There’s been a tidal wave of activity in the content industry recently surrounding Over-The-Top (OTT) services. OTT refers to video content delivered direct-to-consumer on demand via the Internet rather than through a service provider’s dedicated network of scheduled programming. One of the most newsworthy recent announcements comes from HBO preparing to offer OTT service to non-cable subscribers putting the network in direct competition with Netflix and other direct-to-consumer streaming services.
This could be the great news that many viewers have been waiting for, but it is by no means a standalone development in the content delivery ecosystem. Last year we saw the Verizon/Redbox partnership launch a streaming service for games and movies, an experiment which has recently been pronounced unsuccessful. DISH Networks and ABC Disney also announced an OTT partnership service. AT&T and the Chernin Group announced a $500 million joint venture to deliver online video. The deals go both ways as well, with multimedia studio Electus Digital licensing the film Coffee Town to HBO and select theatrical screens, after its initial release last year exclusively on digital platforms.
So who is going to come out on top in Over-The-Top?
The OTT content streaming industry is in for a massive overhaul. RBC Capital Markets reports that in 2015, SVOD syndication/licensing deals will be worth USD$6.8 billion, up from the USD$5.2 billion that Hulu, Netflix and Amazon collectively spent on content acquisition this year. Strategy Analytics corroborates this data that global spending from consumer subscription on OTT video is set to rise to €3.53 billion by 2018. However the clearest opportunity is for traditional pay TV operators (like HBO) rather than pure-play services (like Netflix). The traditional brands already enjoy strong relationships and consumer trust to seamlessly integrate customers into online subscription. For example, HBO’s 10 year deal with Universal Pictures (expiring 2023) provides exclusive TV, online, and mobile rights for Universal and Focus Features films; withholding content from Netflix and other services. Lionsgate’s agreement with Netflix for the breakout original Orange Is The New Black will likely culminate after the delivery of the 4th season, which will allow Lionsgate to provide the series at that time to the highest OTT bidder. Netflix has also over the past 2 years ended agreements with Discovery Networks, A&E, and History – allowing these brands to now explore independent OTT providers. The current Netflix deal with Disney will expire in 2016, so we can also anticipate ABC/Disney to be in stealth negotiations for independent OTT opportunities.
This is why we think it’s hot!
Areas of opportunity also present themselves in implementation services. The online content discovery process continues to present frustrations for many viewers which can ultimately chip away at the provider’s bottom line, unless providers make it easier for subscribers to find what what they want to watch, when, where, and how, they want to watch it. A key priority for OTT providers in the next few months needs to be the improvement of their discovery experience. Services like Crowdlinker’s content discovery and social recommendation tools can support customer acquisition and retention for online video providers. We agree with The Verge’s Nilay Patel who argues that your TV should be smart enough to be playing your favourite shows and events when you turn it on. Step into the future of the content delivery ecosystem with us!
Want more? Here is everything you need to know about How To Choose An OTT Platform Provider