Dimitar Serafimov | Thu Jul 23 2015 CET | OTT Industry

The way we access TV and online videos is changing: premium OTT services like Netflix and Hulu are significantly challenging traditional cable or satellite services. The need for access to readily available content and a freedom from subscriptions that fail to suit their needs is driving rapid investment.

OTT is obviously on the rise, the competition heats up and there are numerous companies trying to grab their piece of the cake. Let’s take a look at V-net.tv findings about the key factors influencing OTT’s growth, extracted from their recent report: “Profiting from the OTT explosion”.

OTT video market developments

Developing economies or emerging markets such as South America or the South Pacific are generally dynamic, fast-growing, and see a rapidly developing infrastructure. Mainstream pay-TV markets have often yet to mature here and mobile infrastructure is in its infancy.

It is in these so called ‘nascent’ markets that growth in premium OTT investment is expected to hit 75% with an average 5 premium services being launched over the next three years with improvements in the speed of internet, an increase in the public uptake, and the grouping from entrenched corporations all contributing to growth.

This huge push is also being seen in accelerating markets such as those in Germany for example with increases in the availability of digital rights along with improvement in internet services this is set to explode. It is the advanced markets of the USA and UK that see premium providers capitalizing on the strong economic zone, even challenging more mainstream incumbent providers like Time Warner or Comcast and showcasing the advantages OTT media brings. New market entrants challenge these incumbents to radicalize growth along with the increased freedom to digital rights.

Although the premium OTT services in advanced markets is seen as the end goal of growth in the sector, dynamic nascent markets look to alter the development of these service with some industry members predicting a more mobile-centric development trajectory.

Standalone OTT services leading the way

It is expected that these independent companies will make up the bulk of new OTT services launch in the next three years, with 28% of respondents thinking third-party providers will be in the majority of new arrivals.

It is these standalone OTT premium services that represent the most radical change; the freedom from larger corporations that may restrict content output and force developers to adopt strategies that meet margins, rather than a creative vision. Whilst these unique OTT’s may lack the initial funding they often gross higher profits for the creators of content, especially when we start to see an overlap of services offered like sport or live events.

Factors affecting OTT growth

Overwhelmingly the increased availability of digital rights is thought to be the driving force of industry innovation with customer confidence in anti-piracy software and bundling of services by pay-TV providers also being seen as important and when asked, two thirds raised that these issues were important to their impression of market growth.

These factors can differ in specific markets, with a lack of infrastructure being the main barrier to development in nascent economies. Also:

77% rated lack of consumer willingness to pay as an important barrier

60% said rising consumer disposable incomes didn’t factor.

It is clear that the OTT phenomenon is here to stay and set to undergo radical development, investment, and evolution. The emergence of these as both subsidiary features and single entities also promises that the market will be dynamic, pushing providers to improve constantly and keep prices competitive. It is the end level consumer that will benefit from the video revolution as companies fight to stay on top.

We are proud and excited to be one of the tech front-runners that see a great value in premium OTT solutions. Our role as a monetization platform provider to broadcasters, pay-TV and third-party OTT operators encourages us to evolve in the current context and meet the demands of our clients.