Over-the-Top Video Programming
In this Fast Take we will discuss video programming services delivered directly to the consumer via the internet – without a traditional bundled video subscription (like cable TV).
We will explore how new content creators have amassed large audiences, built valuable programming brands, and why traditional media companies such as Disney and Time Warner are flocking to the space.
The term “Over-the-Top” or OTT is a way to signify a consumer’s ability to access video content without a cable or satellite subscription. Instead, the consumer uses a broadband or cellular connection to bypass traditional TV services to watch what they want, when they want, on any screen they want. These consumers figuratively leap over their set-top box to enjoy a larger selection of content.
For many consumers, this option allows them to trim cable bill costs, as well as provides them access and flexibility to see programming not available on linear channels. Regardless of the reason, OTT is increasingly popular, and consumers are spending more time watching video content via connected devices, and demanding an unprecedented amount of control over their programming.
MAKING THE CUT
The term “cord-cutting” signifies the growing trend of consumers satiating their hunger for content without ordering a traditional TV subscription. Alarmists fear that this behavior, if widespread, will erode the established financial model that pays for most programming, ultimately leading to a reduction in quality content.
The number of “cord-cutters” and “cord-nevers” (Millennials who have/will never purchase a traditional TV subscription) is statistically low; OTT streaming, however, is increasing. Whether it’s a supplement to a consumers’ TV subscription or a replacement, one thing is certain: OTT is a genie that won’t go back in the bottle.
A PERFECT STORM ENABLES BEHAVIORAL SHIFTS
Fifteen years ago, the Consumer Electronic Show (CES) buzzed with excitement over streaming video and the connected home. Consumers could watch high quality video directly from their computer, and companies such as Atom Films and Broadcast.com emerged as content delivery services. The large screen computer monitor was touted as the centerpiece of the new living room as manufacturers promised an integrated media center for the home.
Then, reality set in. The monitors and CPUs were more expensive than traditional television sets. Video buffering interrupted most viewing experiences. High-speed internet connections (1.5 MBS at the time) were costly and sparsely available. Complicated connections and clunky interfaces made it easier to simply watch TV, leaving the early version of OTT to quietly die.
Over ten years later, the confluence of technological achievements such as increased broadband penetration, low cost computing power, smart phone adoption, and the tablet revolution have resurrected OTT.
Today, more consumers have access to fast connections (70% of US homes have broadband) and more personal screens capable of receiving content (70% of the adults own smartphones, 34% tablets). Microprocessors have become inexpensive, resulting in affordable Smart TVs (25% of US broadband homes) and $99 streaming players (%19 of US broadband homes).
With the foundation laid, consumers have adopted new behaviors that will gain even wider acceptance as the penetration of these technologies grow.
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