In an increasingly technology driven world with the number of connected devices crossing 2 billion and growing, the movement from cable viewing to Over-The-Top (OTT) is natural. An OTT platform offers the flexibility to watch one’s favorite TV shows across a range of connected devices, something which the traditional model of cable viewing cannot offer due to technological limitations. From OTT platforms that work across Windows and Mac operating systems to iPhones and Android based phones as well as televisions across technologies, there is no longer any question of whether television programming will cater to this growing market. Instead, television operators are now scrambling to ensure that their OTT platform is able to provide the most powerful viewing experience to customers.
Decline of traditional cable and satellite television services
OTT is responsible for disrupting traditional cable and satellite TV services by delivering television and movie content through the Internet. The days of traditional bundling of television channels with added offerings and matching bills has now become passé as users no longer need to subscribe to cable or satellite channels and pay a hefty bill every month to be able to view their favorite movies or television programs. An OTT platform provides application- based service that streams content directly on to the user’s device by passing traditional content distribution channels-which a common man generally refers to as online TV. OTT platforms are increasingly being used in providing media and communication services related to the distribution of television and movie content because with live streaming and video on demand feature they prove to be much more cost effective for the ultimate user than the traditional cable and satellite platforms.
Internet TV is killing cable TV
The adoption of OTT platforms is highest among the younger age group mainly because of the convenience and flexibility of viewing television and movie content across multiple devices of their choice, something that is not possible with cable and satellite channels. With a growing number of broadband solutions and in turn the broadband subscribers without cable or satellite subscriptions, industry estimates place the number of broadband subscribers without TV subscription to be approximately 10 million, a majority of them being in the age group of late 30’s to early 40’s, the market is certainly lucrative. Netflix was among the earliest adopters of the OTT platform with quite a reasonable OTT billing and thus, has certainly reaped the benefits of being an early entrant with a subscriber base of 37.7 million in the US, higher than even HBO’s 31.4 million subscribers.
OTT revenue models
There are currently three different revenue models being used across the OTT platform
- Subscription based service also called SVOD, Netflix and Hulu being the most famous adopters of this OTT platform based revenue model
- Ad supported free service also called AVOD like Crackle
- Transaction based service also called TVOD like iTunes and Vimeo
Challenges before the rise of Online television
The biggest challenge faced by OTT platform based content delivery is distribution. For instance delivery through OTT platforms requires the users to have televisions connected to the internet, which means replacing traditional television sets with the newer internet equipped televisions. However the increasing adoption of OTT based viewing shows that users ultimately view it as a small price to pay for the convenience and affordability it offers in the long run, especially among the younger age group.