As I dig through the leftover crumbs from the last bag of chips, I realise that I’ve been binge-watching Peaky Blinders for 10 hours straight.
While I’m wallowing in the guilt of “I-have-so-much-work-to-do”, I sometimes wonder what makes Over-the-Top (OTT) platforms trick your brain into believing you have to give up your sleep! The psychology of OTT addiction and the escapism it offers is just astounding!
Sometimes, despite having full knowledge of how my body responds to this kind of binge-watching because of the feelings of pleasure I’m experiencing due to the release of dopamine and how my brain is pseudo-addicted to the show, I still can’t stop watching it. The OTT has become a survival mechanism for some of us in this pandemic, offering a much-needed respite from the cacophony around. While binge-watching has become a common phenomenon, the OTT space is now crowded with diverse content of all hues and languages.
Given that the OTT space has captured our lives and consumed it, I decided to dig a bit deeper into its future. But first, let us explore what OTT platforms do to personalise your experience of watching any series or movie on their platform. Ever wondered how Netflix is suggesting you to check out “what people around your area are watching” or “find out what your friends are watching”?
To do that, every OTT service provider needs to understand the what, why, how and when their viewers are watching any content. This requires a complex analysis of the data and aggregation, spread across various platforms, gathering key insights into understanding the video flow, viewer experience, choices, etc. Not stopping at that, personalised recommendations, gender-based listings, binge-viewing functions have been introduced to take viewer engagement and experience to a whole new level!
Wondering how our TV viewing experience came to this? Well, earlier people used to plan their lives around their favourite TV shows. Now, on-demand services are providing round-the-clock content that is tailored around one’s lifestyle. Take The Kitchen App as an example. It offers live-streaming classes where you can not only follow along but also interact with the instructors. Plus, the network stars whom you’ve previously only been able to watch on TV will answer questions live via the app.
This shift in consumer habits has shaken up the cable TV industry! A testimony to this is how Comcast and other traditional cable providers have been witnessing a steep dip in their revenues while fortunes of OTT platforms like Netflix, Amazon Prime, Hulu, Qiyi and several other players have been going through the roof.
Here’s a snapshot of the world’s biggest streaming services by the number of subscribers as of November 2019 (Q3 2019).
The numbers point to a rise in binge-watching phenomenon across the world – an 18% rise – from 40 minutes at a time in 2018 to 2 hours in 2019. That apart, consumers are now watching more online video services than ever before. A report states that viewers spend an average of six hours 48 minutes per week consuming various forms of video content while TV viewing fell 10% in 2019. The report reveals 70% of consumers subscribe to at least one streaming service (compared to 59% in 2018) and nearly three in four consumers (72%) now use dedicated streaming devices (compared to 67% in 2018).
Going by the growing numbers across the world, several studies indicate that Asia is primed for OTT growth. Asia benefits from the fastest growing OTT subscription rate globally along with high rates of online video consumption. “Competition between OTT providers is also strong with both international and local players operating in the region, increasing supply options for buyers. This growing interest in OTT in Asia correlates with worldwide market growth, which is predicted to grow by $77.73 billion in the period between 2019 and 2023. Of the 9 markets surveyed, Indonesia and India show the biggest preference for OTT platforms and services,” states the Rubicon Project report.
In India, it is evident that the OTT market is rapidly growing but still is yet to mature as TV remains a dominant medium for entertainment. Market research firm eMarketer predicts solid growth levels of around 26% over 2020, which would take the Indian count of Netflix users up to 10.2 million, which would give us a penetration rate of 3.1% – up from 2.8% in 2019.
As connectivity improves in India, the digital video market is set to grow in size, reaching just under 370 million by 2021 – or 66% of video users. It is a market on which several OTT players such as biggies Amazon Prime, Netflix as well as significant ones like Hotstar, Viu, SonyLiv, MX Player, BigFlix, SunNXT and others are currently focussing their businesses on. In addition, with smartphones being primary devices for consumption of online video content, some OTT players have gone further with mobile-only subscriptions given the $5 billion predicted value of the Indian streaming market. With new players like Disney+ entering the market in March 2020, the streaming space in India is likely to explode and diversify further.
With the OTT market expanding, the future of OTT and TV could directly depend on apps. That means better streaming devices and quality of the gadgets that could also ultimately determine the biggest smartphone players in the market.
Going by the current market trends in the OTT space, its future will depend on these 5 factors:
1) Digitization: Better digital/ fiber infrastructure and 5G network to handle a massive increase in digital traffic caused by increasingly flexible and mobile use of media offerings. Beyond that, they will strongly drive the digitalization level of video production processes. Artificial Intelligence (AI) and analytics become key elements of smart content discovery with intelligent recommendation functionalities.
2) Co-existence of traditional and alternative content: Linear and on-demand content will be equally important and will coexist peacefully. Video-on-demand will soon become mainstream in all population groups. At the same time, linear TV remains significant. Especially live content such as sports and major events will preserve the high importance of traditional, linear television.
3) Targeted advertising: TV and video advertising will adapt to new formats and increasingly focus on personalized ads. Leveraging consumer data will enable stakeholders to hyper-target their ads and content, and perhaps, maximize customer experience and value. However, the extent of targeted advertising still depends on regulation and consumers’ willingness to share their data. Advertising marketing will be something between a fully automated process and individual sales negotiations.
4) Moderate regulation: Market regulation will be moderate compared to the highly regulated media industry today. The lower level of regulation for online and mobile offerings leads to a reduction of the regulatory pressure for all market players, especially for traditional media companies. In particular, lower regulatory pressure will lead to a higher level of freedom when it comes to cooperation between market players and the concentration of media ownership. Net neutrality may continue to exist.
5) Market consolidation: The global media industry will be partly consolidated. Stakeholders will make use of strategic mergers, acquisitions, and alliances to strengthen their content quality and distribution capability. Moreover, numerous market players will shift along the value chain by expanding their businesses. Broadcasters will not only focus on their core competencies but also occupy some other positions in the value chain.
Over-the-top (OTT) services become more important in the future TV and video market, whereas tech players play a minor role. Looking at content production, it is expected that both traditional studios and non-traditional providers will be part of it.
A Deloitte Report predicts four scenarios for the future of OTT as illustrated below:
SCENARIO 1: Universal supermarkets
In the Universal supermarket scenario, broadcasters and content producers need to focus on the implementation and positioning of strong content brands. This branded content must be used to improve bargaining positions when negotiating partnerships with content distributors. Also, content brands should seek more international licensing and leverage. To secure additional revenue streams, broadcasters and content producers must extend their business models beyond the TV and video market into other fields, such as merchandising.
SCENARIO 2: Content Endgame
Larger content producers need to invest more strongly in international content production — directly or via subsidiaries — to keep pace with their big global counterparts. Besides this focus on content, larger producers must strengthen the fields of customer relationships and advertising-marketing in the Content Endgame scenario.
Meanwhile, smaller broadcasters and content producers need to position themselves as inimitable national partners for global players through unique, local, and strongly branded content. Furthermore, they must explore alternative distribution channels through strategic alliances with DPCs or IP network operators.
SCENARIO 3: Revenge of the Broadcasters
In this scenario, broadcasters must keep an eye on the general conditions of the video market. They need to be aware of their political role and must exert influence to prevent adjustments in the regulatory framework towards a less strict regime.
SCENARIO 4: Lost in diversity
In the Lost in Diversity scenario, broadcasters and content producers must clearly place the emphasis on their own strengths. In a world in which everyone does everything, only a strong, focused strategy and appropriate investments will secure the future market existence of broadcasters and content producers.
Going by the four scenarios and the current trends during the pandemic, it is clear that consumers are choosing OTT as their preferred choice to have access to the content they love. While it does pose a challenge to traditional cable TV providers, on the other hand, the OTT space offers a tremendous opportunity to those who want to re-invent themselves with foolproof strategies and robust infrastructure. That way, OTT players can be a part of a bigger, transforming market where they don’t compromise on the quality of services while simultaneously balancing their business, increasing reliability and bringing down the overhead costs!
Well, let us hope that this growing market doesn’t create a content bubble like the dotcom bubble that burst right into our faces two decades ago!