OTT is the acronym for over the top and is the name for film and entertainment distribution over the internet (Kokaram et al., 2015). It is typically used in connection with services offered by other traditional broadcasters. OTT allows users to subscribe to a traditional cable or satellite pay like Time Warner Cable and Comcast. Users need a broadband connection to access filmography distributed by OTT. In the OTT world, viewers watch content whenever, when, and where they want on any device they want (Sandhu, 2017). Traditional distributors will still likely play a crucial role in the growth of OTT as they specialize in areas networks are not well-versed such as sales marketing and customer management. The reason why OTT developed slowly is that it did not have many content owners and even after the selling over the web problem was addressed; they still did not have it in them to sell directly to consumers.
How OTTs Change Consumer Practices
The expansion of digital media creates competition between cable television and online streaming service providers. The convergence of communications, information, and entertainment in conjunction with an increased number of services have changed how people access and consume content media (Fuduric et al., 2018). The shift from traditional TV broadcasting to online media streaming services is commonly referred to as cord-cutting or cord shifting (Fuduric et al., 2018). Influencing the modern-day consumer goes beyond advertising to considering the needs, wants, and preferences of consumers. The industry has been reshaped by technological innovations influencing consumer behavior. There has been a 121 percent increase in viewing of streamed on-demand programs and films (Tapanainen, 2017). Some of the factors that influence consumer adoption of OTTs include cost, ease of use, and social trends (Lee et al., 2018). In modern society, age shows a marginal impact on the adoption of OTT. This means that the majority of subscribers of the OTT media are millennials.
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If one were to observe the trends in film or TV consumption for the past 50 years, they would realize that there has been a significant change in term of content produced an increased number of channels. Today, there is more content being aired on multimedia platforms that cannot be contained in television alone. The term on-demand was coined to refer to the technology that allows people to choose their television content (Steele et al., 2015). OTT comes after tradition film distribution through DVDs and has been successful in changing ways people view films at home. OTT, in this case, is a choice for many considering they can access a world of content with ease, at lower prices, and convenience.
OTT attributes such as user-friendly platforms contribute to the change of consumer practices. Consumers will often opt for an interactive system that can provide them with video content at their convenience over traditional content media. The only barrier to the adoption of digital content media is the ease of use (Schreurs et al., 2017). This is evident among the aging populations who may not be very familiar with computers or new technologies. This premise can suggest that the aging population prefer cable television, whereas the new generations opt for OTT. The future of content creation can be deduced to be leaning towards OTTs. The rise in cord cutting is approaching a full market scale in the US. According to TDG research, and spends in OTT is projected to reach 40 billion dollars by 2020 (Wison, 2018).
OTT is essentially a market on the move. On-demand services search as Netflix and Amazon are replacing traditional broadcasters with their ease of accessibility on smartphones and mobile devices (Roberts, 2017). Consumers demand TV and video is changing. The ease of access to filmography is changing consumer practices. Whereas an uncertainty remains over the future of TV, streaming services are investing in product licensing and producing their content. According to Deloitte digital media survey in 2018, in the US, 48 percent of consumers stream content every day of the week, 41 percent of consumers in the UK have purchased the subscription-based video (Deloitte, n.d).
Research suggests that technology influences the passion for consuming. When the content people would want to see is found online, they would be drawn to research the content in online platforms. Another significant attribute of OTTs that attracts consumers over traditional TV is the opportunity to watch content such as TV shows at once instead of watching weekly episodes. They are more flexible and can be accessed at any time since the consumer decides what to watch at what time. Given programs airing on television are not live events, consumers can watch programs at later periods. The process through which consumers watch programs after their live broadcasts on OTTs is called time shifting (Reiber, 2016). This is not the case for cable television, which showcases different content at different times. OTT shapes consumer practices through influencers. Word of mouth is a significant factor that drives consumer behavior and decisions (Zhang & Benyoucef, 2016). The viewers who stream a program will share their views, whether positive or negative to their peers. Discovery of content via word of mouth recommendations creates a stronger loyalty among viewers, and as the discussions of content is important to the viewing experience.
What is OTT?
Over-the-top streaming is any method of delivering streamed content to consumers over the internet. A definition of OTTs by ABI Research documents OTT as online video from service operators supplied by different channels over fixed mediums such as computers and mobile devices such as smartphones and is dissimilar to pay TV (Park, 2015). There are generally numerous accepted means and methods of delivering film content to users, but OTT adopters prefer over the top. OTT is also described as cord-cutting, with more people unsubscribing from traditional video providers (Park, 2015). The move disrupts traditional structures of billing and film distribution. The move to OTT has been widely accepted as it a far much more straightforward business and improves the old ways. Expats can use OTT channels such as Skype to talk with their relatives back at home. Travelers and residents can access a world of music at their fingertips thanks to OTT streams such as Spotify. Television viewers no longer have to worry about missing their favorite shows as they can access them anywhere and at any time. With more than 160 million combined subscribers, Netflix and Amazon are the dominating OTT providers in the global mediascape (Wayne, 2017). Media branding aims to attract target audiences and build brand equity.
OTT can largely be broken down into three different revenue mediums. Subscription-based services (SVOD) such as Netflix, Hulu, and Amazon; Free and ad-supported services (AVOD) such as Sony’s Crackle, and transactional services (TVOD) such as iTunes, Vimeo, and Amazon’s instant video (Fiorino, 2019). How people choose these options is entirely based on preferences and convenience. Whereas no one medium is expected to die so that the others can survive, how the providers approach such options will determine how the OTT will break through all the clutter. The growth of OTT is determined by discovery. Whereas the modern OTT industry is dominated by companies such as Netflix and Hulu, other services such as Amazon, HBO, and CBS All Access are getting into the streaming business (Digitalsmiths, 2015). Discovery details identifying specific niches and content that can attract OTT subscribers. As more players get into this field, it will get harder to get noticed. Consumer behavior is a close aspect to watch to ensure an OTT provider stays ahead of the competition
Determinants for OTT growth include content availability, convenience, features, user experience, and net neutrality (Sujata et al., 2015). Some of the key considerations for adopting OTT mediums include high-quality and reliable video or audio streaming. High-resolution video and audio streaming for OTT mediums is the first deliverable that can bait and hook users to OTT offerings and aid in developing a relationship with the streaming company. The streaming service should be accessible across multiple technological channels such as a computer, tablet, and smartphone. They should also allow multiple users. OTT providers are investing in reliable cloud computing services to ensure that their deliverables are offered seamlessly. A focus on user experience (UX) is an important influencing factor to user traction. Users of OTT will more likely choose providers that have the best user experience. The UX is all about convenience.
A good OTT provider should have a powerful content management system. It should have the capacity to store and manage large volumes of media. The deliverables should also experience minimal disruptions. Content management is not merely a marketing tool; it is a significant necessity for managing innovations (Tidd & Bessant, 2018). OTT providers should invest in a management system that tracks, manages, and delivers high content. OTT can appropriately monetize their content. The provider should try different options to identify what works and what does not to stay within the competitive market. An OTT should not stay enclosed within its niche. To stay connected to customers, the provider can work with commercial channels and facilitating bringing quality products to its viewers and creating a wider structure of the business.
OTT services are also scrambling out the mobile space. People are bypassing mobile service providers to consume and share content. In messaging, new OTT services have phased out text messaging from conventional mobile service providers such as AT&T. People can now bypass the costs of traditional text messaging by using online services such as Facebook, Whatsapp, and Instagram. If the current trends of cord cutting and the move to OTT are anything to go by, the pace of OTT subscriptions is expected to accelerate in the coming years. According to a report published in Variety Magazine, Convergence Research Group estimates that 4.56 million households are opting to ditch pay TV by the end of the year (Roettgers, 2019). In the report, 34 percent of US households do not have a conventional TV subscription. Convergence estimated that 4.01 million U.S subscribers opted for cord cutting. the report also holds that by the end of 2019, TT subscribers will surpass the number of pay-TV subscribers (Roettgers, 2019)
How does OTT Change Film Distribution
With the advent popularity and increased number of internet users, the future of film distribution is certainly OTT. Given a majority of people can now access the internet on their smart devices, distributing content to consumers via the internet through streaming becomes the most logical and most marketable choice. OTT giants such as Netflix and Amazon are already in movie production and distribution. What started as a TV-show subscription service has now grown into an enterprise invested in film production and distribution. Service providers such as Netflix are buying rights to films. Developing a social content network that connects people through films can help entrepreneurs a window of opportunity for competition in market share (Governo et al., 2017). OTT services pay close attention to social multimedia computing to capture the social activity and interaction of users to understand the trends in the film industry.
The exclusive theatrical window serves as a new niche or window for film distribution in the modern film industry. The National Association of Theater Owners documents that the average time theatrical releases of the film take to reach content media has decreased from 138 days in 2005 to 91 days in 2015 (Hower, 2016). The result of this evolution of film distribution has impacted motion picture trends through increased Box Office revenue, awards, streaming services, and the abundance of low-budget motion pictures. Whereas big box office numbers showcase the success of a film, winning awards provides a benchmark for the quality of a film. The markets with high broadband penetration such as North America, Europe, and Asia are establishing services and networks to incorporate OTT video capacity.
OTT video providers are interrupting or providing alternatives to traditional theatrical film distributions. They are increasingly incorporating exclusivity models and day-release models for film distributions. Consumers can look forward to the release or availability of theatrical releases in digital day-and-date releases. Additionally, the increased quality of home television and audio systems provides a challenge to traditional theatrical releases paving the way for OTT domination (The Conversation, 2018). OTT providers such as Netflix have high-security protocols to minimize piracy as opposed to theatrical releases. However, there is still a challenge for content subscription as hackers can get a hold of digital copies. As more people shift to online channels, companies are joining forces in many different ways to identify partnerships and offerings that will maximize revenue and attract consumers. OTT providers are constantly exploiting the best opportunities to bring the best content to consumers.
There is evidence to suggest that OTT content generation, distribution, and consumption are disrupting traditional television. At the end of 2017, there were approximately 120 million OTT subscribers in the US; this showcases that internet subscriptions are on a trend to overtake TV in media consumption (ATKearney, n.d). OTTs are partnering with mobile network operators in a bid to capture the greatest market share, create business alliances, and deliverables that are constantly evolving (Joshi et al., 2016). The challenge that remains is knowing what offerings to deliver and who to make partnerships with to maximize revenue. Some of the observed trends are that companies are experimenting with new models for content monetizing. Subscription video on demand (SVOD) and ad-based advertising are the most popular OTTs being exploited by providers testing the new market. Consumers are spending more on SVOD, making it the largest video services provider with about 51 percent of the global spend. More than half of US homes are now subscribed to an online streaming service collectively spending 2.1 billion dollars a month (Wang, 2018).
OTTs are changing the value chain of content creation and distribution. According to ComScore, over 50 million households now have OTT video, and they consume it at the same time as traditional TV. In the US, consumers are still using traditional TV and at the same time adopting internet-based distribution, and the trend is expected to grow (ATKearny, n.d). The success of OTT film distribution is influencing the development of OTT content for other content such as sports. Sports companies are exploiting OTT video to maximize and optimize revenue (Layton, 2015). Technological advances have made the mobile channel becomes widely accepted as the best medium for video delivery. OTT partnership with mobile networks also works to incentivize viewers to consume more content on their mobile devices (Comarch, 2017).
The video represents the most lucrative revenue generating segment within the media and entertainment sector. According to PwC, video subscriptions and advertising made 420 billion dollars in 2015 (Dasgupta, n.d). The study also documented that 78 percent of US consumers are subscribed to at least one OTT service. The majority of subscribers are millennials, and they promote OTT either through cord-cutting of traditional TV or becoming OTT subscribers right away. PwC consultancy adds that OTT ecosystem revenues are expected to grow by over 20 percent per annum (Dasgupta, n.d). One of the reasons for the success of OTT is that it allows users to interact actively with content, unlike traditional TV. An OTT like Netflix suggests for end-users similar content as the content previously watched or searched.
OTT transforms content distribution and communication as it purposefully directs long-term relationships with consumers to create more sustainable value. The success of OTTs is based on consumer interaction and lead generation. A customized experience with consumers gives OTTs room to diversify their offerings. Companies like Zappos and Gilt are successful through their compelling interactions shaped by aggressive remarketing strategies they find in shoppers. It can, therefore, be deduced that the success of OTTs is based on interactions with their audience, unlike traditional TV (Balis, 2015). The traditional TV had no further interaction with consumers and only depicted a one-time exposure of brands or content to consumers, this way consumer behavior only depended on liking or disliking the brand advertising (Haider, 2018). The OTT has incentivized this by allowing brands to communicate with customers on an ongoing basis. OTTs use metrics to create success such as aggregate reach, engaged reach, and time spent to determine true fellowship (Balis, 2015).
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