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InContext / An inside look at the business of digital content

The OTT superhighway: What to expect as everyone goes OTT

July 8, 2019 | By Dana Ghavami, CEO—Spotible@Spotible

Digital video in 2019 looks like digital content at the dawn of the information superhighway when it started to be commercialized in formative ways. With booming audiences for streaming video, new OTT video services are gearing up to ‘party like it’s 1999’. While the industry has been overshadowed by Netflix for quite some time, a slew of new “Princes” is making their presence known, including Disney, WarnerMedia, and NBCUniversal.

The OTT service establishment today—spearheaded by Netflix along with Amazon, Hulu, and Apple—spend a staggering $20 Billion plus dollars annually on original content. At the same time, up and comers like Pluto TV are trying to replicate the success of traditional TV over the Internet. And, under the ownership of Viacom, they’ve started to stream premium original content in a channel lineup that now includes BET, Comedy Central, MTV, and Nick.

On the other hand, YouTube is attempting to crossover from being a user-generated network to a general entertainment content destination. And numerous video services have emerged that cater to more niche audiences or content segments. These range from Vimeo’s traction with small business organizations like yoga studios to offerings like Lifetime Movie Club for original drama fans and Britbox for domestic fans of British programming.

The point of saturation will inevitably arrive and the number and mix of AVOD and SVOD will eventually play out. If this concerns you, remember that cable boasts thousands of channels. The digital tuner on a TiVo can access over 1,300 of them. Nationwide, without duplication, there are tens of thousands of channels and over 500 premium scripted shows.

History is a reliable predictor of the future. Looking back, linear TV grew five-fold in channels and shows during the golden age between the 90s and early 2010s. Even so, total viewing time increased by just 15% as monitored by TV measurement companies like Nielsen. Ultimately, free time and content consumption are on an X-and-Y axis.

The heaviest TV viewership comes from a core of the total TV viewing population, which is comprised of those over 55 years old in age. However, the median age of a viewers for newer and more tech savvy OTT platforms is just over 30 years old. Clearly, the preferences and expectations of younger audiences are going to shape plans for premium content offerings in the future.

Keep in mind that the proprietary premium content offerings of services like this will be a clear differentiator. Consider the much hyped Disney+ OTT service. In addition to boasting its deep well of animated and family programing, Disney is also the owner of the Star Wars franchise, which provides an intergalactic bridge to the post-millennial generation. And let’s not forget that WarnerMedia will soon distribute the Star Wars of our time: Game of Thrones. That franchise alone could provide the foundation for a significant OTT presence.

So, what will happen next in OTT as established and upcoming services prepare to battle? Most likely, the future will not belong to a handful of OTT services alone. Rather, we’ll see the proliferation of OTT brands that cater to niches of interest and genres, as well as those providing general TV style content offerings. These services will range widely in terms of content and tactics and the growing OTT audience will allow them to propagate on the Internet like TV channels did on cable.

It is less about who is going to take over OTT and more about who is going to take their audience for a great ride on the TV superhighway.

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