Over the Top (OTT) media is a type of media service that allows users to access content directly using the internet. It bypasses all mediators in the process to serve the content directly to the viewers. What makes OTT a popular and better alternative over the traditional mediums is its flexibility across gadgets, convenience, and great value for money.
How OTT Differs from Traditional TV?
Did you know that the pay-tv penetration rate in the US has fallen to 74% from 88% since 2010? As per data reports, it is expected that over 46 million US households will have cut their pay-tv cords by 2024. There are some major differences between OTT and traditional TV that have caused this change. Let’s explore three main differences to get a fair idea.
- The first thing that distinguishes OTT platforms from traditional TV is how the content is delivered. OTT platforms provide direct service to the users by leveraging the internet. However, the traditional TV channels require users to have a cable or satellite dish connection to receive the broadcasted content.
- OTT platforms or services provide the users with the option to pay for the pool of content they want to view instead of paying for everything that they might not be interested in. In the case of traditional TV, users have very limited or no flexibility in this regard.
- Anytime and anywhere is the norm in today’s digital era. People do not like waiting for something they want instantly. OTT caters to the instant gratification needs of viewers by allowing them to access the content at any time of the day from anywhere. They can pause, play, replay as per their wish, which is not the case with traditional television broadcasts.
How does OTT work?
OTT services have simplified how viewers view and access video or audio content by leveraging the internet. The technical aspect of the working mechanism involves components like superfast technological production, encryption, compression, cloud storage, CDN, and decoding. The OTT platforms use all the technical components to deliver any content directly to the users instead of sharing it through a middleman such as a cable operator. Alongside this, OTT channels can also generate revenue using multiple monetization methods including subscription, advertisement, third party ad integrations, pay-per-view model, etc.
Advantages of OTT
Some of the most exciting benefits of OTT platforms that have helped shoot up their growth are mentioned below.
OTT subscription charges are quite affordable when compared to the traditional cable TV charges. Popular OTT platforms like Netflix have even introduced a mobile version subscription which is very affordable.
More freedom for viewers
OTT platforms are highly customer-oriented and provide viewers with complete control of how they can consume the content. They have the option to even access content offline using the download feature.
Anytime is the norm
Viewers can have access to their preferred content at any time of the day. Unlike traditional TV they don’t have to wait for a day or week to watch their favorite content.
OTT platforms like Netflix and Amazon Prime have a subscription fee for watching content. The subscription model charges the user a specific amount based on the plan they choose to access the content. This ensures that they don’t have to unnecessarily watch advertisements while watching their favorite shows.
Access from anywhere
If viewers have an internet connection, they can have access to their favorite OTT content, regardless of their geography. They can even watch content on their mobile in case they are not carrying your laptop or TV to a remote location.
Evolution of Viewing Habits from Traditional TV to OTT & CTV
Conventional TV was introduced way back during the 1930s in the US. However, it gained momentum after 2 decades during the 1950s when radio programs were being transitioned into television shows quite rapidly. Eventually, television became a way of life but it did not provide the user with the needed flexibility using the broadcasted content. Every new idea is based on a solution to an old problem and this is how the concept of OTT was introduced when the internet came into existence. The transition from broadcast to ‘choice-first’ programming was not achieved overnight.
You will be surprised to know that Netflix was launched way back in 1997 when it started selling and renting DVDs by mail to customers. Two years down the line, Netflix started offering monthly online subscriptions using the internet and the rest is history. Over a decade later, it became the leading player in the OTT space and also a household name. The rapid digitization of services led to increased adoption of OTT platforms by the people. The latest trend that will shape this industry’s future is CTVs that allow users to stream online content on big-screen TVs using a special device or inbuilt hardware.
Are There Any Regulations/Censorship for OTT Platforms?
The laws and regulations related to OTT platforms differ across the globe. Some countries have strict regulatory bodies that monitor what type of content is being shown on the platform to keep a check on sensitive content or those that are based on false news which might affect a large majority of people. Countries like Singapore have a media regulatory body that issues the code of practices for OTT and video-on-demand services. In the US, there are no such regulations for OTT channels but a proposal for a new regulatory framework to monitor online content was given in 2019. Australia has an ‘eSafety Commissioner’ for overviewing the digital media.
Leading OTT Platforms
Netflix was the harbinger of the OTT revolution and dominated this space for quite a long period with no strong opponent. However, this has changed in the past couple of years and Amazon Prime Video has a stronghold in the OTT arena as well. Both these giants provide a subscription-based OTT service to the viewers. They have different types of subscriptions for users across different geographies. Other leading players in the OTT video segment include Disney+Hotstar, Apple TV+, HBO Max, SonyLiv, etc. Hulu is also among the market leaders; however, its services are limited to the US and Japan only.
Top Podcast Platforms
Over the Top (OTT) music streaming platforms have also gained huge popularity in the last few years. People are more inclined towards streaming audio content as it provides them with the flexibility to multi-task. Many a time, people stream motivational podcasts while they are working because it’s easier for them to tune into. Just like Netflix dominated the OTT space, Spotify is the leading player in this segment that overtook Apple Music. Other platforms that are also gaining similar popularity and subscribers include Amazon Music, Wynk, Gaana, Google Play Music, Hungama, JioSaavn, SoundCloud, Spotify, and YouTube Music.
Global OTT Video Revenue Trajectory
You will be amazed to learn that the global OTT media revenue is expected to reach approximately USD 210 billion by 2026. The convenience provided by OTT platforms made it an easy to sell service to people who prefer consuming content online. The revenue for the OTT video segment was roughly around USD 6.1 billion in 2010. This has increased exponentially over the past 10 years and the global revenue figure for 2020 stood at USD 106.48 billion. It’s almost 18 times the 2010 figures. This should provide you with a fair idea as to how rapidly it’s increasing.
OTT Future Predictions
There is no doubt that OTT has a bright future ahead and will continue to be the dominant form of media in the coming decades. As per expert predictions, OTT app usage will grow into a USD 200 billion industry by 2024. The global OTT video market is expected to grow double in size by 2023. Also, the Asia Pacific region will overtake North America by a large margin in terms of OTT video revenue. Personalization of content based on the user profile will be the key to beating the competition for OTT businesses. People will prefer an OTT platform that is user-friendly and easy to navigate instead of a complex UI/UX.
Over the past two decades, the evolution of the OTT industry has been nothing less than phenomenal. It has taken a fair share of the market and has reduced the usage of traditional pay-TV, compelling them to change their strategies. Given the flexibility and convenience it provides to the users in such a cost-effective manner, it is sure to rule the media industry in the coming years.
Hence, this is for sure the right time for broadcasters and content owners to venture into streaming with their own standalone OTT platform. CONTUS VPlayed, in this case, is a leading self-hosted video streaming solution that businesses can partner with to build and launch an exclusive platform of their own to achieve greater benefits in terms of audience and revenue.