The digital revolution has ushered in new trends, such as the globalization of online streaming. Online streaming services like HBO Max, Netflix, Hulu, Amazon Prime, and Disney Plus are gaining worldwide popularity.
Netflix, the streaming giant that broke the mold, began by sending customers rental DVDs, a la Blockbuster. Netflix has been refining its product and algorithms for over a decade, causing and dominating the OTT video technology industry’s phenomenal growth.
A 35.3 percent year-over-year increase in direct-to-consumer subscription revenues has brought HBO Max and HBO domestic subscribers to 44.2 million. Netflix had 12 million subscribers ten years ago. Netflix now has over 140 million subscribers. The fact that those numbers are increasing by around eight million 1 / 4 shows the rapid growth of video streaming.
Competitors with deep pockets who have noticed the expansion of OTT streaming and recognize that it’s the long run of video service delivery are doing everything they can to compete head-on.
Despite geo-restrictions, people from all over the world find a way to access online streaming platforms. For example, HBO Max and Hulu are only available in the USA, but a VPN can help them stream HBO Max and Hulu in other countries where the online streaming services are unavailable, for instance in Canada.
How much has the video streaming market grown?
OTT subscriptions have risen from 150 million in 2014 to around 600 million in 2019. Subscribers should reach 1.1 billion by 2021. It will grow from $69 billion in 2018 to $129 billion in 2023. The US market penetration of OTT video is over 70%, with the average user having three subscriptions. Over 300 video streaming services exist globally, with over 200 in the US.
The remarkable progress of OTT video technology in a decade is due to two factors: First, improved internet speeds and high-performance consumer electronics (CE) devices capable of using OTT video technology will increase accessibility.
Second, the streaming industry’s innovations have greatly improved customer experience (UX). The video streaming industry now provides better content suggestions based on customer data analysis (which began in 2006 when Netflix awarded developers a $1 million prize).
OTT versus TV industry
OTT stands for the over-the-top distribution of video content. OTT is a technology alternative that allows the digital replication of the traditional home entertainment “stack” of consumer value propositions.
OTT is the delivery of video content over the internet rather than over broadcast TV or dedicated cable, fiber, or satellite networks. In many ways, OTT is a copy of the standard set of consumer video services, but it has surpassed linear TV.
Digital technologies enable many distinct characteristics and features that seem impossible with over-the-air, cable, or satellite distribution.
The flexibility of consumer offerings and price points that companies can provide and from which consumers can choose.
Finally, the content creators that participate in OTT and traditional TV are distinct. OTT has opened up the market to new content creators by removing distribution and space constraints.
A more defined and funded ecosystem of studios, production houses, and professional talent distinguish traditional professionals like Hulu. This group covers the TV content creation ecosystem before OTT.
A regular production schedule, a profit motive, and a regular revenue stream are required of professional amateurs (pro-ams). They only produce content for OTT, and many started as amateurs on YouTube or other social media (for example, The Young Turks).
3-Amateurs produce content infrequently, but they contribute heavily to the content community. Their work is widely consumed on Facebook, Twitter, and Snapchat. Many amateur videos have “gone viral” and been seen by millions. Sometimes a new but vital part of the content production ecosystem.
How has the growth of video streaming platforms impacted the broadcast industry?
The competitive dynamics of OTT vs. pay-TV have changed dramatically due to the massive growth of OTT video streaming. The only apparent losers are traditional broadcasters and cable TV operators, whose subscribers abandon them due to high prices and a lack of comparable options.
The phenomenon of “cord-cutting” has radically altered the broadcasting market. Nearly half of US adults aged 22-45 don’t watch traditional TV at all, and by the end of 2019, 22 million households will be without satellite or cable TV.
Cord-cutting also affects where advertisers spend their money. The total share of ad spending by traditional broadcasters is expected to fall from 36% in 2016 to 29% in 2021. These video streaming growth trends have posed a challenge to the traditional content production giants. Martin Scorsese and his $200 million dollar movies exemplified this.
Stopping revenue loss is another important monetization strategy. Piracy and thus illegal redistribution of video content is one of the most significant revenue leakages in the streaming industry. Piracy is expected to cost content owners over $50 billion annually by 2022, sapping the hopes of several new streaming services.
The answer is improvised content protection via DRM and anti-piracy services tailored to OTT video technology. Assume piracy is still an option for some. In that case, OTT revenue will plateau, stifling innovation and creativity, and decreasing the motivation and financial justification for digital rights holders to keep producing high-quality, compelling content.