OTT: The Disruptive Rise of On-Demand Viewing
Over-the-top (OTT) is a term used to describe content delivery services that stream media directly over the internet, bypassing traditional cable and satellite providers.
Key Takeaways
OTT has seen explosive growth in recent years and is projected to continue growing at a compound annual growth rate (CAGR) of 12.5%
The shift towards OTT has posed challenges for traditional media companies, particularly cable and satellite providers, which have seen their subscriber numbers decline as more and more consumers switch to OTT services.
In order to stay ahead of the curve and differentiate themselves from their competitors, many OTT providers are investing heavily in original content.
The rise of OTT has disrupted the media industry, giving consumers more choice and control over the content they watch. Here, we'll explore the growth of OTT, its impact on traditional media, and what the future holds for this rapidly expanding industry.
OTT has seen explosive growth in recent years. In 2021, the global OTT market was valued at $194.55 billion and is projected to reach $492.21 billion by 2028, growing at a compound annual growth rate (CAGR) of 12.5% during the forecast period. This growth is being driven by a number of factors, including the increasing availability of high-speed internet, the growing number of connected devices, and the shift in consumer behavior towards on-demand viewing.
Netflix is perhaps the most well-known OTT service, having launched in 2007 as a DVD-by-mail service before pivoting to streaming in 2010. As of Q4 2021, Netflix had 214 million paid subscribers globally, making it the largest OTT service by far. Other major players in the OTT space include Amazon Prime Video, Disney+, Hulu, and HBO Max.
One of the main advantages of OTT is that it allows consumers to access content on their own terms. Rather than being tied to a cable or satellite provider's schedule, viewers can watch their favorite shows and movies whenever they want, from wherever they are. This flexibility has proved particularly popular with younger viewers, who are increasingly turning away from traditional TV in favor of OTT services.
However, this shift towards OTT has not been without its challenges. Traditional media companies, particularly cable and satellite providers, have seen their subscriber numbers decline as more and more consumers switch to OTT services. In 2020, US cable and satellite providers lost a combined 6 million subscribers, while the number of OTT subscribers grew by 22 million. This trend is expected to continue, with some analysts predicting that cable and satellite providers could lose up to 50% of their subscribers by 2025.
Another challenge facing the OTT industry is the increasing competition. While Netflix may have been the first to market, there are now dozens of OTT services vying for consumers' attention. This has led to a proliferation of content, but it has also made it harder for individual services to stand out from the crowd. As a result, many OTT providers are investing heavily in original content as a way to differentiate themselves from their competitors.
So what does the future hold for OTT? Despite the challenges, the outlook for the industry remains positive. As more and more consumers embrace on-demand viewing, the demand for OTT services is only likely to grow. However, the industry will continue to evolve, with new players entering the market and existing services adapting to changing consumer demands. As a result, we can expect to see continued innovation in the OTT space, as providers seek to stay ahead of the curve and offer consumers the best possible viewing experience.
The growth of OTT has disrupted the media industry, offering consumers more choice and control over the content they watch. As the industry continues to evolve, we can expect to see new players enter the market, existing services adapt to changing consumer demands, and continued innovation in the OTT space. While the shift towards OTT has posed challenges for traditional media companies, the overall outlook for the industry remains positive, with demand for on-demand viewing only likely to grow in the years to come.