The way we consume entertainment has changed.We no longer turn to traditional television to keep up with news, events, watch a movie or a game, and much of this is due to the continued rise of OTT, a service platform that you can access on various devices and from wherever you are.
The OTT platform takes advantage of the way people consume entertainment, rapidly adapting to major changes in consumer trends, and in a world where the future seems uncertain but the growth of technology continues to accelerate, the key is to evolve, and not to fall behind.
Internet access is almost within everyone’s reach and more entertainment companies are betting on online content, so within a few years certain methods of consuming entertainment, such as traditional television, may disappear, supplanted by OTT, AVOD and SVOD services.
What do OTT, AVOD and SVOD mean?
OTT stands for “Over the top”, and refers to entertainment or content that is reproduced on an internet platform and available on your Smartphone, Smart TV, computer or connected TV device. Familiar examples of OTT channels are the popular Netflix, Amazon Prime, Hulu and Disney + platforms.
VOD (i.e., Video-on-Demand)allows you to access specific content at any time through an OTT service. When you go on to platforms such as Amazon Prime or Netflix you find a library of titles and a search option at your disposal, and all you have to do is click play to start viewing the content.
The rise of VOD in recent years has generated a notable increase in linear flow, so many entertainment companies have had to adapt to a more demanding consumer, able to choose what to watch and when to watch it. Currently there are two main types of VOD, with AVOD referring to content in subscription mode.
At Jump Data- Driven Video, our strategies and plans are geared to optimizing and taking advantage of your SVOD, AVOD and Pay TV services.
The OTT Boom
Netflix, which made its debut in 2007 and has since become one of the leading streaming platforms, has been a major force behind OTT. Later companies such as Amazon and Hulu followed suit, paving the way for a wave of hundreds of services of this type, which led to the rapid growth of this industry, betting on a promising future in the world of entertainment.
According to a study conducted by Leichtman Research Group, by the end of the third quarter of 2020, at least more than 70 % of American households had one or more streaming services, with 55 % having at least two services.
However uncertain the future feels, events such as the current pandemic make it clear that OTT services will continue to grow thanks to certain factors that continue to drive this boom.
According to Juniper Research, by the end of 2025 OTT subscriptions will have reached two billion. In monetary figures this is equivalent to about USD 194.2 billion, more than the estimated value in 2019 of USD 85.16 billion.
Other factors that contribute to the growth of OTT
As a result of the coming of age of OTT, traditional channels now must compete with large platforms such as Hulu or Netflix, and adapt quickly to new consumer trends in the entertainment industry.
Traditional channels are resorting to a strategy that can be described as a hybrid system, which combines subscription services (SVOD) with income generated through advertising (AVOD) to achieve monetization targets and reach a wider range of consumers. Companies like CBS Access and NBC’s Peacock have chosen this model to compete with the most popular platforms.
Another factor that has greatly contributed to the OTT boom is the growth of mobile data traffic. According to Ericsson, it had already grown by 68 % in the third quarter of 2019. Mobile data plans and the desire to access all types of content from anywhere have transformed OTT services into a benchmark to satisfy these types of needs, thus contributing to the increase in their popularity.
But none of this is enough to maintain the growth of OTT. The creation of original content through high-quality, own-brand productions will also favor OTT platforms. So long as the viewer remains hooked and their expectations and needs are satisfied, this industry will continue to grow.
Advertising on OTT, an encouraging future
Many companies are already clear that OTT services are the way to go, and gradually more advertisers are following suit and migrating from traditional television to OTT services, considering the number of viewers using cable television services as their entertainment medium.
According to a survey conducted in a webinar by BIA on the issue of “all eyes on OTT” given its boom in 2021, 41 % of the professionals surveyed said that their advertising investment increased considerably when they applied it to OTT platforms, compared to 26 % of respondents who said they increased their advertising investment in linear TV.
Experts estimate that by 2025, the current spending on advertising of around $990 million will increase to $ 2.37 billion, betting on OTT, AVOD and SVOD services and the constant evolution of consumer trends.