According to eMarketer, the number of adults who will cancel a pay TV service is projected to rise to 39.3 million this year and rise to 55.1 million by 2020. Further analysis predicts that the number of homes paying for subscriptions to streaming video services will reach more than 450 million by 2022 (up from 250 million in 2018)
But, what is video OTT anyway? Well, media content that is delivered to viewers directly over the internet, with zero dependencies on any traditional operators is called OTT or ‘over-the-top’ content.
And, here’s why consumers are drawn to OTT Video Platforms:
▪ High-value content at fixed & low cost (SVOD): The $12.99 monthly subscription cost for Netflix comes as a pocket-friendly alternative, when compared to the conventional cable packages which cost a lot more and offers many channels that are not relevant to us.
▪ Unconventional and exclusive content: The content showcased on the OTT platforms is unique, original and sometimes groundbreaking too. Movies, series, shows, and documentaries produced by Amazon Prime and Netflix are a refreshing change in the world of media, and garner a heavy fan following.
▪ Compatibility with multiple devices: The best part about OTT platforms is that viewers are no more confined to their television sets. Any device – be it a smartphone, a tablet, a gaming console or a computer can be used. That’s not all! Multiple people can also access the same account simultaneously, depending on the subscription package.
▪ Accessible all the way: Thanks to the internet-based delivery system, OTT platforms treat viewers to an ‘anytime anywhere’ experience, which can also be enjoyed on the go. All they need is an internet connection and a compatible hardware device.
▪ Tailor-made content suggestions: This is one of the most sought-after luxuries that OTT subscribers enjoy. They are offered an absolutely personalized experience wherein they receive content recommendations from their favourite genres and get notified about new digital releases instantly. This ensures that subscribers never miss out on an interesting content.
▪ Access to free content (AVOD): Some OTT platforms are becoming a major hit due to the free content they offer, without charging any subscription fee. Platforms like Amazon Prime and Hotstar feature a certain section of content for free, which is no less popular. Credits to the AVOD monetization model, these free content turn out to be profitable for the OTT industries too through ad-generated revenue. Hence, it’s a win-win situation.
The revolutionary OTT Market – What’s next?
The OTT market is a growing sector which has seen a steady rise in the number of homes which are practicing “cord-cutting” – that implies to the dissociation with cable TV connections, to opt for the internet alternatives. During the years 2013-2018, The number of U.S. households using only over-the-top streaming services to access TV programming and movies has nearly tripled and with over 300 OTT platforms functioning in the USA and an average American subscribing to at least 3 OTT streaming applications, USA is on its way to making OTT its primary content streaming platform.*
PwC has estimated that the OTT services in the US will grow up to $30.6 billion by 2022, and a study conducted in Deloitte also states that about 43% of Americans subscribe to both pay-TVs and OTT services at present.
Amidst all the glory, a caveat has also floated up. A recent study stated that 50% of OTT subscribers are fed up of accessing ‘too much content’, and research showed that about 47% of OTT consumers in America who are unhappy about having to deal with multiple platforms and subscriptions in order to enjoy their favorite shows.
Growth Opportunities in the OTT Market
Despite these challenges, experts predict immense potential in the OTT Technology domain. While the US market is deemed the most lucrative with about 51% viewers opting for these platforms, Europe and Asia-pacific aren’t far behind in making a shift to the OTT streaming services too.
OTT video content also encompasses real-life documentaries, educational programs, health-based content and more. These non-entertainment sectors also hold big margins in terms of revenue and audience, opening new windows of opportunities.
Show me the Money
With OTT growth, rises the scope to play around with new and innovative monetization models. While most OTT solutions are subscription-based, in 2018 20% of subscribers opted to go ahead with in-app purchases. It is predicted that OTT advertising will leave behind SVOD models and adopt a hybrid between AVOD and SVOD to be able to monetize the platforms better. The massive potential in OTT advertising was highlighted recently when Hulu generated more than $1 billion from web-based ads, and Roku’s revenue doubled.
With a new OTT platform coming out every few months, the tag of “new kid on the block” is no more viable for this kickass technology. However, there’s a lot that’s still untapped and it’s needless to say that OTT holds a promising future for those who choose to invest in it.