Demand for OTT channels is growing, consumer habits are changing, and it’s creating a clear impact on the OTT market. A recent report found that the global OTT market is set to grow by $77.73 billion between 2019 and 2023, increasing at a CAGR of over 13% during the forecast period. Whether you’re a pay-TV operator, a video content provider, broadcaster, or even a newcomer to the market, OTT channels represent an opportunity to expand your global footprint. An OTT channel can help you increase revenue and reach new viewers, including cord-cutters. In fact, it is predicted that by 2023, the number of pay-TV households in the U.S. will stand at 72.7 million, with cord-cutters estimated at 56.1 million.
Different kinds of OTT channels
OTT stands for over-the-top. OTT goes over the top of traditional access networks and makes it possible to stream video content over the internet to connected devices, such as smartphones, tablets, and smart TVs. Most OTT services are subscription-video-on-demand (SVOD) offerings that provide access to a comprehensive library of TV shows and movies. Examples of these kinds of services include Netflix, HBO Max, Apple TV+, and Disney+.
Another flavor of an OTT service is the skinny bundle. Skinny bundles are slimmed-down versions of traditional pay-TV television offerings. They include many of the linear specialty channels that viewers love, such as ESPN and AMC, streamed over the internet. An example of a successful skinny bundle service is Sling TV.
Pop-up channels are another form of an OTT service. Pop-up channels feature content that is only available for a limited time period. Take for example a live sports event, or specialized holiday content.
While live content has traditionally been delivered on pay-TV and broadcast channels, OTT has carved out space in the video streaming world, especially for live sports. Fans love the freedom of being able to watch a single event or a tournament and manage their subscription on a per-use basis, at a relatively low price.
The real difference between OTT and linear TV channels
The key difference between OTT and traditional linear TV is that OTT leverages the internet for delivery, which opens the door to personalization, regionalization, and other features that only the digital space can offer. Linear TV channels are scheduled viewing experiences transmitted via an over-the-air, cable or satellite network. The content is sent over the entire network, and each TV is getting the same content. With linear, it’s a challenge to personalize and to reach audiences that aren’t in front of the TV, in the right region, at the right time.
There is also a difference between the OTT and linear TV business model. Linear TV channels rely heavily on advertising. OTT offerings can also leverage advertising but provide more options when it comes to monetization.
There is also a difference in the viewing experience. Viewing choices are distinctive between OTT and linear TV channels. Considering that many of today’s viewers like watching content they want, anytime, anywhere, this can be a deciding factor for subscriptions. Research has shown that younger generations prefer OTT while older demographics such as Baby Boomers and Seniors desire the linear TV experience.
The media landscape where everyone can play
Today, it seems like everyone is getting into the OTT game. Thanks to readily available streaming solutions, both big and small players can easily access the OTT arena. OTT is no longer just for big companies like Netflix or Disney. Traditional broadcasters, pay-TV operators and major television networks, such as NBC, have also embraced OTT video streaming.
We are also seeing sports federations and leagues launching their own channels to reach local and regional audiences, as well as new audiences beyond their traditional scope. We now have smaller organizations and content owners that previously had no footprint in broadcast launching channels.
Consequently, the OTT landscape has become very diverse. In a traditional linear TV model, TV channels go through a middleman such as a cable or satellite operator to reach viewers. Now, with an OTT solution, you can offer VOD and live streaming to consumers directly. With the OTT business model, there is more control and greater opportunity for profitability.
Different solutions to create OTT channels
Today, it is easy to launch an OTT channel, and you have options. One option is a SaaS or software-as-a-service. This cloud-based approach to media processing and delivery uses the public cloud like Microsoft Azure, Google Cloud, or Amazon Web Services (AWS). Another solution is to run the media processing software on your own private cloud.
Unique advantages of SaaS and on-premises solutions
The SaaS model provides agility without requiring any major financial investment. You can launch new channels fast and remove them just as quickly based on the type of channel and audience interest. Scalability is a significant advantage of the SaaS approach, as are reduced costs and increased speed.
A cloud-based SaaS for video delivery can host the entire workflow in the cloud. You can do media processing, primary distribution, and disaster recovery, all with the same solution. Unifying your workflows makes for easier management and simpler delivery.
However, for some OTT providers, SaaS is not an option. Your organization may prefer to operate in your own data center to run all applications. This allows you to manage and maintain infrastructure yourself. On-premises solutions are a great option if you have the resources and skill set needed to run private cloud solutions for OTT.
What to consider before creating an OTT channel:
- Monetization is key: Monetization is often important when creating an OTT channel. The foremost question is: How can you drive revenue? OTT is a good way to repurpose live and linear content for delivery on any screen. Relying on a cloud-based solution for playout and graphic branding makes it easier to maximize efficiency and monetize your video streaming service. This can be done through channel subscriptions and by selling advertising. OTT will enable targeted advertising, rather than the blanket style advertising common to broadcast linear TV. This can be done through dynamic ad insertion (DAI). By delivering targeted advertisements, you can increase monetization for OTT content and improve the end-user experience. According to industry research, targeted TV advertising is experiencing rapid growth. It reached $1 billion worldwide in 2019 and now represents a 0.7% share of the total linear TV advertising market. Estimates today indicate that by 2022, the targeted advertising’s share will be 10%, which is a significant leap.
- Growing your subscriber base: OTT gives you the ability to increase your subscriber base. A key reason is that it is not limited by transmitter, cable or satellite connectivity. The internet is used for delivery, so you can build a stronger subscriber base in the context of a global scale. It lets you deliver your content to more viewers going beyond the limited, local reach. You can create a connection with viewers anywhere. This includes being able to handle foreign languages and subtitling to make your content more relevant to overseas audiences.
- Selecting a primary distribution solution: If you are a broadcaster/television programmer, it may be important to consider how to deliver linear channels to distribution partners. You can use OTT to reach your distribution network anywhere in the world. This is not limited to OTT channels. It will work for channels that are used for broadcast, satellite and cable delivery in other parts of the world. OTT solutions can support workflows for preparing and distributing local broadcast channels to affiliates. Or, you can deliver channels that were originally intended for OTT as broadcast channels in a given territory. A solution that can unify all your media workflows may provide more agility. For example, Harmonic’s VOS®360 platform streamlines the entire media processing and delivery process. You can then leverage an end-to-end solution from source to screen for broadcast, OTT, VOD, catch-up, and start-over TV.
- Personalize OTT offerings: Consumers have a lot of options for streaming services today. But that can be a double-edged sword. Viewer fatigue may be setting in. According to some studies, nearly half of consumers (47%) are frustrated with the number of subscriptions required to access the content they want. Personalization can help reduce viewer fatigue by ensuring that viewers only see the most relevant content. Customizing the OTT experience can go beyond making personalized content recommendations or delivering targeted advertising. Personalized live OTT sports experiences are one sector with numerous options for customization. You can deliver different camera angles and live statistics. Making your OTT channel personalized will drive viewers to it, and this is especially relevant for increasing fan engagement.
- Outside of the box thinking for disaster recovery: Disaster recovery is another relevant option to consider when providing an OTT service. The traditional disaster recovery approach involves setting up an on-premises infrastructure for resiliency. A more optimized option is to use a combination of on-premises software systems, with disaster recovery on the public cloud using a SaaS. For an event that is only going to last a few days, using the public cloud with redundant channels can be more cost-effective than having to build an on-premises solution.
Get in the OTT game
By launching an OTT channel, you can feed the growing consumer appetite for video anytime, anywhere, on any device. It is expected that the OTT video market will surpass $200 billion by 2024, with 90% of that value fueled by subscription and advertising revenue. Monetization and personalization are also key elements in increasing revenues, especially for live OTT sports channels. With OTT, you can make your video streaming service available globally to attract subscribers outside your region. It can boost your brand and revenue, and more importantly, engage more viewers and fans.
There are different ways you can get into the OTT game, whether using a SaaS or an on-premises solution. The best option may depend on the individual channel needs as much as your current business objectives. The good news is that it is possible to use one orchestration and one control system to run channels with both on-premises solutions and in the public cloud. With this approach, operations are simpler, and services are easier to scale.
Interested in learning more about starting an OTT channel? Let us know!