Lesson 2

OTT Marketplace & Trends – decline & growth of competition and opportunities

 The outlook for OTT is looking stronger than ever with a CAGR of 17.4% and an impressive projected revenue that is stipulated to rise to USD 245bn by 2028 (Future Market Insights, 2018). Even though this booming industry has caused much disruption in the way media and entertainment are consumed, it’s evolution has not stopped. Technical advancements in video encoding, encryption and delivery methods to the changing business scenario centring on convergence and globalization, new technologies and business development push the continuous transformation of OTT.

Here, we look at some of the significant trends that will shape the OTT industry in next few years:

  • Efficient encoding/transcoding

Officially announced back in 2015, with a backing of most technology behemoths, AV1 is no doubt a disruptor in the OTT industry. With a proven increased efficiency over the existing High-Efficiency Video Coding (HEVC) and VP9 codecs, it could potentially lead to realization not only in financial savings but also increased QoE.

Introduction of official support in Microsoft Windows (beta currently), Google Chrome and Mozilla Firefox, and with the stipulated release of supporting hardware chips later this year, AV1 is bound to gain much traction.

  • Subscription price may Increase

Now, this is not a news anymore. Netflix has increased its subscription price recently. So, what does it suggest? SVOD platforms such as Netflix, Prime Video, Hulu etc. are spearheading the OTT industry and share the credit for making streaming popular across the globe. While ease of access and slashing data and smartphones rates fuel live and on-demand streaming, 2018 added original contents to the list as well. Netflix originals, Prime Video originals kept winning millennials and GenZ alike making the leading names in the industry a household name everywhere. So, if subscription prices increase this year going forward, don’t get amused. We bet you can’t resist the appeal of the binge-worthy shows either.

  • Rough weather to continue for Pay-TVs

Research shows on an average, users will spend 170.6 minutes every day on the internet; video streaming will reach around 332.2 million subscribers, and Roku, Fire TV, etc. will be the main streaming devices behind this mammoth growth. The statistics combined with the upsurge of regional streaming services and the launch of new platforms from media houses such as Disney, Warner Brothers etc. clearly suggests that for Pay-TVs, the battle against OTT will be far from over.

  • Ad-supported Offline Viewing can be a reality

The increased number of OTT users will automatically attract advertisers to take advantage of the platform and market their products or services. Thus 2019 is going to witness substantial growth in digital advertising.

According to a report, 49% of Gen Z and 48% of the millennials spend much of their time on online streaming. Advertisers have now a smoother and smarter way to cater to their target audience and earn big. Streaming platforms with AVoD revenue model are in a win-win situation here as they can make their service completely ad-free by charging more or can simply reduce the price, increase user base and keep on earning revenue from digital advertisers.

Also with 42% US and 50% UK SVOD users downloading videos for offline viewing, advertisers may soon come with an option to embed ads in the content itself. This is again a win-win situation for both advertisers and video streaming service owners as latter can charge extra bucks from their users for completely ad-free viewing. There will soon be dynamic ad insertion technique that will let you stitch advertisements with video content at CMS level rather than a client’s browser.

  • Artificial Intelligence to make streaming smarter

The OTT industry has already got a glimpse of the power of Artificial Intelligence (AI) through the recommendation engine. Recommendation engines are by far the most evident and talked about use case of AI in OTT platforms. It is especially helpful for platforms which have been functioning on a subscription-based model as it is instrumental in content discovery and segmentation based out of user persona. Recommendation engines are going to be smarter and better with their recommendations in 2019, thereby increasing users’ lifespan on any website they are browsing on. Be it OTT or e-commerce sites.

  • Being Interactive with AR & VR

Research has shown that the combined market size of augmented and virtual reality will reach around $215 billion by 2021. There are more than 1,760 VR startups working for different industries which include advertising, education, tourism, and many others. And along with all of these, 2019 is expecting to experience an additional revolution – the VR headsets might not require the support of external devices anymore. So, both of these technologies will make their remarkable moves in this year, and later on as well.

  • Live Streaming & Short-Form Contents will stay in Vogue

Research says that viewers spend 8X more time on live streaming than on-demand videos. Starting from FIFA World Cup to Academy Awards, last year, live streaming was rolling on the table with all major events being extensively covered. The backstage chitchats in leading entertainment and sports events are immensely popular among viewers. So, get ready to have a sneak peek of your favorite stars just by tapping the “start streaming” button.

  • Streaming UHD Videos in Low Latency

With greater appreciation of OTT industry comes greater demand for high-quality videos. Thus viewers are resistant to compromise 4K streaming with service interruption. This calls for availing the most competent CDN to assure low latency to your viewers. According to several studies, even a smaller lapse in videos can cause you loss in viewers number. Improved video delivery will top the list of deliverables for leading streaming service providers and especially the ones who are starting off.

  • Soaring Demand of Cloud Hosting

2019 is expected to be the year of cloud-based infrastructure for OTT platforms. Along with extensive storage space for online store owners and their users, it will also assist them to instantly launch and scale their services.

  • Sachet Pricing will enter the Move

2019 may see the OTT service providers offer the users with comparatively low-priced subscription plans for a week than for a month. This will facilitate the viewers to enjoy online content at a relatively lesser price. They can switch to subscribe to monthly plan whenever they feel like.

Until last year, OTT industry was more focused on technical improvisations and monetization. But in 2019 the focus will be more on viewing pattern and content consumption behavior. While quality content will be the primary driving force for OTT services, it would be interesting to see the pricing strategy of bigger players and how they balance things out when they carry on with their expansion plans.

  • Convergence through data

OTT Ad spending has reached a whopping $2bn in 2018 and providers are investing more and more in the correlation of viewership with consumer purchasing behaviour. The convergence of OTT with e-commerce, aided by advanced analytics and personalized ad-injection is opening up even more revenue models for providers. This also brings us to the next trend of personalization.

  • Personalizing for loyalty and revenue

Earning the loyalty for the new generation of cord-cutters and cord-nevers takes more than just great content, they expect tailored services based on their choices and preferences. Personalization isn’t just demanded from the content though, recommendations, subscription plans, metadata and even frontends have to be personalized to cater to the new era of subscribers.

  • Demand for high-quality content

All the technology and business trends, increased prominence of efficient encoding and delivery methods, capable user-end hardware are paving the way for the production and delivery of UHD 4K, 8K and HDR content. Providers are focusing more and more on the production of such content and as 4K HDR TVs are becoming common in households, the industry will see a great demand for it in 2019.

  • Evolving mobile media consumption

With video stipulated to be 78% of all mobile traffic by 2021, there is an ever-increasing need for higher bandwidth and technical capabilities. The next generation of cellular communication, 5G, is poised to solve this with the promise of low-latency and speeds up to 10Gbps.

And, with the telcos and broadcasters partnering up to leverage on 5G’s capabilities, the way the mobile users consume media content is going to evolve in 2019.

  • Blockchain-powered content protection

Blockchain adoption in the OTT domain is expected to increase in 2019 and beyond, as it can help content creators and distributors in storing, cataloguing, copyrighting, and distributing digital content. Blockchain’s immutable, decentralised public ledger will also enable OTT platforms to introduce more effective access policies and restrictions. This will help ensure that digital content remains seamlessly accessible to authorised users, while protecting it against copyright infringements and online piracy.

  • OTT beyond entertainment

The combination of mobile internet and smartphones has already contributed significantly towards democratising education all over the world. With any and every bit of information just a finger-tap away, learning is now not confined to classrooms alone. OTT services will help boost this revolution by further expanding the dimensions of a classroom. From being a mere physical part of a building, a classroom will soon become a metaphor for millions of people live-streaming lectures, across the globe and across time.

This shift from classroom-based education delivery to an online self-learning environment will be accompanied and bolstered by video lectures, live webinars, and interactive quizzes. OTT-based digital learning will also enable learners to pursue multidisciplinary education by taking up relevant online live or recorded courses, as per their requirements.