OTT is rapidly becoming a way to increase revenue and major corporations are piling in. At its heart, Over The Top (OTT) content is the term used for the delivery of film and TV content via the Internet, without requiring users to subscribe to a traditional cable or satellite pay-TV service like a Comcast or Time Warner Cable.1
Because all things OTT “sits at the center of the inevitable and unstoppable merger between the worlds of television and digital video,”1 it’s a hugely attractive proposition. Earlier this year, CBS said it expects their over-the top business to generate $800 million in revenue by 2020. Half of that revenue would come from CBS All Access and the other half from Showtime’s over-the top product. By 2020, the company project each should have about 4 million subs.2
The OTT playing field is vast and getting exponentially larger every day – but different business models are confusing some. YouTube, Amazon and Hulu, the big three ad-friendly over-the-top (OTT) producers, have helped legitimize all things OTT by virtue of their quality, original content production.4 FierceCable.com put together a list of each group based on their primary business model.
Here are just a few; for a full list head here. 3
SVOD (subscription video on demand)
Top players: Netflix, Amazon, Hulu
Strengths: The most appealing to consumers with an all-you-can-eat video buffet available at very reasonable prices, averaging about $9 per month. More than 41% of U.S. homes now access an SVOD service, a Nielsen report says.
Weaknesses: The massive popularity of SVOD has content owners hiking up the prices to license digital content, eroding profits. And despite signing on tens of millions of subscribers, some analysts worry that Netflix, in particular, may simply run out of subscribers to sign up.
Ad-supported on-demand
Top players: YouTube, AOL On, Yahoo Screen
Strengths: With TV ad dollars increasingly shifting over to digital advertising, ad-supported online video, from OTT juggernaut YouTube to content services like PopcornFlix, has a huge potential opportunity ahead of it. Within a decade–some say within five years–online video advertising revenues may skyrocket to match or surpass TV ad revenues. A year ago, that possibility was almost inconceivable.
Weaknesses: Online video advertising, like online display advertising, is hobbled by fraud issues. Brands don’t have tremendous confidence that their video ads will be shown where and when they want them to be.
User-generated content (including live streaming)
Top players: YouTube, Twitch, Facebook, Vimeo
Strengths: Viva la user revolucion! Since YouTube first launched on April 10, 2005, making it easy and fun for average Internet users to upload their videos to the waiting public, user-generated content has been a dominant and driving force for online video.
Weaknesses: For all its popularity, companies are still trying to figure out how to make money with this thing.
According to James Shears, writing for AdExchanger: “Though traditional measurement, such as gross ratings points, is lagging on OTT, the possibilities for advertisers are still immense. Through logins, IP addresses and device IDs, data can be mapped to effectively target appropriate audiences on smart TVs, gaming consoles and other streaming devices. And perhaps even more important, given the targeting, someone could actually measure if the ad drove a consumer to action or purchase.”4
If you aren’t eyeing OTT, you’re looking in the wrong direction.
1http://digiday.com/platforms/what-is-over-the-top-ott/
2http://www.broadcastingcable.com/news/currency/cbs-expects-make-800m-ott/154668
3http://www.fiercecable.com/special-report/where-netflix-youtube-and-hbo-now-fit-ott-industry
4http://adexchanger.com/tv-and-video/newfronts-original-ott-content-advances-programmatic-tv/