Defining the Terms in Digital TV

Confused about the difference between streaming, connected TV, and video-on-demand? You’re not alone. In fact, if you ask three different people, you’ll likely get three different answers.

The truth? In the immortal words of Facebook, “it’s complicated.”

Opportunities in this space have grown exponentially in the past five years as more and more people ditch their cable subscriptions. The side effect of all this innovation is that with all the new terms popping up, there hasn’t really been much time or thought put into creating industry standard definitions for each.

The result? What one person calls Connected TV another calls Advanced TV. Where it gets tricky is when you add in terms like streaming, video on demand, and full-episode player (FEP), and sometimes, one streaming video partner, can have multiple ways to watch. For example, Hulu can be considered an Over-The-Top (OTT), Streaming, and Full Episode Player (FEP).

Let’s sort it out by starting with the basics. Whether you hear it called digital, connected, or advanced TV, the idea is the same: video content delivered via an internet connection rather than a broadcast signal. This process is known as streaming. You can stream video content to any internet-connected device. Another buzzword to describe this is Over-The-Top or OTT – watching video on devices or channels (like web and app) that are not through traditional TV Cable or Satellite.

There are multiple ways to watch digital TV. Full Episode Player (FEP), as the name would suggest, plays full-episode content, or more specifically, videos of 30-60 min in length on Apps or Websites – think Bravotv.com or the Bravo App. Video-On-Demand, like FEP, is like it sounds – selecting specific video content to watch on your time. VOD can be consumed through Smart TVs and Cable channels that offer Video-On-Demand plans. There are also ways to watch live streaming video and content. For example, NFL games were streamed live for Amazon Prime members last season, and live streaming TV can be purchased through internet services like Sling TV and DirecTV Now.

A majority of people watch streaming TV through Connected TV (CTV). CTV is the definition for watching any internet streaming video, on a TV screen. This can be through CTV devices like Amazon Fire Stick, Roku or Google Chromecasts, but also includes smart TVs that have streaming video capabilities built in to watch digital apps.

As there are multiple ways to watch and stream shows, you can see how the Hulus and Amazon Primes of the world can fall into multiple acronym buckets. They can be streamed “Over the top” on your computer or phone, or through a CTV device and the shows they stream can be considered FEPs or VODs.

The two terms the industry as a whole tends to agree on are Programmatic TV and Addressable TV.

Programmatic TV is the concept of buying traditional TV advertisements, digitally through an automated system, like a DSP. The goal is to buy and manage TV advertisements like we do now for display banners and video, with the ability to optimize, report, and target audiences in real time. Unfortunately, there are a lot of roadblocks to making Programmatic TV work the way we (digital advertisers) want it to. We will get into those details in a future post.

The term Addressable TV refers to digitally buying ad space targeted to specific cable set-top boxes. This is beneficial if you want to target households in a certain zip-code or show your ad to households with more than four people in the home, for example. And that’s all there is to it – see it’s not as difficult as it seems. 

Are you ready to test your knowledge? Check out this CTV comprehension quiz by The Trade Desk.

Courtesy of The Trade Desk

Now that we’ve got all that down and you aced your quiz, let’s talk about what this means for advertisers.

Advertisers can buy VOD, FEP, and live streaming ad space digitally, not just through traditional TV buys and contacts, and the ad space available to digital advertisers is growing. Digital TV allows advertisers to reach their target audience in more precise and measurable ways than ever before while reaching a younger audience inaccessible through traditional TV buying. For example, advertisers can target their ads to a specific channel, CTV device, or audience. They can also only serve their ad on VOD or FEP content. The possibilities of targeting options are vast and constantly growing.

The number of U.S. households that only use streaming services has tripled in the past five years and now stands at almost 15 million. This is on top of the 74% of U.S. households that subscribe to traditional cable TV as well as streaming/OTT services. According to eMarketer, by the year 2021, an estimated 200 million U.S. consumers will be using an OTT streaming service or connected TV at least once a month.

The top four OTT streaming services – Netflix, Hulu, Amazon Prime and YouTube – currently average over two hours of watch time per user, per household each day. With AT&T’s and Time Warner’s recent merger, this figure is set to grow as they gear up to debut a new streaming service.

As the industry continues to grow, we hope to not be the only ones “defining the terms” but until then, be sure to bookmark this post so your team can be aligned on the meaning of digital TV’s more non-specific terminology.