OTT: The Way Ahead

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OTT: The Way Ahead

Over-the-top content (OTT) service providers like Hulu, Netflix, and Amazon are showing massive uptake by consumers who want to view content as per their choice of time and platform. According to Juniper Research titled Mobile & Online TV & Video: OTT, IPTV & Connected Markets 2015-2019[1], OTT subscription is forecasted to generate $31.6 billion in revenue by 2019.

As traditional broadcasters face increased competition from OTT service providers, let us take a look at the future of OTT.

New providers in the market

While countries like the United States have already adopted OTT and are on the verge of saturation, developing countries with high mobile penetration and adoption rates of pay-TV and broadband are witnessing increasing popularity of OTT services. A  Digital TV Europe Research[2] estimates that developing countries like Eastern Europe, Middle East & Africa will see greater growth in revenues and that of Latin America will nearly triple from 2015.

Driven by rising mobile data usage, mobile is becoming an important medium to deliver OTT service in East European countries, Middle East & Africa. Pay-TV providers, mobile operators, broadcasters and media companies are expanding their OTT services in these regions either by launching their OTT services or partnering with regional OTT players. For example, UAE-based mobile operator Etlisat has introduced eLife ON, Saudi Arabian Mobily has mView, Times Media Group has an OTT service called VIDI in South Africa, and Pay-TV operator OSN has launched GO across MENA.

SVOD is catching up

Viewers are increasingly opting for OTT services like Hulu, Netflix, and Amazon Video, which gives them the freedom to choose the content they want to consume across different platforms. Millennials are adopting subscription video-on-demand (SVOD) services faster than their older counterparts. A report from BI Intelligence highlights younger viewers watch four times as much video content online than aged viewers. The popularity of SVOD services like YouTube, Sling TV, and PlayStation Vue further underlines this fact.

For SVOD services, usability is the key. Companies need to innovate to leverage OTT and SVOD services to reach out to more viewers. For example, YouTube has launched offline viewing for consumers to download videos and watch it at their convenience – even when there is no mobile connectivity.

With the first screen of the millennials being the mobile screen, digitization provides a huge opportunity for SVOD providers to grow their business. Content creators and marketers can reap the benefits from SVOD adoption. Content creators can profit from the surge in the short-form video, while marketers can capitalize on advanced product placements.

More connected TVs

Thanks to connected TVs, which include streaming devices like Apple TV, gaming consoles, Web-enabled TV sets, and TVs connected to the Internet by laptops in the group, monetization is also growing. According to FreeWheel, an ad-serving company whose clients include major video providers such as AOL, Crackle, Fox, NBCUniversal, Viacom, and Vevo, more than one-third of monetization was led by OTT devices. An eMarketer report[3] estimates that by 2018, 191.4 million or 58.2 percent of the U.S. population will use a connected TV device to access the Internet.

Changing fundamentals of content creation

OTT has unlocked transformational changes in how the content is created and consumed. The availability of unlimited content space has given more freedom to experiment and has provided audiences for all kinds of content. Although most are amateurs, some are earning millions of dollars, while contributing to the depth and breadth of content available to consumers.

Further, the increase of mobile and streaming access has enhanced consumers’ ability to choose what they watch and where and when they watch it. With the rise in mobile use, the demand for short-form, high-quality content, also called ‘snackable content’ has also witnessed a massive growth. Consumers are turning to live, user-generated video and “citizen journalists” for news related to developing events or stories. For example, The Young Turks, which offers short-form news videos on relevant topics around the world every day has become a key news destination for millennials.

The launch of Facebook Live in April 2016, which makes it easier “to create, share, and discover live videos” further highlights the changing fundamentals of content creation. Content creators are also focusing on introducing contextual parameters for content discovery. Factors like mood and current affairs are being taken into account apart from their viewing preference while making a content recommendation to the viewers.

To ensure successful adoption of OTT, service providers must address three critical challenges – aggregation, subscription churn, and transparency. As consumers look to fulfill the 3Ws – watch what they want, when they want to, and where they want – OTT providers not only need to manage content but also create new content and recreate legacy content to retain subscribers. Proper archiving, digitization and tagging of content will help in aggregation while generating content across various formats will provide shared experience across devices and help in customer retention.

[1] https://www.juniperresearch.com/press/press-releases/ott-tv-market-to-increase-fourfold-reaching-32bn

[2] https://www.digitaltvresearch.com/ugc/Global%20OTT%202016%20TOC_toc_149.pdf

[3] http://digiday.com/platforms/ott-video-going-5-charts/