August 15, 2019 | Article | by REQ Marketing | Advertising
OTT Streaming Service Growth
What is OTT?
With internet speeds skyrocketing and internet provider prices dropping, it’s no wonder that over-the-top (OTT) services are reaching exponential levels of growth. You may be wondering to yourself, “so, what exactly is OTT?” Well, OTT stands for “over-the-top” and is described as a service where a user can access digital media through a provider that doesn’t require a traditional cable or television subscription. If you can pull your head out of the sand for long enough to hear about OTT, you’ve probably already subscribed to at least one of these over-the-top services. From video streaming services including the likes of Netflix and Hulu to music platforms such as Spotify and Apple Music, OTTs are cementing their place within an ever-growing entertainment industry.
According to Forbes, a study conducted by Vindicia found that on average, an American is subscribed to 3.4 OTT services at an average monthly price of $8.53. Let’s open our calculator apps and scratch our heads to do the math for all of America, or even globally. Oh, wait, Allied Research Market already did. As per their recent study titled “Over-the-top Market,” the OTT industry is poised to reach $332.52 billion in 2025. With such large promise in overall growth in such a young and burgeoning industry, are OTTs built to last?
Strengths & Opportunities of OTT
Let’s attempt to analyze the over-the-top industry by beginning with some strengths and opportunities. The concept of getting more while paying less is something that a lot of people can get behind. With OTT services, oftentimes users are able to access more of what they want, as often as they want and for pricing options as flexible as they would like.
Take Hulu for example, with exclusive content only provided through their streaming service, users must have a subscription to access this content that their friends have been raving about and dying to see. At this point, users have pricing options that give them the feeling of flexibility in choosing the plan that best suits their needs. Whether it’s paying more to bypass ads or adding on more users so the whole family can stream endlessly, these options open doors for almost all audiences.
Similarly, with internet connectivity that is not only becoming faster but increasingly accessible, the user pool for OTTs will continue to grow globally over time. Allied Market Research predicts smartphones, smart TVs, laptops, and desktops to be the main couriers of these OTT services. With 81% of Americans owning smartphones and 74% owning some form of computer in 2019 (according to Pew Research Center), many Americans will not have issues accessing these services.
Weaknesses and Threats to OTTs
While OTTs are positioning themselves to continue taking the entertainment industry by storm, there are still some major roadblocks lying on their path ahead. Though we know that Americans are averaging multiple OTT service subscriptions, it will be challenging to see how these services fair globally in developing nations. Where there lacks proper network infrastructure and internet access, there will be audiences who won’t find benefit in subscribing to these services. Over-the-top providers may see exponential growth in developed areas with stable internet speed, but they can only grow as fast as network development in other areas. Generally, it is not ideal to have one industry’s growth dependent on another’s. How OTT service providers work with or around the obstacle of global internet access could prove to be a pivotal factor in their success.
It’s also easy to forget about the original service providers: the good ol’ cable companies. It will be interesting to see how, or if, these companies choose to push back against the OTT providers to win back some of their market share. With some turning focus to specializing in providing internet services, the reaction of other traditional cable providers could become another hurdle for OTTs to get over.
As their global reach stretches further and further, there seems to be little reason why users wouldn’t continue substituting their traditional media providers with OTT services. How far that global reach can grow and the extent to which OTTs can make themselves accessible are what could hold them back, but the $332.52 billion estimated market value in 2025 seems feasible from where they are today.