Traditionally you were required to subscribe to a traditional cable or satellite pay-TV service in order to watch your favorite series and movies on your TV set-top box at home. But with the increase of broadband speed and its adoption, companies like Netflix and Hulu changed the way we consume our entertainment. We can now watch whatever we want, whenever we want. The video-streaming service Netflix made it clear that a successful video service could be delivered over the top of the public internet, rather than through the expensive, closed networks of broadcasters and telecom providers. With their disruptive model, Netflix now has 93.8 million subscribers globally.
Growth of the OTT market; what is next?
Experts say that within the next 5 years, viewership hours of live-linear streaming OTT content will surpass those of traditional broadcast TV. So now that the market is open, everyone wants a piece of it. No one wants to miss out on not having their app on the home screen of a popular TV service. And that is why OTT is the sexiest term in entertainment right now.
Big companies like HBO and Amazon entered the market after Netflix led the way. Recently, Disney announced that they as well are about to enter the OTT TV market with their own platform. Disney wants to take the opportunity to make more money through its own service than through licensing its content to Netflix. And that could be a wise decision as they have a tremendous amount of video content available that serves a niche market (mostly children).
Earlier this week, Apple announced to set USD 1-million budget to create original TV shows and movies, meaning they are getting ready to compete with Netflix and Amazon. As a result, it will become harder and harder to get noticed as more players get into the field.
OTT the top content – Giving viewers what they want
In order to become and stay a successful OTT player, you need content – good content. Netflix found out that content is expensive, and the best syndicated TV shows kept getting snapped up by cable channels or could be taken back like Disney recently did.
By analyzing their own viewer data, Netflix found out that people would binge-watch serial dramas in a way that they would not do for sitcoms. House of Cards was the very first Netflix show that the streaming service used as a sort of big-data analytics testing ground. Netflix roburt analysis showed them everything they needed to know about how much viewers loved actor Kevin Spacey, the British version of House of Cards, and director/producer David Fincher – who was well-known for his work in The Social Network. Those three pieces of data made them certain the show would be a home run. They pumped USD 100 million into the show without even having seen a pilot. That money amounted to one-third of the USD 300 million annual budget for original shows.
How do OTT platforms bring their content to the user?
OTT platforms use an online video platform or OTT backend. An OTT backend typically handles all the media, users, subscriptions, security, and rights of the OTT platform. The backend communicates with different consumer devices. The IAB defines OTT devices as those that can connect to a TV to facilitate the delivery of internet-based video content, also referred to as connected TV.
The most common hardware devices used for streaming are currently streaming boxes/sticks (Apple TV, Google Chromecast), smart TVs, and sites. There are some development challenges to bring your content on every device, because each device has their own development stacks for creating apps.
The OTT and SVOD industry is evolving and is increasingly gaining more commercial power each and every day. When content owners and service providers are able to overcome the technical challenges, they have a huge opportunity in front of them. Focus on growing, producing great content, and protecting your subscriber base, and increase the average revenue per user.