OTT TV is booming big time. Currently, more than two out of three American households are enjoying streaming video services. In 2020, with “chilling at home” pretty much imposed by authorities, streaming platforms such as Hulu, Amazon Prime Video, and Disney+ brought in millions of new subscribers, with Netflix’s global subscriber base crossing the 200M mark. The market size estimations are set at $125 billion by 2025, showing no signs of slowing down. But despite its success, OTT TV isn’t pushing Pay TV out of the picture. Rather, we’re seeing the market evolve into a more advanced version that combines the best of Pay TV and OTT TV, but is greater than the sum of its parts … Cloud TV.
What Is OTT?
First off, what does OTT stand for?
OTT TV stands for “Over the Top Television” and refers to video content being streamed directly to consumers via open internet, rather than through traditional tv service providers. That is why OTT Television is often called online television, internet television, or streaming television.
It can be viewed on any device with an internet connection or on Smart TVs. To enable OTT on other types of television screens, consumers need to use intermediary devices such as Apple TV, Amazon Fire TV sticks, or game consoles.
So, OTT TV is the delivery system of online television content. Today, OTT can deliver several types of content: Video-on-demand (VOD), live streaming, and linear TV.
OTT TV vs. Pay TV
2020 was a beneficial year for several industries, including OTT TV. However, it has not benefited Pay TV, which has suffered its biggest subscriber loss in years, due to the growing adoption of streaming services.
One of Pay TV’s strongest cards is live sports, but with major events canceled in the first half of 2020, many consumers chose to cut the cord. But cable has been losing ground for several years now. The fact is that OTT TV holds advantages over Pay TV that push consumers to churn.
With OTT TV, consumers choose what to watch, when and where to watch it, and how much of it they want to watch. Television went from a family experience to an individual pastime. Everyone in the family enjoys their own shows from their own device, at home or on the go.
Consumers turn to streaming services mainly for the exclusive content, advanced features such as personalization and multiscreen, and the lower cost of OTT TV. One of the challenges of OTT TV is that consumers often subscribe to several services to access all the content they want. They then have to juggle continuously between platforms and get billed separately for all these services. But as we’ll see below, there’s a way to bundle these services.
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With OTT, television advertisement is shifting from a model based on viewer count and time of day to a targeted online advertising model, based on demographics, psychographics, and technology. OTT marketing has a much higher ROI than traditional television advertising. That is why it’s increasingly attracting ad dollars. Between Q1 and Q3 2020, OTT ad spend increased by 70%.
That is not all the marketing folks have to celebrate. Through web technology, brands can show their ads to the relevant TV audiences based on the type of content consumers are watching. They can also retarget ads between all the consumer’s connected devices. Lastly, data tracking allows marketers to get exact numbers on the performance of their campaigns. It reveals exactly how a lead reacts to a campaign, whether the desired user action was a page visit, a download, or a sale.
Reason enough for both consumers and businesses to flock en masse to OTT TV. But what does this mean for the traditional TV service operators? Under the adage “if you can’t beat them, join them”, many are successfully turning the threat into an opportunity by migrating to Cloud TV… so, your next question is:
What Is Cloud TV? And Is It the Same as OTT TV?
TL;DR, it is not.
With the growing competition from hundreds of OTT TV services out there and a declining trend of global Pay TV revenues, traditional Pay TV operators need to find creative ways to overcome the challenges they are facing… and they are rising to the challenge with Cloud TV.
We established that OTT leverages the internet to stream content. This enables interactivity, personalization, regionalization, and other powerful features that are beyond the possibilities of traditional cable or satellite TV. On the other hand, traditional TV’s strength lies in its scalability and its robustness.
Cloud TV delivers the best of both worlds.
It enables Pay TV operators to leverage the cloud-based infrastructure to deliver their services, while maintaining the scalability and the robustness of traditional TV.
Cloud TV also builds on the advertising model and technology of OTT TV, with advanced audience segment targeting and the ability to create tailored offers.
Cloud TV sets a new standard for TV distribution systems:
- Scalable and robust
- Global distribution, localized per market
- Data-driven TV products
- Personalized experiences
- Operational efficiency & lower costs
How Cloud TV Is Changing the Future of Television
With consumers wanting the best of both worlds and Pay TV industry players looking for ways to face change, the future lies in Cloud TV.
Telco companies such as Vodafone and Veon deliver live and on-demand experiences from the cloud, with television packages that combine their Pay TV offering with an aggregation of content from third-party streaming services.
Media companies such as Viacom18 and Mediacorp leverage Cloud TV to expand their audience reach and boost revenues, by providing their millions of viewers a large portfolio of engaging and personalized experiences on any device.
New players are also leveraging Cloud TV to get their piece of the pie. Flipkart, a Walmart subsidiary, reached over 12 million monthly users for their new Cloud TV service, in just two months. They were able to pull this off, thanks to the super aggregation capabilities that Cloud TV enables.
We are witnessing exciting developments within Cloud TV technology. Cloud TV is paving the way for Cognitive TV, which will infuse AI-based technologies into all aspects of TV services, fueled by data. This will give service operators access to a platform that is constantly learning and evolving while keeping the consumer experience simple.
We’ll see features such as adaptive advertising, ‘natural UI’ that will enable conversational interaction with the television service, and omni-screen, which creates a smart interaction between the consumers’ various devices. Kaltura’s General Manager of Media and Telecom Nuno Sanchez and Senior Vice President of Product & Marketing, Media & Telecom Gideon Gilboa discussed and demonstrated Cognitive TV in this very entertaining keynote during the Kaltura Connect 2020 event.
More on Cognitive TV as it evolves, right here on the Kaltura website.
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