Nitin Sharma, Senior Vice President-Distribution, 9X Media Pvt. Ltd
The advent of over-the-top (OTT) distribution is disrupting Indian digital media landscape and changing the dynamics of the industry. OTT content bypasses traditional pay-TV distributors, such as cable companies or multichannel video programming distributors (MVPDs), and offers programming directly to consumers (DTC).
In this new world of media distribution:
- Content creators are trying to determine how to best monetize their content and how to optimally interact with their partners and audience.
- Traditional aggregators and distributors of content are competing with OTT companies for subscribers.
- A changing advertising ecosystem is causing a ripple effect in terms of monetization of content and the ow of ad revenue to OTT services.
Some traditional and digital media companies have a clear OTT strategy. However, many others have not struck a clear path forward. Even for companies that have a clear strategy, advances in technology and the ecosystem will continue to create uncertainties and opportunities in the market. To win in the OTT market, players will need to move quickly and develop a strategy that allows for flexibility, agility, and rapid implementation.
The current OTT ecosystem is wide open. The content ecosystem is complex, with ever more players, platforms, devices and partnerships that need to be carefully managed.
Why has the popularity of OTT Skyrocketed? Market analysts predict strong growth of OTT over the next 4 years, especially in the subscription video (SVOD) and ad-supported OTT video markets. Consumers, analysts, and market commentators consistently view OTT more favorably than pay-TV in terms of convenience, quality of streaming, price, and other key drivers. This is why OTT consistently receives a much higher "net sentiment" score than pay-TV.
Viewers Watching – and Wanting – More OTT Content
Consumers are spending more time watching OTT TV each year, with most of this increase in video viewing coming at the expense of traditional MVPDs. It is projected that OTT video viewing will continue to increase by 32 percent annually through 2020.
Impact on Content Distributors and Creators
OTT is disrupting traditional distribution paths and legacy business models. This disruption is being driven by several market forces and trends, including:
- Disintermediation of traditional distributors and unbundling of content
- Exponential growth in demand for OTT-delivered media, especially in the millennial segment
- Explosion of new OTT offerings by new entrants into the market
- Competitive pricing through new business and operating models
Declining revenue and subscribers will put signicant pressure on traditional TV providers who offer content in big bundles. Even though it may not happen overnight, more subscribers will cut the cord. With the advent of OTT distribution, the variety of business models has expanded, most notably direct-to-consumer (DTC) arrangements. In an OTT world, it is likely that the business models will continue to blend as companies look for more ways to monetize their content.
Since the inception of OTT, the number of offerings has rapidly expanded. Some pay-TV companies have responded to OTT disruption with the "TV Everywhere" concept, which allows subscribers to access programs in real time from a variety of devices.
Challenges for OTT Providers
Although OTT is becoming increasingly popular among viewers, it still faces a number of challenges that may hinder its growth.
- Bandwidth and data cost. Foremost problem that is seen currently is the Data speed and cost. With government focusing on Digital India in a big way and Telecom companies trying to capture the market, there are some benefits stored for the end consumer in terms of free data and low pricing.
- Limitations to customization. Currently, there is a wide array of OTT offerings and viewing options. Those changes and additions to the OTT landscape have given consumers a more customized experience for video viewing. However, there still are limitations in terms of consumers being able to choose their own menu of content or customize their viewing experience.
- Pricing. OTT services need to be pushed to the consumers in a very economical and competitive way.
All said and done, OTT is here to disrupt the viewing pattern and is here to stay.