Trends Shaping OTT: 2021 and Beyond
Accelerated Trends and New Opportunities
Around 12 months prior to now, COVID-19 had started sinking its teeth, resulting in many countries going into lockdowns to curb the virus spread. Several industries took a hit in the months that followed as business operations were cut down, yet OTT (over the top) streaming services came out on top. This was driven mainly by the surge in online streaming, as people spent more time at home and turned to video consumption for entertainment. Nielsen reported a 60% increase in global video consumption in 2020.
Competition for viewership intensified, with Disney Plus, HBO Max, and Peacock making their foray into an already packed streaming market. With the surge in activity, we witnessed a rapid acceleration of predominated trends and the introduction of new opportunities for revenue generation. The North American OTT market is set to double its revenue to US$94 billion by 2026, according to Digital TV Research.
Here is a round-up of developments in the OTT industry and trends to watch for this year and beyond.
The Era of Interactivity and Engagement
With a variety of streaming services to choose from, viewers are looking for a differentiated experience that keeps them engaged with a platform. The shift towards an engaged viewer has evolved the streaming landscape into a two-way flow of content and interactivity between viewers and providers. This new era is known as OTT 2.0, in which viewers do not just watch content but also engage with it. One of the strategies used by providers is the gamification of the streaming experience, as seen with Zee5 offering casual games for subscribers. Streaming services use the data generated by viewers to personalize their experiences by pushing relevant and contextual content that enhances the feeling of being up and close to what viewers love.
Multi-View and Synchronized Watching
Two ways of viewing content that gained a lot of traction in 2020 were multi-view and synchronized watching. Multi-view is the option for viewers to watch streams from different angles. Such a capability creates an immersive viewing experience, especially for sports and live events where in-person attendance is impossible. Synchronized watching allows people to enjoy content together even though they might not be in the same location. This type of social viewing gained popularity with tools, such as Netflix Teleparty, where a group of friends or family can enjoy a movie together while adhering to mandated social distancing. All such streaming experiences are becoming a standard expectation by viewers and will be extended with more features in the future.
Worldwide Adoption of 5G
5G delivers the next generation of cellular network technology and will be deployed across much of the world, providing faster and reliable internet speed. The benefits of 5G would be noticed in high definition video streaming, live sports, event streaming, and instances where low latency is required. Furthermore, 5G technology will facilitate various other experiences, such as high-bandwidth content like immersive applications, VR (Virtual Reality), AR (Augmented Reality), and even 360-degree live-streaming.
The OTT streaming market is packed with an abundance of options for viewers. However, this abundance has turned out to be a bane due to the countless number of subscriptions a viewer has to deal with to enjoy their favorite content. As content is fragmented across many OTT services, viewers will churn between platforms to access the content they like. Holding onto viewers would require a balance between offering premium content at the right price. Moreover, OTT providers looking to amass more viewers also implement different monetization models, such as pay-per-view and AVOD (ad-based video on demand) as an alternative to SVOD (subscription video on demand). Another strategy used by providers is bundling OTT subscriptions with other services, such as what we see with Disney+’s latest bundle which combines Disney+, ESPN+, and ad-free Hulu. Bundling of services is beneficial to both providers and viewers. Providers can keep their viewers engaged on their platform longer without having to produce more of their own content. In the meantime, viewers wouldn’t have to switch between streaming providers to enjoy their favorite content.
Targeted OTT Advertising with AVOD
More providers would explore ad-based streaming, partly due to the subscription fatigue we spoke about earlier and primarily due to the revenue potential it brings. According to Digital TV Research, AVOD would be the largest OTT growth sector in North America, and revenue is projected to reach $32.61 billion by 2026. A key reason advertisers are drawn to OTT advertising is the niche audience base it can target through streaming devices and services. Targeted advertising minimizes ad spend waste by showing suitable ads to the right audience. Moreover, OTT advertising can enable interactive ads where viewers can interact with what they see rather than passively watching them.
OTT for Sports
There would be an increase in OTT streaming services for sports. As traditional TV subscriptions continue to drop, live sports was one area that was yet to transition to online streaming fully. However, the limitations of attending sporting events caused by COVID-19 and the emergence of 5G has created a stronger push towards embracing OTT for Sports. Through OTT, sports fans can easily live-stream their favorite sporting events from any device along with a plethora of possibilities for interacting and engaging with the platform, whether it be fan reactions, betting, fantasy leagues, and many more. Moreover, OTT platforms catering to sports can explore numerous revenue streams not possible in traditional TV, such as targeted advertising, personalizations, live stats, etc. DAZN is one of the recent players to enter the OTT sports streaming market and is launching its service in more than 200 countries.
With the accelerated pace at which the OTT industry is evolving, we cannot emphasize enough the importance of having a strategy based on a proven technology stack designed to capitalize on the opportunities that the future holds.