Here's what is going to drive growth in the OTT space
Nothing has shown the importance of video streaming more than the current Covid-19 pandemic, during which billions of people around the world remained at home, glued to their screens. With global industry sales for OTT reaching US$ 332.5 by 2025, and big names like Netflix, HBO, Disney, and Amazon investing heavily in the industry, Over-The-Top (OTT) media is fast becoming an essential category for app developers and advertisers.
This ecosystem continues to grow, as does the competition for viewers. After 10 years of near-total dominance, Netflix now has an increased number of competitors. OTT is no longer a niche but a mass market. It is one of the biggest global trends, and it keeps growing in every market. A new report from Juniper Research predicts there will be nearly two billion active subscriptions to video-on-demand services by 2025, a 65% increase from the end of 2020.
But it is not possible to talk about the growth of OTT around the world without talking about the advances that allowed this phenomenon. A few factors are driving this trend: broadband coverage that grows and makes the service more affordable; the reduced cost of computers, tablets, and phones, especially in developing markets; increased access to new technology to stream content seamlessly; the ability to get video on big, connected TVs; new apps and streaming services; and the increasingly abundant, diverse, high-quality content.
While, of course, it's still too early to say what post-pandemic life will be like, the opportunities provided by the app offerings through OTT are enormous – and they're just beginning to be explored. For brands, apps offer an environment to customize the experience and utility they provide to customers. And with all the data generated by OTT about content preferences, we'll see great targeting opportunities, especially for niche products.
Let's look at other key trends that I predict will be impacting the OTT market in 2022.
#1: Major OTT growth markets in 2022 will be dominated by mobile-first broadband
According to OMDIA's Global Trends report, much of the future growth of online video subscriptions will come from countries dominated by mobile broadband connections. Although initial success has been based on fixed broadband connections to laptops and connected TV sets, many more future viewers will be using smartphones and tablets. This is because growth in mature fixed broadband markets is now saturated. Therefore, developing countries where fixed broadband is not ubiquitous are where the most significant growth will happen.
Another driver of a mobile-first market is the 5G technology becoming more prevalent and accessible. As 5G networks promise to bring faster speeds and a more reliable connection, viewers will no longer have to deal with the everyday frustrations of sluggish load times and midstream stops and stutters. 5G will pull the cloud computing infrastructures vital to delivering OTT services closer to end-users, allowing real-time processing and minimal latency.
The 5G's promise of high-capacity, low-latency connectivity will be a content delivery game-changer. It will support everything we're already doing with streaming while making it faster, higher quality, and more mobile.
#2: Super aggregation - everybody is doing it
In an era when there are so many "TV" services available to consumers and consumers want to spend more time "watching" and less time "searching," super aggregation has become a critical solution to fulfill consumers' needs. These integrated viewing experiences make it easier for consumers to find what they want and keep them from switching between different platforms.
More and more brands are putting all their content under one name. Hulu (2007) was perhaps the first streaming platform combining content from rival TV networks. But now, this is becoming more commonplace with the likes of Paramount+, Discovery+, and others combining their various OTT streaming platforms into one. And this is not only true for American brands. We also see non-USA national broadcasters uniting to compete against global brands and provide consumers with one place to find and watch their favorite local content, such as NLZiet (Netherlands), Salto (France), and BritBox (England), among others.
Perhaps becoming a super aggregator is most critical to pay-TV operators. As younger consumers' viewing habits move away from traditional pay-TV models, pay-TV operators have seen declines in their TV subscriber base. Pay-TV operators were the original content aggregators, bringing in various TV channels under one subscription, with one integrated menu guide. However, we now see them aggregating their TV channels with their own SVOD service and 3rd party premium SVOD and AVOD apps. They count on the convenience to offer all apps under one roof to slow down and reverse their TV subscription losses.
Nowadays, pay-TV operators have the choice of two leading platforms to support their super aggregator strategy – Android TV and Reference Design Kit (RDK-V). More recently, Irdeto launched a defined set of security requirements and the certification process for RDK, which the company calls the Irdeto Certified Secure Experience (ICSE). The ICSE covers the security and the integrity of the experience for premium app vendors, achieved through a scalable premium app certification strategy. Premium app providers are increasing their security requirements to protect their content from piracy, and they recognize the importance of a flawless customer experience to retain their subscribers. This has been a big gap with RDK in the past and a massive challenge for operators for both pure OTT and hybrid deployments.
#3: Consumers demand personalized content and experiences
Operators must collect and analyze the data at their disposal to achieve scale and profitability and personalize their approach to keep their subscribers engaged on their platform. It starts with providing content in formats and varieties that appeal to the evolving preferences of their audiences.
Media companies must also offer experiences that are platform-specific to maximize the ease of use and increase the likelihood of engagement. Menu layouts will show what is new and trending, what they were watching, suggestions by genres based on the viewers' preferences on how to find their content. Nowadays, users can find personalized recommendations by what the user's connections have liked, by day of the week and time of day, or even the viewer's mood. And within these modules, they need to use data to decide how to present the movie content to each viewer - which actors or which scene to pick for the movie poster that will increase the likelihood of the viewer to remain on their service.
Finally, insight into consumers' willingness to pay for content will allow media companies to serve them to their desired level using a range of monetization models.
#4: Innovative models for OTT monetization
For decades advertising has been the backbone of live television. As consumer viewing behavior is rapidly shifting to streaming video platforms, it is only natural for companies to seek new innovative solutions to empower customers.
OTT content providers currently need to try different models to address customer needs and attract new subscribers. You have the subscription (SVOD), advertising (AVOD), and the transactional video on demand (TVOD) models. All three have essential shortcomings and benefits, but in the long run, a network's content library and audience demographics will determine which models are the best fit.
The prime example of platforms using AVOD as a content monetization system is YouTube, where advertising tends to last a few seconds, and the user can decide if they want to stop seeing it. The SVOD model offers a low price for everything, usually much cheaper than cable, and the TVOD model is more often used in sports and premium releases. The consumer will pay for exactly what they want to consume and nothing else.
New technologies are reaching the market to help streaming services overcome the current challenges of adblocking of ad insertion technologies, latency, and device fragmentation. Solutions such as Irdeto's Server-Side Ad Insertion (SSAI) can enable streaming platforms to explore new revenue streams by maximizing their premium OTT ad inventory value and serving targeted and personalized ads during live events and on linear channels.
Players will continue to experiment with different models, hybrid strategies and try new technologies to maximize their returns. Offering flexible options across all three models is a sensible policy for many services: clients can choose from a range of possibilities, and the services have the potential to generate more money from those monetization models.
The following eight to ten years will see an even more significant growth in streaming services than we've seen thus far, with more content being created for viewers to enjoy. it's never been a better time for content creators and brands to connect with their audiences during the up and coming golden age of OTT streaming.
