OTT Video Apps: When Cheap Becomes Expensive

Understanding Total Cost of Ownership is a Vital to ROI, yet too often it’s ignored or underestimated

As media companies brace themselves for a direct-to-consumer future, new over-the-top (OTT) video services are being created left and right. Over the next twelve months, we’ll see the launch of HBO Max, Disney+, and Apple TV+ among others.

As the number of streaming service rise, so do the number of companies providing video app solutions. Many of these solutions are being developed with the promise of being “fast and cheap”. What most people don’t take into account is the total cost of ownership and how cheap can become very expensive.

What is Total Cost of Ownership?

Many people believe that the way to determine whether something is cheap or expensive is to look at the price, oftentimes comparing the price of one offering with a similar offering. And while price can sometimes be a factor, it generally has less to do whether something is expensive. This is due to the misconception companies have taught people to expect that they can have better, faster, and cheaper.

The total cost of ownership (TCO) for enterprise software is the sum of all direct and indirect costs incurred by that software; both its purchase price and cost of operation. Assessing total cost of ownership represents taking a holistic approach that assesses the purchase from a broad perspective.

When evaluating options in a purchasing decision, buyers must not only look at an item’s short-term price, but its long-term price, which is its total cost of ownership. While an items direct expenses can be easily reported, analyzing all of an item’s indirect expenses can play a significant role in deciding whether to complete a purchase.

The item with the lower total cost of ownership is the better value in the long run. Understanding the TCO is a vital part of calculating ROI, yet too often it’s ignored or woefully underestimated.

“It’s Gotta be the Shoes”

Let’s assume you’re comparing two pairs of shoes, one pair with a price tag of $250 and the other priced at $450. There’s a massive gap in price, however you need more information in order to determine which pair is more expensive.

Price and cost are two different factors.

The $250 shoes are average quality and are expected to last around 18 months if worn to work every day. This means these shoes cost you about $14 per month.

On the other hand, the $450 shoes are a much higher quality and can last 48 months if worn to work daily. These shoes will cost you less than $10 per month, meaning that even with a higher price, they have a lower cost.

Over a period of 48 months, you’d need to purchase 2.5 pairs of the lower priced shoe, which would total $750. Compared to the higher priced shoe at $450, it’s clear which option presents a better value and lower cost.

Better and Faster Always Costs More

There’s an adage that as a customer, you can choose no more than two of these: better, faster, cheaper.

You may want better and faster, but receiving better and faster comes with a higher price because it simply costs more to produce better. Or if you want results to be expedited, that outcome will require a greater investment.

You may want faster and cheaper. When you combine faster and cheaper, the quality of the outcome is no longer important.

“Cheaper” tends to come with a lower price and a higher cost. When this is true, cheaper ends up being more expensive.

“Expensive” tends to come with a higher price and a lower cost. When this is true (spoiler alert: it often is,) even if one does not ascertain the value, expensive is actually “cheaper,” if by cheaper we mean a lower cost.

The Heart of OTT Video App Development

At its heart, launching or managing an OTT app is extremely complex. It requires a deep understanding of pretty advanced technologies. These include not only software and app design, but also human psychology. It involves knowing what people will respond to and what they will find intuitive.

These technologies also continue to evolve, so keeping up with software updates and patches is an uphill battle. And of course, customers deserve the best when it comes to the user experience. So, there is no question that an app will constantly need to be updated.

Another fact to keep in mind is that unlike building apps for mobile, Connected TV apps are much more fragmented as each platform such as Roku, Amazon Fire TV, Apple TV, Android TV, Samsung Tizen, XBOX, etc. all have their own coding languages and SDKs. These apps also require a myriad of backend integrations from video delivery, rights protection, customer management, monetization, and analytics platforms.

If you want to build for each of these requirements, you need to have those skills, and they are often hard to find as the required skill sets are so specialized. In-house teams can’t usually accommodate these specializations without overstaffing. These employees will need upskilling, management, and salaries all of which eat into your total cost of ownership. Being able to rapidly scale up or down in response to the market is critical to avoid unnecessary pressure on your in-house engineering team.

Outsourcing development gives you access to competent team of OTT app experts, whose services you pay for as and when you need them. They have the experience to deliver your OTT video app through various operating systems and ecosystems and customize solutions based on the skill sets that you lack, but the experience those teams or individuals bring to the table by having executed similar solutions can be an invaluable asset to your teams delivery velocity.

Zemoga Can Help You Build Better

At Zemoga, our team of OTT video app experts help companies such as Sony Playstation Vue, Hulu, Spotify, and iHeartRadio navigate the ever-changing media landscape and launch products that engage customers across every device.

Our OTT app solutions range from providing strategic consultation to fully autonomous cross-functional retained teams to individual OTT app experts that can seamlessly integrate into your project team.

We support all major TV and mobile platforms like Roku, Apple TV, Android TV, Samsung Tizen, iOS and Amazon Fire TV. Not only can we optimize for every one of these, but we can help you build a better, more integrated architecture..

We’ll never lie to you about the total cost of ownership for our services. Our practices ensure total transparency in to the challenges, opportunities, and costs when delivering your OTT video apps to market. Unlike other companies, we won’t pretend that we can give you more for less. We’ll be open and clear about every aspect of our business.

That’s what we’re all about, better solutions, better systems, better efficiencies.

Let us help you build better today.

About the author

DJ is CEO & Founder of Zemoga. He has worked in the digital design and production space for over 30 years specializing in developing customer engagement strategies & building teams and technologies that provide groundbreaking solutions for F500 Co's.