From Niche to Mainstream: The Rise of OTT

The cord cutting revolution is officially here. 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.

Now that streaming service subscriptions are on par with traditional distribution, over-the-top (OTT) platform usage has emerged beyond Millennial consumers. Gen X and Baby Boomers are increasingly adopting OTT services.

With viewers of all ages embracing streaming as their main source of TV content, we put together the most important findings from newly released data about OTT that will impact and shape the industry.

OTT in a Nutshell

OTT refers to devices that go over a cable box to give user access to content on TV. The content can be streamed directly through the internet to a consumer’s digital device (such as a laptop or smartphone) or to a connected device (such as a smart TV). Most importantly, it doesn’t mandate a traditional cable subscription.

Generally, OTT runs on at least one of three main business platforms: TVOD, SVOD, and AVOD.

• TVOD (Transactional Video on Demand): Think iTunes or Google Play. With transactional VOD, consumers pay for individual pieces of content.

• SVOD (Subscription Video on Demand): Think Netflix or Hulu. With subscription-based VOD, users pay a set monthly price in exchange for unlimited access to a streaming service’s video library

• AVOD (Advertising Video on Demand): Think YouTube or The CW app. Advertising VOD offers free content in exchange for watching commercials.

While these have been the most common VOD platforms to-date, recent data suggests there’s room for new business models

From Niche to Mainstream

OTT’s rising popularity has led to revenue on track to reach $22 billion this year. As new platforms such as Disney+ and Apple TV+ look to disrupt the industry, it begs the question—how many streaming services can the market take?

New research released last month by OpenX and The Harris Poll surveyed more than 2,000 verified U.S. adult users of OTT services, providing a comprehensive look into streaming data. The top insights for the industry in the 2019 Consumer OTT Report include:

• OTT is mainstream: More than half of all U.S. adults over 18 use at least one OTT service.
• There’s room for multiple business models: People are evenly split between wanting an ad-supported or subscription model.
• OTT is mobile first: Streamers utilize their mobile devices for more than six hours a day and watch more than two hours of mobile video each day. Even further, about one-third say screen size has no impact on how long they watch something or what they watch.
• Movies reign supreme: The top content people want are movies, then scripted TV shows.
• OTT ads are effective: 72 percent of people recall a specific OTT ad, with 40 percent actually pausing the content to go online and purchase.
• People will subscribe to more than one OTT service: The average user streams content across three devices and subscribes to three different OTT services.

Many networks are joining forces with OTT, rather than fighting against popular services. But, they’re also looking for new business models that rival the current OTT heavyweights. One thing is clear: OTT isn’t going away, and networks will have to adapt if they want to survive.

For more information on OTT—from quality assurance to proposed new companion screen architecture—download the May SMPTE Motion Imaging Journal.