“OTT”, Over-the-top TV, refers to video content that is streamed over the Internet through an app or device onto a TV without requiring users to subscribe to a wired cable, telco, or satellite TV service. One camp sees OTT as being within the confines of a TV screen. Others include delivery to smartphones, laptops, desktops and tablets.
OTT is providing consumers with a tidal wave of original programming delivered in new ways. While Linear TV viewing is still by far the norm (around 75% of all viewership), OTT has already become mainstream. About two-thirds of TV households have an OTT subscription. Viewership has quickly expanded and skews younger and more affluent than linear TV.
OTT is also offering marketers with new tactics including experimenting with ad loads and creative options. This direct-to-consumer business model marks the biggest shift in the entertainment industry in over a decade and is of wide international scope. Expectations for OTT in the US are sanguine, with the platform poised to gain a larger share of viewership and ad revenue in the coming years.
The streaming services that provide programming can be “ad-supported” (e.g. You Tube, Pluto, Crackle) or ad-free Subscription Video on Demand SVOD, e.g. Netflix, Amazon Prime (Hulu has both options). Streaming devices provide access using sticks and boxes, e.g. Amazon Fire TV, Google Chromecast. Smart TV’s are another option.
Over 100 scripted programs were streamed in 2018, including Emmy winners Stranger Things, The Handmaid’s Tale and The Marvelous Mrs. Maisel. Virtually all major networks (and their studios) are making at least some of their vast library of programming available via OTT, e.g. many seasons of programs like The Office. With all this content on demand, consumers have turned to “Bingeing”- the practice of watching multiple episodes of a single show.
In terms of advertising and marketing – one example on the positive side is that people watching media on OTT devices usually cannot simply close the window and skip ads, jump to another browser tab, or install an ad blocker to get rid of the ads altogether. On the other hand, lack of frequency caps (i.e. the same ad delivered repeatedly during a single episode) appears to be a problem for both advertisers and viewers.
The burgeoning OTT industry is facing many questions and issues. Among the more salient are: To what degree will consumers switch from linear TV to OTT? How will advertising perform in OTT environments? How many streaming video services will people want, or afford? Will the industry consolidate? Flourish? The ARF will continue to provide members with updates.
Source: The ARF. (2018, October). Knowledge at Hand: The OTT revolution, The ARF.
To read the full Knowledge at Hand report, click here.
Editor’s Note: The ARF recently issued a report on OTT as part of our “Knowledge at Hand” series on key issues. This article is taken from that dossier.