflix is TMK’s most popular recently
binged show for 8 chefs
But with 39 shows listed as recent binges for 53 survey
respondents, chefs are watching a lot of different content
Chefs are much more consistent in choosing the one show
to watch for the rest of their lives - 36% would go back to
the classics, choosing Friends and The Office
Sample size n=53 5

6. TMK OTT BUYING
Pain Points
Differentiating partners & offerings
Inventory transparency
Measurement
Sample size n=53
68%
of chefs buying OTT
for clients spend
<$1MM
41%
of chefs feel confident
communicating OTT
acronyms to clients
6

7. How do consumers see our ad?
How do we buy in a fragmented world?
How do we evaluate inventory quality across partners?
Is OTT worth buying vs. traditional TV or Facebook?
What measurement is possible and how is it evolving?
Where is OTT headed?
TMK’S BIGGEST QUESTIONS
Sample size n=53
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8. The Rise of
OTT
More
Content
Than Ever
Opportunity
& Best
Practices
The Future
The Rise of OTT

9. Over-the-Top Television
Provides access to video content via a
high-speed internet connection, bypassing
the traditional cable/broadcast provider
wired connection
9

10. WHAT IS CONSIDERED OTT?
Sources: comScore “State of OTT” June 2018; Freewheel; Nielsen Total Audience Report, Q1 2018, Internet enabled TV-Connected Device = game console, internet connected devices and smart TVs via VAB - Report
2018 “Linear TV and OTT: Living Together in Harmony”
Full Episode Clips Live
MOBILE CTV DESKTOP
GAMING
CONSOLES
31% of HHs
SMART TV
ATTACHED
DEVICES
47% of HHs 37% of HHs
10

11. 60MM HOMES ARE CONNECTED TO OTT
Sources: comScore “State of OTT” June 2018
60.7%
64.1% 54 hours streamed/month/HH
+28% rise in time spent YoY
2.7 average devices per HH
75% of streamers prefer to
watch OTT content on a
connected TV
11

12. CONSUMERS ARE STILL WATCHING LINEAR TV
73% of US households are cable subscribers
...but Q4’18 linear TV subscription loss was the highest ever at
-4.1% and is expected to continue on this downward trajectory
USviewers(millions)
Sources: VAB - Report 2018 “Linear TV and OTT: Living Together in Harmony”; eMarketer, July 2017; Nielsen SVOD data 12

13. 2007 20202008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
BUT THEY ARE REPLACING & SUBSIDIZING WITH 200+ OTT SERVICES
13

14. SO CONSUMERS CAN CHOOSE THE SERVICE(S) THAT BEST FIT THEIR NEEDS
Source: WSJ “There are five different races in streaming TV,. Here’s where Apple fits in.” April 2019
Streaming services are
competing for consumers’
attention and money in five
key categories
14

15. CONSUMERS ARE STACKING SUBSCRIPTIONS
Source: Parks & Associates OTT Services: Purchasing and Perceived Value; Kagan Market Intelligence
Number of Subscription Services
Among US Broadband HHs
Subscription Services in HHs
15

16. SO THEY CAN WATCH EVERYTHING THEY WANT TO WATCH
Must have content features for consumers with one streaming service. Every feature gains importance
with each additional subscription a consumer buys.
Source: Hulu study with Hub research, March 2019
35%
Favorite shows
16%
Original shows
17%
Exclusive shows
16%
Exclusive movies
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17. The Rise of
OTT
More
Content
Than Ever
Opportunity
& Best
Practices
The Future
More Content Than
Ever

18. Viewing Behavior Gen X Millennials Gen Z
Watch multiple episodes in a single sitting 44% 56% 60%
Binge-watch the same show through to the end 38% 43% 53%
TO CONSUMERS, IT’S ALL TV & THEY’RE WATCHING MORE THAN EVER
Sources: Hulu, WSJ
Binge Watching
> 50% of viewing sessions on
the top 100 shows on Hulu
consisted of 3+ episodes in
the same series
129K Hulu viewers watched all
180 Golden Girls episodes
(2 mo average)
On-Demand Viewing
13.6MM people watched the
GoT series finale during the
9pm viewing on HBO
44.2MM viewers watched
each episode in S8 - just not
necessarily when it aired
Comfort Viewing
5 of the top 10 shows
people chose to view after
a S2 episode of The
Handmaid’s Tale on Hulu
were comedies
18

19. STREAMING SERVICES ARE CREATING ORIGINALS TO DRAW IN CONSUMERS
Source: Nielsen, Moffett Nathanson
Number of Scripted Originals Change in Content Investment 2012-2019 (Billions)
19

20. CONSUMERS WATCH WHAT, WHEN AND HOW THEY WANT
Live on NBC
NBC App NBC on HuluvMVPD
NBC on Demand
20

21. The Rise of
OTT
More
Content
Than Ever
Opportunity
& Best
Practices
The Future
Opportunity & Best
Practices

22. OPPORTUNITY TO REACH CONSUMERS IN AD-SUPPORTED ENVIRONMENT
% of OTT consumers who mostly watch AVOD
Sources: MAGNA, April 2018; MAGNA Intelligence, “Magna Advertising Forecast (Spring 2019): as cited by MediaPost, April 5, 2019, as cited by eMarketer
73% of adults watch
ad-supported OTT
36% of AVOD viewers use
ads to learn about new
products/brands/services
98% average ad completion
rate for connected TV
22

23. OTT COMBINES BEST OF BOTH WORLDS
Source: Freewheel; VMR 2018
OTT
Premium environment: full screen, viewable, often
unskippable
Lean-in experience: intentional, engaging
Granular targeting: mix of 1p & 3p data to buy
specific users
Unique formats: sponsorships, content curations,
interactive
Measurement: track online & offline conversions
through 3p partnerships, beyond R/F
OTT is a “digital” experience when it comes to targeting and measurement, and a “TV” experience
when it comes to content quality and delivery.
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24. BUT OTT CONSUMPTION & AD SPEND ARE DISPROPORTIONAL
Sources: MAGNA, April 2018; MAGNA Intelligence, “Magna Advertising Forecast (Spring 2019): as cited by MediaPost, April 5, 2019 via eMarketer; eMarketer 10/30/18 “Advertisers shouldn’t choose between linear TV
and CTV, they need to do both”
OTT
29%
Linear TV
71%
Linear TV
97%
OTT
3%
Time Spent Ad Investment
15% of advertisers regularly
include OTT in their media
plans
$2.7B US OTT ad spend in
2018
$5B projected US OTT ad
spend in 2020
24

25. WHY?
Inconsistent
definitions
Extremely
fragmented
Undefined inventory
hierarchy
Lack of
standardization &
transparency
25

26. LOTS OF ACRONYMS & TERMS
OTT
CTV
AVOD
FEP
SVOD
MVPDAdvanced TV
Skinny bundle
TV everywhere
D2C
TVOD
V-MVPD VOD
ACR
SSP
TV
2019 26

27. WITH INCONSISTENT DEFINITIONS
Sources: Interactive Advertising Bureau (IAT), “Digital Content NewFronts: 2019 Video Ad Spend Report” conducted by Advertiser Perceptions, April 29, 2019 via eMarketer
48%
Streaming video that
appears on a TV
Streaming video on
any screen
50%
Other
2%
US agency and marketing professionals
define OTT differently, leading to confusion
and inconsistency in the marketplace
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28. LANDSCAPE IS EXTREMELY FRAGMENTED
Source: VAB 1Q’18 “You Down With OTT?”
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29. Programmatic
Biddable
Programmatic
Guaranteed
Managed (IO-based)
WITH MANY WAYS TO BUY
Upfront
● Direct buy with a
publisher
● Executed & managed
by the publisher after a
contract is signed
● Contract outlines CPM,
cost, placement,
cancellation terms, etc.
● Guaranteed publisher
inventory purchased
programmatically
● Gives agency more
visibility & control to
make optimizations
● CPMs locked (v.
dynamic) &
optimizations limited
● Inventory not
guaranteed
● Agencies bid on
publisher inventory
through DSP
● Agencies have more
control over
optimizations, incl.
pausing campaigns
● Commit to a large buy
when major TV
networks & streaming
services announce next
season’s lineup
● Often in conjunction
with a TV buy
Buy
How it
works
Example
Partners
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30. DSPs, SSPs & marketplaces
PARTNERS CLAIM ACCESS TO THE SAME INVENTORY
Devices
Aggregators/vMVPDs
TV everywhere
Buying at the top of the diagram
gives access to the largest
repository of inventory
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31. BUT QUANTITY QUALITY
It’s important to evaluate where
partners’ inventory falls in the
waterfall - first look at inventory often
comes from direct buys with
publishers who then make a portion
of their inventory accessible via SSPs
Direct Buy
Ad Server/
Marketplace
SSPs
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32. LACK OF STANDARDIZATION & TRANSPARENCY IN MEASUREMENT
This “wild wild west” approach is particularly an issue for connected TV where consumption is seeing
the highest growth.
1 TVs are cookie-less and not trackable across providers, providing a challenge for attribution
2 Many OTT platforms are walled gardens, making access to data available only in a silo
3 Closed systems often means no universal reach/frequency control or view across partners
4
Password sharing (e.g. Hulu, TV everywhere) is rampant, making de-duplication across households or
devices within a household impossible and leading to misreported reach/frequency
5
Partnership deals often don’t allow brands to cherry pick shows/episodes or give visibility in
reporting to what shows/apps buy ran across
6 For brands also buying TV, no standard for comparing delivery or success of OTT vs. TV
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33. HOW CAN WE HELP?
Identify key players
Evaluate pros &
cons
Ask (lots of)
questions
Push industry for
transparency &
measurement
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34. KEY OTT PLAYERS
Ad-free Devices
Ad Supported
TV Everywhere
Aggregators/vMVPDs
DSP/SSP/Network
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35. BEST PRACTICES
✓ ✓
✓ ✓
✓ ✓
✓ ✓
No one size fits all solution
Determine what’s most important
to your client
Consider the inventory supply
path
Apply block/white lists & push for
granularity in reporting
Identify what to optimize toward &
what measurement is available
Buy on audience or contextually,
as all OTT is primetime
Specify where to run: live, on
demand, direct, everywhere
Utilize unique, attention-grabbing
formats with relevant creative
Test & learn!
37

36. The Rise of
OTT
More
Content
Than Ever
Opportunity
& Best
Practices
The Future
The Future

37. FUTURE TRENDS
Consolidation & rise
in power of super
aggregators
Subscription fatigue
& rise of AVOD
Personalization
More transparency
& lower CPMs
39

38. CONSOLIDATION: THE BIG 4 (+ APPLE?)
Source: VAB 1Q’18 “You Down With OTT?”
Other
At some point, consumers will hit
subscription fatigue and stop
stacking additional paid services.
The winners are already licensing
beloved existing content and
producing original content.
Share of OTT Viewing Hours
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39. CONSOLIDATION: REMAINING WILL FULFILL A NEED
Source: stratechery.com
Job
Business
Model
Go to
market
Company
Brands & Family
Subscription +
Disney Flywheel
Direct to
consumer
News & Sports
Ads & affiliate
fees
Traditional TV
distributors
Information &
Education
Ads
Search
Stories &
Entertainment
Subscription
Direct to
consumer
Niche & Left
Behind
Subscriptions,
ads, content
sales
Resellers
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40. RISE OF AD-SUPPORTED VIDEO ON DEMAND (AVOD)
The proliferation of subscription-based services has led to subscription fatigue and an increased
consumer interest in AVOD, particularly among younger (18-34) and male viewers. Top partners include
Amazon IMDb’s Freedive, Viacom’s PlutoTV (also their first Spanish-language service), Walmart’s Vudu,
WatchFree and TubiTV.
While AVOD features largely catalog content, players are beginning eye creating original content to
compete with SVOD. However, it remains to be seen if they can even begin to challenge SVOD fare.
45% of streamers
watch AVOD OTT
the most
52% of AVOD
viewers are cord
cutters or cord
nevers
75% of AVOD
viewers don’t
mind ads as long
as content is free
42
Sources: Nielsen, IAB, MediaPlayNews

41. THE END OF THE VIDEO COMMERCIAL
As more players develop in the OTT space, the competition for share of ad dollars has spurred many platforms to
develop ad solutions that help brands stand out on a given platform beyond the standard video commercial.
Co-branded slates
In-show integrations
Seasonal sponsorships
Pause Ads
Binge Sponsorship
Easter Egg Placements
Channel Sponsorships
Movie Night
Streaming Guides
Interactive Units
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Sources: Hulu, Roku

42. TRANSPARENCY
ReportingTargeting
Before
● cherry-picking
● whitelist & blocklist
geos, demos, custom audiences,
channels, apps, shows
After:
● in-depth reporting
(app/show level)
● cross-device
geos, demos, custom audiences,
channels, apps, shows
Industry demands will push publishers to become more transparent with what’s available in both targeting
and reporting
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43. SUMMARY & NEXT STEPS

44. KEY TAKEAWAYS
1.
OTT is mainstream and
growing among all ages
2.
Many long tail services exist,
but consumption of OTT is
concentrated to major players
and will likely consolidate
3.
Transparency and tracking are
currently lagging, but expect
to come with more ad spend
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46. THANK YOU!

47. GLOSSARY
Advanced TV: umbrella term for all TV not viewed through
traditional satellite, cable or broadcast
Over-the-top (OTT): access to video content via a
high-speed internet connection, bypassing the traditional
cable/broadcast provider wired connection
Connected TV: a TV set connected to the internet via an
attached device, gaming console, or SmartTV
Video on demand (VOD): time-shifted viewing of TV
programming on any device, accessible at the viewer’s
convenience
Transactional video on demand (TVOD): viewer pays based
on the amount of content watched (e.g. pay for new movie
release on Amazon Prime)
AVOD: ad-based video on demand that is free for
consumers
SVOD: subscription video on demand, paid for by
consumers (e.g. Netflix, Hulu, CBS All Access)
Multi-channel video programming distributor (MVPD):
aggregator service that provides access to multiple
television channels via satellite or cable
Virtual MVPD (V-MVPD): Distributors that aggregate linear
TV content licensed from major programming networks
and package together in a standalone subscription
available through the internet (e.g. SlingTV, Hulu Live,
DirectTV Now)
FEP: full episode players, regardless of device played on
Automatic content recognition (ACR): software technology
with the ability to identify content based on sampling a
portion of audio, video, or still images; used to compile
reliable data about viewers’ habits and build audiences
with the intent to retarget or competitively conquest
Set top box (STB): hardware that translates broadcast
signal onto TV
Addressable TV: automated by that serves different
households different ads at the same time
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