Over the top (OTT) is a term used to refer to content providers that distribute streaming media as a standalone product directly to viewers over the internet, bypassing telecommunications, multichannel television, and broadcast television platforms that traditionally act as a controller or distributor of such content.
The term is most synonymous with subscription-based video on demand services that offer access to film and television content ,including existing series acquired from other producers, as well as original content produced specifically for the service.
OTT services are typically accessed via websites on personal computers, as well as via apps on mobile devices ,such as smartphones and tablets, digital media players ,including video game consoles, or televisions with integrated smart TV platforms.
OTT has become more widespread, and today is present on the marketplace as three distinct business models: SVOD: Subscription-based services e.g. Netflix, AVOD: Advertisement-supported services e.g. Crackle and TVOD: Transactional services e.g. iTunes, Amazon Instant Video.
With multiple business models and the rise of high-speed broadband, a lot of OTT players enter the market, with varying degrees of success.
Furthermore, while the OTT market continues to grow, it may not be having the detrimental impact on traditional services such as DTH that might be expected.
In June 2017, Limelight Networks released its semi-annual ‘The State of Online Video’ report, which stated that the OTT market is growing fast and is yet to reach saturation. Some 38.4 per cent of respondents (up 1.5 per cent year-on-year) subscribed to one OTT service, 18.8 per cent (up 4.4 percent year-on-year) subscribed to two, and more than 10 per cent (up 2 per cent year-on-year) subscribed to three or more, leaving 31.2 per cent (down 8.9 per cent year-on-year) without an OTT package.
The trend is expected to continue as demand for higher-quality content becomes more important than price. Meanwhile, December 2016 saw 26.1 per cent of respondents report that they watched most of their online content from OTT services, which grew to 29.8 per cent in June 2016.
In another surprise move, it turned out that millennials (those currently aged 18-34) were the most likely to have abandoned YouTube in favour of OTT. Furthermore, some 23 per cent of millennial respondents now live in OTT-only households, while 61 per cent subscribe to both paid-for TV and OTT services, much higher than the 52 per cent average across all age ranges.
Of particular note from the report was the 14.7 per cent of respondents who indicated that they would never terminate their paid-for TV subscription, up from 10.5 per cent in May 2016. The top reasons for leaving a paid-for TV subscription were price increases (29.4 per cent), the ability to subscribe directly to desired channels (19.5 per cent), and more sports and other live events becoming available online (9.4 per cent).
Meanwhile, 2017 saw Northern Sky Research (NSR) release its ‘Linear TV via Satellite: DTH, OTT and IPTV, 8th Edition’ report, which found that despite the challenges, the linear TV via satellite market will continue to grow steadily.
According to their finding, “Although OTT platforms have become increasingly mature in North America, elsewhere the development of OTT platforms is in its infancy and is expected to have limited impact on traditional video platforms in the short to medium term.
Nevertheless, longer-term, it will essentially be compulsory for DTH and other pay TV platforms to offer OTT as a supplementary service, to both increase retention amongst existing subscribers, and signing up new subs based on exclusive content, and effectively becoming a ‘one-stop shop’ for content as much as feasibly possible.”
While OTT is a growing sector, it isn’t without its challenges. The top hurdle, without a doubt, is the availability of high-speed broadband. Netflix itself states that speeds of 3Mbps are required for SD video streaming, 5Mbps for HD, and 5Mbps for 4K. For those without high-speed internet access, OTT services are only available at sub-par quality, or not at all.
With image quality becoming more important among a significant proportion of consumers, notably sports, documentary and action movie enthusiasts, being unable to achieve 4K content through OTT services, when it is available via other DTH services, makes OTT less attractive.
The attainment of high-speed broadband access on a global scale still has a very long way to go, despite widespread broadband initiatives and investments. The average global broadband speed was 5.6Mbps, with the highest average speed found in South Korea at 26.7Mbps.
However, many regions, particularly in Africa, have speeds of less than 1Mbps, while other areas have no connectivity whatsoever. India has an average broadband speed of 6.5 Mbps. Indeed, only 69 per cent of global IP addresses had average internet speeds greater than 4Mbps, while 32 per cent had 10Mbps or greater speeds, and 7.1 per cent exceeded the 25Mbps which is required for 4K streaming. Beyond technology, there’s also the vital matter of content. Without the right content, the OTT services will struggle to win or retain subscribers.
In the near future, we can be reasonably sure that OTT services do not constitute a direct threat to traditional broadcast services. A significant part of the global population still has no reliable high-speed broadband access, making DTH broadcasting via satellite or fibre a more cost-effective alternative, and, in some cases, the only option. Moreover, Broadband TV and OTT are mainly through smart phones and are very uncomfortable for the eyes which affect the vision.
Even with the eventual roll-out of high-speed broadband around the world, it’s unlikely that traditional broadcast services will see too much decline in subscription numbers, provided they keep ahead of the game. The most probable outcome is the adoption of hybrid services, with households opting for a mixture of DTH distribution and /or cable TV content, in addition to OTT services. This can be counted on so long as traditional broadcasters continue to get the content right; in demand and exclusive.