Over-the-top (OTT) platforms are online services that provide video and audio streaming content over the internet, without the need for a cable or satellite subscription. OTT platforms have become increasingly popular in recent years, especially during the COVID-19 pandemic, as more people seek entertainment and information at their convenience and comfort. According to a report by Statista, the global OTT video market was worth $178 billion in 2021 and is expected to grow by 9.72% annually to reach $297.9 billion in 2026.
But what are the reasons behind this shift in consumer behavior? And what are the trends and challenges that OTT platforms face in the competitive and dynamic media landscape? In this blog post, we will explore these questions and provide some insights into the OTT industry.
Why are people leaning towards OTT platforms?
There are many factors that contribute to the increasing popularity of OTT platforms among consumers. Some of the main ones are:
- Cost-effectiveness: OTT platforms offer a variety of content at affordable prices, compared to traditional cable and satellite services. Consumers can choose from different subscription plans, pay-per-view options, or even free ad-supported services, depending on their preferences and budgets. For example, Netflix users worldwide watched 452,000 hours of content in 2021, paying an average of $10.99 per month. In contrast, the average cable bill in the US was $217.42 per month in 2020.
- Convenience: OTT platforms provide flexibility and convenience to consumers, who can watch their favorite content whenever and wherever they want, using any device that has an internet connection. Consumers can also pause, rewind, fast-forward, or skip content as they wish, without being bound by schedules or commercials. Moreover, OTT platforms offer features such as offline viewing, personalized recommendations, parental controls, and multiple profiles, to enhance the user experience.
- Diversity: OTT platforms offer a wide range of content in various genres, languages, formats, and quality. Consumers can access local, regional, national, and international content from different creators and providers, catering to their diverse tastes and interests. For example, YouTube is one of the most popular free video streaming platforms in the world, making it one of the best OTT platforms. YouTube enables both content creators and businesses to earn a profit from video and display advertisements on the platform. That’s because more than 40% of global shoppers purchase products and services they discover on YouTube. Furthermore, OTT platforms also produce original and exclusive content that attracts and retains subscribers. For instance, Netflix has invested heavily in original content production, spending $17 billion in 2020, and winning 44 Emmys in 2021.
- Innovation: OTT platforms are constantly innovating and adapting to the changing needs and expectations of consumers and the market. They leverage advanced technologies such as artificial intelligence (AI), cloud computing, big data analytics, blockchain, and 5G, to improve their content delivery, quality, security, personalization, monetization, and customer service. For example, Disney+ uses AI to create realistic animations and visual effects for its shows and movies. Amazon Prime Video uses cloud computing to store and stream its vast library of content. Netflix uses big data analytics to understand its user behavior and preferences. HBO Max uses blockchain to protect its intellectual property rights. And Verizon uses 5G to enable faster and smoother streaming for its customers.
What are the trends and challenges for OTT platforms?
As the OTT industry continues to grow and evolve, there are several trends and challenges that OTT platforms need to be aware of and address. Some of them are:
- Competition: The OTT market is highly competitive and fragmented, with many players vying for a share of the audience's attention and wallet. According to [Muvi], there were over 1,000 OTT platforms operating globally in 2020, offering different types of content and services. Some of the leading players include Netflix, Amazon Prime Video, Disney+, Hulu, HBO Max, YouTube TV etc., while some of the emerging players include Peacock TV (NBCUniversal), Paramount+ (ViacomCBS), Discovery+ (Discovery Inc.), Apple TV+ (Apple Inc.), etc. To survive and thrive in this crowded space, OTT platforms need to differentiate themselves by offering unique value propositions, such as exclusive content, niche genres or markets, low prices or bundles etc.
- Regulation: The OTT industry is also facing increasing regulation from governments and authorities around the world, who are concerned about issues such as content quality, censorship, taxation, data privacy, security, piracy, etc. For example, in India, the government has introduced new rules for OTT platforms in 2021, requiring them to self-regulate their content, adhere to a code of ethics, establish a grievance redressal mechanism, and comply with government orders. In the European Union, the Audiovisual Media Services Directive (AVMSD) has been revised in 2018, requiring OTT platforms to ensure that at least 30% of their content catalog is European, to promote cultural diversity and support local production. In the US, the Federal Trade Commission (FTC) has been investigating OTT platforms for potential antitrust violations, such as unfair competition, market dominance, and consumer harm. OTT platforms need to be aware of and abide by the various laws and regulations that apply to their operations in different countries and regions, and balance their creative freedom with their social responsibility.
- Engagement: The OTT industry is also facing the challenge of engaging and retaining its subscribers in a saturated and volatile market. According to a report by Deloitte, the average US consumer subscribed to four streaming services in 2020, but also canceled one or more services in the same year. The report also found that 62% of consumers said that they signed up for a free trial or a discounted offer, but planned to cancel the service within six months. The main reasons for canceling or switching services were cost, content, and ads. To increase their subscriber loyalty and reduce their churn rate, OTT platforms need to focus on delivering high-quality content that meets or exceeds their subscribers' expectations, offering flexible and attractive pricing and packaging options, and providing a seamless and satisfying user experience across devices and platforms.
Comments
Post a Comment