A lot has been written about the decline of TV and the rise of OTT.
But how fast is the decline? By the end of 2018, a total of 33 million subscribers in the US would have canceled their pay-TV subscription for OTT.
This is huge! Broadcasters always predicted Television’s decline but they never thought it would be this quick.
There are various factors for this shift: cheap and reliable internet, growth in usage of mobile and smart TV devices, higher cost of cable, and the flexibility to watch content on the go.
What are broadcasters doing during these changing times? They are launching their OTT service to stay relevant.
Table of Contents:
1. Usage of mobile phones and smart TV devices has grown exponentially
2. At the same time, television’s usage is on the decline
3. Ability to build a direct relationship with users
5. Additional ways to monetize content
Usage of mobile phones and smart TV devices has grown exponentially
Over the past few years, traffic on mobile and smart TV devices has grown significantly.
Let’s talk numbers. Global mobile data traffic is projected to grow from 28 exabytes per month in 2019 to 77 exabytes per month in 2022. That’s an astonishing growth of 3x in 3 years!
Global mobile data traffic from 2017 to 2022 (in exabytes per month) (Source – Statistica)
At the same time, Smart TV’s household penetration is projected to grow from 11.5% in 2013 to 32% in 2019.
Smart TV household penetration rate worldwide from 2013 to 2019 ( Source – Statistica)
In fact, 82% of all internet traffic will come from video in 2021(let that sink in)
It’s clear that users are spending a higher amount of time on the internet watching videos. Broadcasters are launching their OTT service to ensure they have a part of the ever-growing pie.
At the same time, television’s usage is on the decline
Consider these numbers: In 2017, AT&T’s DirecTV and Dish Network lost 554,000 and 995,000 satellite subscribers, respectively. At the same time, their OTT products DirecTV Now and SlingTV added 888,000 and 711,000 subscribers, respectively.
For the first time in the history of television, advertisers are spending more money on digital than traditional TV.
The writing is on the wall: TV is on the decline and OTT is on the rise. Broadcasters are launching their OTT service to stay relevant, tap into the growing OTT market and attract customers.
Ability to build a direct relationship with users
As a broadcaster, you are dependent on cable and DTH platforms for distribution. What if you could cut out the middleman and directly reach your fans?
Yes, you can do that with OTT. Users just need a device and an internet connection to watch your content anywhere – be it on the web, mobile or Smart TV.
Since you are not dependent on a middleman, you get paid from your users directly. You can simply integrate a payment gateway and receive the money directly in your bank account.
With OTT, you also get better insights about your users. What are their likes and dislikes, watch history, location, gender, devices they use and much more. This data can be used by the editorial team to create relevant videos and increase engagement. Using recommendation algorithms, you get to recommend videos personally to each user at scale.
The insights can also be used by the sales team in getting campaigns with higher CPM rates.
Setting up a TV channel is expensive. You need to pay uplinking and downlinking charges, carriage fees, content delivery fees, distribution fee and more. These costs add up to hundreds of thousands of dollars every month.
There are additional downlinking and carriage charges if you want to broadcast to new geography.
But with OTT, you don’t need to pay any of these charges. The cost of launching and managing a multi-device OTT service is very low when compared to the cost of launching and maintaining a Cable TV channel.
Setting up an OTT service is cost-effective. You already have the infrastructure and resources to produce content. You can use your existing content to get started with OTT.
If you plan to use SaaS platforms like Ventuno to launch your OTT apps, there are only 2 types of additional costs:
- Fixed cost – Monthly platform fee
- Variable cost – streaming, storage, and encoding costs, depending on consumption.
The best part with OTT is there is no cost involved in making your content available across the globe – you can reach users all over the world.
Additional ways to monetize content
OTT gives you an additional way to monetize your content. You can charge your subscribers, run advertisements or monetize with the hybrid model.
If you plan to run ads, you can get ad-tags from programmatic and direct advertisers and deploy them in your ad-server. Ventuno’s platform has an inbuilt ad server to manage all your ads in one place.
If you plan to charge subscribers, you can integrate your preferred payment gateway with your service and get paid directly. Ventuno gives you a simple dashboard to manage all your payments.
OTT revenue from both advertising and subscription is booming.
Subscription revenue (SVOD) is expected to grow from $25 billion in 2017 to $69 billion in 2023. During the same period, Advertising revenue (AVOD) is expected to grow from $20 billion to $47 billion.
OTT is the future of TV. Viewers are preferring OTT over traditional TV and are ditching cable faster than expected.
Cord-cutting has become a real concern for broadcasters as the adoption of OTT among users has been really fast. OTT has become essential for their survival and it is in their best interest to launch their streaming service sooner than later.
What are your thoughts on this article? Add your comments below or reach out to me at firstname.lastname@example.org if you would like to talk!
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