OTT streaming becoming popular, 4 trends and predictions for the media industry

As more people shift to online channels and corporations collaborate in a sort of ways, the challenge is to spot the offerings and partnerships which will maximize revenue and attract customers. Over-the-top video providers are during a hurry to take advantage of the simplest opportunities.

 

It’s no secret that content generation, distribution, and consumption are disrupting television. In fact, by the top of 2017, there have been 120 million aggregate over-the-top (OTT) subscriptions within the us alone, indicating that the web is gradually overtaking TV because of the standard way people consume media.

Mushrooming partnerships and acquisitions are quickly reshaping the video media landscape. Potential partners, particularly among OTT video providers and traditional mobile network operators (MNOs), are vying for collaboration to capture the best market share, creating business alliances and merchandise offerings that are constantly evolving. the last word challenge lies in knowing what offerings to make and whom to partner with to maximize revenue while gaining customers.

Four trends are transforming the worldwide landscape and can play an important role in informing the strategy that ecosystem players must adopt to succeed.

1. Companies are experimenting with new strategies for content monetization

The digital on-demand content market remains evolving, and an array of companies are experimenting with alternate monetization models—the hottest being subscription video on demand (SVOD) and advertising (or ad-based) video on demand (AVOD). Consumers are spending more on SVOD like Netflix and Amazon’s Prime Video than ever before, making it the only largest video services payment method at 51 percent of worldwide spending (see figure 1). That said, transactional video on demand (TVOD), including electronic sell-through and digital rental, still provides quite half all OTT services.

 

 

In fact, traditional media houses that conventionally owned vast archives of legacy movies and tv content are reinvigorating and amplifying their growth through OTT-based distribution models. Many pay-TV operators are rolling out standalone subscription-based OTT services. Dish’s Sling TV and AT&T’s DirecTV Now are successful samples of affordable standalone services within the us . Sky has launched OTT services in key European markets, including the uk , Italy, Germany, and Austria.

As subscribers show a willingness to buy premium content, OTT players are arising with “fremium” models that provide free access to a specific content catalog to accumulate new subscribers along side premium content and services for paying subscribers to approach average revenue per user. The business model for free of charge content that’s supported through an ad-supported revenue may be a tough proposition, as seen by the worldwide leaders in digital online music: Spotify, iHeartRadio, and Pandora. Spotify and iHeartRadio have adopted a “fremium” model. Spotify derives quite 90 percent of its revenue from subscription fees, touting 75 million paying subscribers out of its 170 million monthly users. Pandora, on the opposite hand, generates most of its revenue through ads, with its user base primarily using the free service. Today, Pandora is losing money and is making an enormous push for Pandora Plus and Pandora Premium services, which have nearly 6 million paid subscriptions.

With growth in subscription-based services, transaction-based services also will increase within the end of the day and are the simplest means to sell content for a high average asking price . for instance , TVOD players like Amazon Video, Google Play, and iTunes largely offer similar content but justify a better price with new-release and blockbuster content and easy-to-use content-discovery tools.

 

2. Consolidations and strategic partnerships are changing the ecosystem

With competition intensifying and greenfield growth becoming tougher , the market is ripe with M&A talks and partnerships with companies seeking to expand into new markets or otherwise differentiate themselves. Notable examples include Verizon’s purchase of Yahoo, T-Mobile and Netflix’s streaming partnership, and Amazon’s Prime Video featuring content from HBO, Cinemax, and Showtime. Also, illustrative of consolidation trends are Disney’s bid to accumulate Fox and therefore the T-Mobile–Sprint merger dialogs.

Between 2011 and 2017, telecoms and pay-TV operators struck 332 deals with OTT service partners. Partnerships tend to specialise in three strategies: marketing simply as a brand and sales tool, service integrations into tariff plans or technical integrations into the interface , and commercial agreements with distribution , carrier billing arrangements, and white-labeled or cobranded offerings (see figure 2).

 

A growing regional focus is additionally developing through partnerships and acquisitions to deliver custom content. HBO is creating distribution alliances globally on its OTT platforms: HBO Now, HBO España, and HBO Nordic. Disney acquired all of Star India’s assets, including Hotstar, its OTT offering. Regional OTT video players are penetrating local markets by getting into strategic partnerships with MNOs. samples of these partnerships are Vodafone’s endless data offerings within the uk for SVOD services, like Prime Video and Netflix, and Shaw Communications in Canada offering its TV and Internet customers an integrated platform to observe Netflix.

Moving in the other direction to extend revenue via linear channels, OTT players are launching lite pay-TV services to supply linear channels at prices less than those of traditional players. Hulu, a completely online video service, launched its live-TV streaming services with quite 40 channels, including major networks CBS, Fox, ABC, and NBC also as select sports and entertainment channels, like ESPN, Food Network, and Cartoon Network.

We expect consolidation to continue, driven by the necessity for scale and leading to three distinct clusters of content players: mainstream content, sports programing, and niche localized content.

3. The OTT model is changing the worth chain of content creation and distribution

Streaming television is touching every corner of media, disrupting not only how content is distributed, but also how it’s created and by whom. Today, about 50 million households have OTT video, and consistent with comScore, they consume it within the same time-of-day pattern as traditional TV viewers.

Even through more TV viewers are adopting Internet-based distribution, the clear majority folks households are still consuming TV programming through traditional bundles—often additionally to OTT offerings. In fact, consumers are spending more on at-home entertainment, a trend which is predicted to grow.

Based on current viewing habits and untapped video segments, an enormous growth opportunity exists in live and linear OTT services, which are expected to be an integral a part of subsequent generation of OTT video. Pay-TV providers are within the best position to develop live streaming services that exploit content that’s best experienced in real time, like news, weather, talk shows, and sports. But this might change because the content owners begin to develop their own platform and OTT partnerships.

In an attempt to optimize reach and maximize revenue, sports properties are exploring developing their own OTT services and partnerships with leading online video providers. Formula 1’s new owner, Liberty Media Corporation, plans to point out races on its OTT platform in almost twenty-four markets this season with unique feeds and multi-level personalization that’s not available on the other platform. Meanwhile, Wimbledon Tennis Championships not only has a fantastic spread of TV-broadcast rights but also features a social media presence with 157 million viewers on Facebook alone as of 2017. On the web video provider partnership side, Amazon signed deals to point out the National Football League’s Thursday night games and therefore the Association of Tennis Professionals tour highlights. Facebook has signed contracts with multiple sport properties, including big league Soccer, the planet Surf League, big league Baseball, US college football, the UEFA Champions League for European football, and lots of more.

While the normal cable model focused on content unbundling, we expect content to eventually re-bundle in an OTT construct. Eventually, we expect more consumers to migrate most of their TV consumption to Internet-based distribution.

4. Mobile is surpassing TV to become the most growth channel for content delivery; MNOs are playing a central role in distribution as cord cutting accelerates

The mobile channel has become a widely accepted medium for video delivery, overtaking traditional TV because the leading growth channel. Even with TV billing arrangements and glued broadband bundling, mobile is quickly growing to become the dominant growth channel for service distribution. As MNOs accelerate mobile broadband and LTE deployment, access to high-quality mobile streaming is growing, particularly within the emerging markets of Asia Pacific, Africa, and therefore the Middle East . At an equivalent time, the surge in MNO partnerships and bundling deals is incentivizing viewers to consume more content on their mobile devices.

While 79 percent of households still buy traditional cable or satellite service, cord-cutting rates are continuing to accelerate within the us . Total pay-TV subscribers declined 3.4 percent in 2017, and “cord-never” households that didn’t buy any traditional sort of TV service within the first place are at 13.5 million and growing

MNOs are quickly realizing their growing importance as an important sales and marketing channel for premium OTT video and other content services. As MNOs support growth in OTT video consumption over subsequent decade, they aim to encourage the utilization of mobile data plans and uptake of mobile-first consumption by offering higher-margin visual entertainment offerings. Mobile partnerships have surged to quite half all recent OTT video bundling deals, validating the growing trend of consumers’ mobile adoption. This trend is predicted to continue as more MNOs subsidize or bundle content at no additional charge to drive upsell and retention.

Racing toward the longer term
Taken as an entire , these four trends affect the media ecosystem’s participants in several ways. Where some see maturing markets, others see fresh opportunities to evolve their businesses to a replacement industry standard for product and repair delivery. And yet all OTT providers are during a hurry to take advantage of the simplest opportunities, and agile ecosystem partners will join them during this pursuit.