Online video is already unsettling established business models for TV, fragmenting audiences who expect to see fewer ads and pay less for content – should they pay at all.

At the same time however, growing discomfort should fast-track new ways to make money, to offset the challenges of more choice for consumers, and greater complexity for businesses.

“It does hurt, but it’s also an opportunity to think differently,” remarked James Miner, a former TV (Fox International Channels) and media agency (GroupM) executive, speaking at Casbaa’s OTT Summit, held in Singapore yesterday.

“There are numerous ways to make money,” summarized Miner, now CEO of app developer MinerLabs. “Yes, it is harder. No, it is not worse.”

Throughout the day, speakers encouraged TV companies to embrace new models of digital monetization, from opening up more inventory to automated ad systems, known as programmatic trading, to creating micro-packs for channels to bolster Arpu.

“As OTT players mature, given the burgeoning amont of content in their portfolios or catalogs, you may see some very interesting experiments on packaging,” mused Atul Phadnis, CEO of What’s On and APAC GM of Gracenote, firms specializing in video search and recommendation.

As of today however, profits remain elusive for OTT or over-the-top distribution – where video travels across the open web rather than through more easily managed broadcast and pay-TV networks.

Margins, profit and scale

While existing broadband networks help lower barriers to entry, subsequent costs for online video can pile up, pushing back profitability.

Worldwide, video traffic is growing three times as fast as industry revenues, squeezing margins, noted David Habben, chief media technologist for Akamai Technologies, an online content delivery network.

This can also put local companies at a disadvantage over international rivals, Netflix in particular, which is ramping up outside the US to offset mounting costs for content and distribution.

“Scale means a lot,” Habben said, also speaking at Casbaa’s event. “Scale really drives down incremental cost.”

Scale also hinges on access to content that people in different countries want to watch, as well as seamless technology to provide it. Both are potential obstacles for aspiring regional OTT providers in Asia.

“Our main differentiator is content produced in Singapore,” noted Paul Sumner, VP of strategic planning for Singapore broadcaster, MediaCorp, which operates a two-year-old OTT service, Toggle.

While MediaCorp’s shows can attract audiences in markets such as Malaysia, Indonesia and Vietnam, that will only take Toggle so far, Sumner pointed out.

“If Toggle is to go regional – which we would like it to, at some point – there has to be local content in local markets,” he said. “We can bring that together with some international content.”

At the same time, shared infrastructure can also help break down technology silos.

“One of the challenges at the moment is that a lot of broadcasters are launching OTT services using their own tech platforms,” Sumner said. “There’s a lot of fragmentation there.”