The video market has been changed by the rise of Over-The-Top (OTT) services. Where viewers were once exclusively connected to their televisions if they wanted video content, that is no longer the case. OTT TV services have changed television viewers, as well. OTT TV viewers have different needs and habits when compared to linear television watchers, and as we can see by the growth in the market, OTT companies are successfully developing their offers for these new viewers. Juniper Research points out in a report from 2015 that OTT TV providers are expected to be earning $31.6 billion by 2019. This is a significant increase when compared to the just under $8 billion earned by OTT service providers in 2014.
But what is it that’s driving this massive increase? What are OTT companies doing that has captured the attention of TV audiences? In this blog, we’ll look at four ways in which top OTT TV providers differentiate themselves from other TV services.
1. Ease of access encourages viewers to cut the cord
With linear television and IPTV systems, viewers are tied to their television and set-top boxes. This means that if you want to watch your favourite show or a movie, you have to be in front of your television to watch it. Fewer and fewer people are engaging with television this way because they are “cord cutting”. This term highlights the trend in which viewers cancel their cable-based TV services in favour of OTT TV services, such as Netflix, Amazon Prime Video, or Hulu.
Why would customers be doing this? OTT TV works differently from other television services. If you want to watch the next episode of a series or finish watching a movie, OTT TV will let you stream the show or movie via any Smart TV, tablet, laptop, or mobile phone that’s connected to the Internet. All you need to do is log in with your username and password. OTT TV providers also allow multiple logins from multiple devices, so you don’t have to watch what someone else is watching. Another key defining factor of OTT TV is that it doesn’t restrict the viewer to a specific schedule or location, the way linear television does. With OTT TV, content is accessible at any time. It’s these kinds of advantages that are causing more and more viewers to cut the cord.
2. Exclusive high-quality content
Netflix has a specific phrase for their exclusive content: A Netflix Original Series. These words have played a key part in the massive growth of OTT TV providers. Not only do these words stand for quality, they also highlight that, in most cases, the show is only available on Netflix. If you wanted to watch any of their award-winning series, like Stranger Things, House of Cards, or Orange is the New Black, you most likely need a Netflix account. Another OTT provider that’s growing their exclusive content library is Amazon Prime Video. As demand grows, more and more OTT services will need to develop exclusive content to draw customers in.
3. Global reach
Amazon Prime Video and Netflix are both examples of OTT TV providers that are expanding their services across the world, where cable TV services and certain IPTV products cannot reach. This allows them to grow a massive subscriber base, with Netflix recently having reached more than 98 million subscribers.
4. Different, cheaper business models
OTT TV providers use multiple business models that vary in cost, and provide much lower rates than their television competition.
The first business model used by the OTT TV providers is the Subscription Video on Demand (SVOD) model. Major providers like Amazon Prime Video, Hulu, and Netflix use this model. Under SVOD, viewers pay a monthly subscription fee to access all content on the service. Another popular business model is Advertising Video on Demand (AVOD). This model has been adopted by providers like Hulu and Youtube. Content is free to watch using the AVOD business model, but is supported by advertisements that play before, during, or after the video. The third popular business model is Transactional Video on Demand (TVOD). This model is used by providers like Youtube (specifically their Youtube Red service) and Apple iTunes. TVOD allows viewers to pay for the specific content that they want to watch.
As you may have noticed, certain OTT services may use multiple models. This is referred to as the hybrid model. The hybrid model has been used by previously mentioned providers like Youtube and Hulu, but also by providers such as HBO and Vice. This model allows the provider to customise their offer to suit their customers’ needs.
These four trends are a part of the ever growing OTT TV industry. POST Telecom can help by providing vital infrastructure and expertise that can put you ahead of the competition. Find out more by accessing our free guide on the State of IPTV and OTT in 2020, or contact us directly if you have any questions.