Over-The-Top TV and Why It's Important

Over-the-top content is set to transform the economic, social, and social conventions of television. The growth of the over-the-top audience will create important opportunities for artists and many non-profit organizations.

Over-the-top (OTT) television is video content that is delivered over the internet independently of a cable or satellite company that controls the selection and distribution of channels or programs.

OTT content is viewed on smartphones, tablets, computers, so-called “smart TVs”, and digital devices that connect to TVs such as game consoles, Google’s Chromecast and Apple’s AppleTV. In 2015, 58% of U.S. households used at least one OTT services, and 25% used two or more.

Netflix, Hulu, Amazon Prime are the most visible OTT providers in the U.S. Each has begun to invest significant resources, just like traditional TV networks of yore, in the licensing and production of original content to attract new viewers. Some providers are focused on significant resources audiences, such as Major League Baseball’s MLB.tv.

Hard numbers on the size of the OTT audience are hard to come by, but the growth is such that Advertising Age has reported it’s “no longer a question of whether TV networks will be available on an a la carte basis through streaming video services, but how powerful those services will get.”

In the United States, in primetime, Netfilx alone accounts for a third of all U.S. internet traffic. In Q1 2015, the company streamed 10 billion hours of video worldwide.

The Appeal of OTT TV

“OTT appeals to viewers, and its audience is growing,” according to Peter Wiley, Executive Producer at Arbour Media, “because it’s perceived as a less expensive alternative to cable and satellite subscriptions, and makes content available on demand, directly on digital devices people use every day. It also allows easy access to content that’s not offered by traditional TV channels, broadcast or cable.”

The appeal of OTT TV is reflected in changes in cable subscriptions and viewing habits.

OTT TV is one of the reasons why the pace of cable and satellite subscription cancellations – so-called “cord cutting” -- is quickening, up 10.4% between 2014 and 2015 according to eMarketer, a leading digital media research firm.

Cord cutters are joined by “cord-nevers”, often millennials who have not been signing up for traditional cable subscriptions at the same rate their parents once did. eMarketer estimates that by 2018, 1 in 5 US households won’t subscribe to cable or satellite TV.

Time spent viewing so-called “linear tv” – regularly scheduled programming present via a broadcast or cable channel – has declined by about 15% for all age groups except those over 55. OTT has facilitated the rise of “binge watching” as a cultural trend, an activity that’s now part of TV marketing.

According to Ericsson’s 2015 TV and Media Report, the amount of time people now estimate that they spend watching streamed video content each week, 6 hours on average, has doubled since 2011. 50% of consumers said they watch streamed content at least once a day, an 30% increase since 2010.

Youth aged 12-24 spend even more time with streaming video, an average of 11 hours a week, according to Defy Media.

The Acceptance of OTT Creates New Opportunities

“The most important thing about the rise of streaming services like Netflix is that they have trained audiences to accept and use streaming video,” says Wiley. “There’s an opportunity to capitalize on that audience’s desire for new content. It’s time for organizations large and small to consider creating their own branded video content channels.”

“At Arbour Media, we’re especially interested in the development of app-based video channels on iPads and the 4th generation of the AppleTV, apps like those deployed by Netflix, Hulu, PBS, or The Broadway Channel, to mention just a few.”

What an app-based approach to video distribution allows, says Wiley, is a well-designed, controlled brand experience without the distractions and potential legal complications that come with posting content to You Tube or Facebook. Apps can be designed to collect detailed usage data and permit immediate interaction with users.

One example of the app-based distribution is the 4th generation the AppleTV app created by Burrbery. The app allows users to express interest in designs appearing during a live fashion shows streamed via the app (see video below) and also provides advise about how to get the “Burberry look” and showcases British musical talent.

Another example, The Economist of London, an internationally renown weekly news magazine recently released its Economist Films AppleTV app, that provides an extension of its print coverage in a number of specially-branded video feature series.

“If properly designed and deployed as part of a larger communication strategy, we think video apps could prove very useful communication tools for arts organizations, schools, and non profits” says Wiley. Among possible scenarios

Colleges might present sports events and student theatre or concerts via a branded AppleTV app designed to connect with potential students, parents of current students, alumni, and donors.

A regional theatre company might present video of a production after the live run has closed to extend its audience, raise additional revenues and build its brand.

State-level advocacy organizations concerned with educational issues might band together to present news and information via a branded TV app aimed at parents, teachers, administrators, and the general public.

State-level arts organizations might produce an app providing content showcasing a state’s leading artists and providing information about the state’s art marketplace as a way of developing interest in it.

“We think there are a number of niche audiences that would respond enthusiastically to the opportunity of streaming content addressing their interests on the family TV alongside Netfilx, or Hulu, or PBS,” says Wiley.

“Video production and app development costs have declined to a point where, if an organization’s leadership has a will to do so, they can probably create a channel to tell their story and advance their cause or brand.”

Sources

Advertising Age. The CMO's Guide to Over-the-Top TV: How Marketers Can Prepare for Cord Cutting

BGR.com. Cable Providers Still Have No Answer for Netflix as Cord-Cutting Accelerate

eMarketer. Americans Cutting Cable-TV Cord at Increasing Pace

Ericsson. TV & Media Report 2015

Pew Research Center. Millennials

PwC. Outlook Special: Over-the-Top Television

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