OTT Services – All You Need to Know

“We believe the future of TV is apps.” With those words, Apple’s CEO, Tim Cook, predicted back in 2015 a future where OTT services and apps would rule TV viewing. While we are not there yet, a lot has indeed changed in the past years.   

We now live in an era where OTT services have overtaken traditional TV as the leading source for watching TV and movies. There has not been a single year without a major global OTT service launch since 2013. Streaming viewers are hungrier for content than ever before, and TV service providers fiercely compete to stay ahead of the game in this massive TV transformation. That is why if you’re planning to launch an OTT service or want yours to make a mark, you must understand all about them first.  

This blog delves into OTT services’ basic definition and features, their top pros and cons, some noteworthy facts, and OTT service examples worth checking out before launching yours.   

What are OTT services?  

Let’s start simple. Over-the-top technology (OTT) refers to a delivery method that distributes any type of content over the internet: audio, video, messaging, and voice. However, the acronym is most well-known for its video and TV programming usage.  

OTT technology allows anyone using an internet-enabled device (smart TV, laptop, tablet, smartphone, or game console) to access videos over the public internet. And what is an OTT service, then? Simply the app or website you turn to watch your favorite programs, series, and movies. 

In the beginning, most of the OTT services were limited to paying viewers only, whether on a pay-per-view basis (paying to watch a single show, movie, or series) or on a subscription basis (paying a monthly or annual fee for unlimited access). However, an increasing number of media companies and broadcasters are offering free viewing these days by funding their OTT services with advertising and sponsorships, or a mix of free and paid monetization models (for example, with Freemium services, partially free partially paid). 

If you would like to learn the nuts and bolts of OTT and how it works, save some minutes to read through our dedicated post on OTT technology later.  

Pros & Cons of OTT services  

OTT services have been tremendously successful because of their flexibility and ubiquity for viewers and content providers. But of course, they also come up with added challenges. Here we list a few.  

Viewers encounter the following:  

• Pros: OTT services let users decide when, where, and how to watch content, which is very convenient. Likewise, their prices tend to be affordable and can go as low as a few dollars per month or even be “free” for ad-based services. That’s why viewers do not usually make either-or choices in OTT. They instead subscribe to assorted services to fulfill their content needs.  

• Cons: obviously, not all that glitters is gold. While consumers enjoy the freedom to watch videos everywhere, content increasingly fragments across OTT services as companies launch their direct-to-consumer services to capture the consumer relationship for themselves. The situation has resulted in an increasingly expensive monthly bill as viewers subscribe to more OTT services to make up their ‘media diet’ (up to 7 services on average in countries like the US). 

As for content providers, we could highlight the following:  

• Pros: direct-to-consumer (D2C) content delivery stands out from the rest.With OTT, media companies can directly stream content to end-users’ devices without any intermediary controlling the video delivery, viewing, or content copyrights. Likewise, flexible monetization, personalization, and total control of the viewing experience are other remarkable advantages. Content providers govern their content, monetization, brand, user experience, and audience data to offer consumers the best possible   

• Cons: as flexible as they are, OTT services can also be unstable. Image and audio quality might be affected depending on the internet connection speed, available bandwidth, and the connectivity supported by the end-user display device. Scalability and robustness are not some of their strongest points either, especially when flooded with last-minute users trying to watch the same prime time event. Finally, another disadvantage to keep in mind is content security. Since OTT services literally begin and end with digital technology, from subscription and login to video delivery, this, in turn, accentuates the chances of user data being leaked and video pirates trying to get their hands on your exclusive content. Our recommendation? Always invest in a technology platform with top-quality security measures and tools (Multi DRM, User Authentication, vulnerability management systems, etc.).  

Interesting Facts on OTT industry  

As a content provider or media company, it is arguably the best time in history to have an OTT service. Check out these mind-blowing stats if you still wonder why.  

• The OTT segment could reach $297,915 million in revenue by 2026, with a global penetration of 49.9%. 
• Subscriptions to online video services surpassed the 1 billion mark for the first time in 2020and will reach 1,64 billion by 2026.  
• The OTT video segment’s average revenue per user (ARPU) will amount to $57.76 in 2021. 
• Adults aged18-43 already spend 63% of their overall TV viewing time watching on streaming versus cable, broadcast or satellite  

As you can see, the long-predicted saturation of the OTT market is far from happening yet. But I bet these data have probably made more than one (and more than two) media professionals a little dizzy. With over 5,300 streaming services out there, how can mine compete effectively and stand out in such a crowded market?  

Do not be put off by this data if you consider jumping on the bandwagon or are already there.  Understanding what works for the best-in-class OTT services and what does not will help you develop a solid plan of action to set your service apart from the competition.  

Learning from the best – Top 5 OTT Service Providers  

The most widely used OTT services worldwide set the bar high in service and feature richness. Many viewers nowadays take their top-notch functionalities for granted in any service. Therefore, staying up to date with their latest capabilities is also a way to understand the audience’s demands and learn a lot for your own OTT service.  

Here we share the top five OTT streaming services per number of global users and what makes them a great “leadership mirror” to evaluate your service’s strengths and challenges:  

1. 1. Netflix

Netflix was founded in 1997 in Scotts Valley, California, as a rent-by-mail DVD service, but it was not until 2007 that it launched its video streaming service, initially called “Watch Now”. Back then, users could access the originally hosted 1,000 titles through personal computers.  

Today, Netflix is the leading streaming service worldwide with 214 million global paid memberships and an impressive content catalog of over 15,000 titles. It offers three different monthly pricing plans (basic, standard, and premium) that include unlimited, ad-free streaming for prices ranging from $8.99 to $17.99.  

Top Netflix features to look out for:  

If there is one thing that everyone associates Netflix with is binge-watching. Netflix comes packed with excellent viewing features and great device compatibility for a seamless streaming experience, even when switching to another device. Some features like the “Continue Watching” list or the “Play Something” shuffle button also improve the experience.  

1. 2. Amazon Prime Video

Amazon’s first steps into streaming were back in 2006 with its Amazon Unbox internet video service, which later became the perk of free access to over 5,000 commercial-free movies and TV shows to paid Prime members in 2011.  

Renamed as Amazon Prime Video some years later, the service has advanced so much that it rivals Netflix nowadays. With 175 million subscribers and streaming hours up to more than 70% year over year, the company has invested heavily to expand its impressive catalog. Its most recent additions have been purchasing the Hollywood studio MGM and bringing Universal’s films to the service.  

Amazon Prime Video is included in the Prime membership ($12.99/month), although users can also subscribe to the streaming service only for $8.99/month.  

Top Amazon Prime Video features to look out for:  

One of its most exciting functionalities is Prime Video Channels, which has partially transformed the streaming service into a content aggregator. This feature lets users add subscriptions to other streaming services to their Amazon account and have everything accessible from one app. Added to this, a bold move by the E-commerce giant has been launching its own smart TVs. Obviously, this competitive advantage is within reach of very few streaming services, but it gives us an idea of the importance of streaming apps for big screens.  

1. 3. Disney+ 

Disney+ launched its streaming service in 2019 with an enviable collection of titles and franchises: timeless animated films from Walt Disney, Star Wars, Marvel hits, Pixar animated movies, or the Emmy-award-winning The Simpsons, to name a few.  

Disney+ is now available in 64 countries and gathers more than 118 million subscribers and over 13,000 movies and shows in 21 different languages. The service costs $7.99/month or $79.99/year for unlimited, ad-free streaming access.  

Top Disney+ features to look out for: 

Disney+ exclusive movie releases became one of the platform’s main attractions to drive subscribers and test if customers were willing to pay an extra fee on top of their monthly subscription for premier access to a movie debut. Only time will tell whether this successful premium release strategy will continue having such good results in 2022.  

1. 4. HBO Max

“Where HBO meets so much more”. That was the tagline anticipating what users could find in this new service launched in May 2021. A turbocharged version of the shutdown HBO Now service, HBO Max offers HBO and Warner Media’s entire award-winning catalog and most well-known viewers’ favorites like Friends, Game of Thrones, the Lord of the Rings, and the Harry Potter movies. 

The service reported at the end of 2021 a combined 73.8 million subscribers for HBO Max and HBO around the world. It costs $14.99/month for the full access subscription with no ads and a bit less ($9.99/month) for the ad-based tier.  

Top HBO Max features to look out for: 

A compelling aspect of HBO Max is that users can access first-run movies the same day they debut in theaters for no extra charge (only on the ad-free plan). It is an attractive proposition to differentiate from other services like Disney+ charging an additional fee for that. Also, some less-known cool features are its Coming Soon and Last Chance sections to learn when new series and movies are coming or leaving the platform.  

1. 5. Hulu 

Hulu originated as a joint venture between NBCUniversal (later Comcast) and News Corp in 2007. Back then, Hulu distinguished itself by offering next-day streaming of current network programs for free, as well as films and TV series under subscription only.  

The Walt Disney Company currently owns the service, which launched its Hulu+ Live TV in 2017 for an OTT linear television programming akin to cable, shifting away from its position in a free, ad-supported environment.  

The service currently has 43.8 million subscribers and comes in four different pricing plans ranging from $6.99/month to $75.99/month, with or without ads and the Hulu+ Live TV service. Moreover, it can be hired as part of the Disney+ bundle with ESPN+, and it offers add-ons with services like HBO Max, Cinemax, SHOWTIME, or STARZ for an extra cost. 

Top Hulu features to look out for:  

Probably one of its most exciting innovations is the Hulu Ad Selector, which allows users to control their ad experience by choosing the ad they want to see between two or three video options. Aside from that, the fact that the platform can be customized through add-ons for more content and functionalities as if it were a Lego toy is also very appealing.  

Launching Your OTT Service – Where to Start

Launching a successful OTT service depends much on the circumstances of your business – mainly, who your target audience is, what your content resources are, and how you approach your business model and growth strategy in the short and long term.  

First and foremost, you should understand who your viewers are and what they expect from a streaming service. How do they typically watch videos, and on what devices? What features do they genuinely value or take for granted? How much are they willing to pay for a streaming service? Would they prefer to watch ads in exchange for free content? Answering these questions will help you better frame the type of service you should get out in the market to engage with your customers.  

Afterwards, proceed to understanding what content distribution strategies and monetization models best pair with your viewers’ requirements and business needs, as well as those working best for the top leading streaming providers in your market.  

Finally, make sure to do some research on the technology partners and streaming platforms that best serve your mission-critical features and business goals. Here are some tips for selecting the best platform for your direct-to-consumer service.

More About Kaltura Streaming Solutions

Given how fast the OTT industry is growing and the superb forecasts expected in user acquisition, now is a great time to boost your media business with a streaming offering, if you haven’t already.   

As we have seen, one of the priority steps to get started is choosing the best technology platform equipped with everything you need for your professional video service. And speaking about covering any TV industry needs, we recommend you look at Cloud TV solutions when comparing OTT platforms for your service.  

Cloud TV solutions like the Kaltura TV Platform differ from standalone OTT platforms because they combine the flexibility and agility of OTT with the robustness, scale, and customization capabilities of Pay-TV. They offer uncompromised broadcast-grade service quality and an innovative and rich functionality equivalent to the streaming giants feature set. Hence, they are an excellent choice to keep in mind for professional OTT services. Check out this post to fully understand the differences between OTT and Cloud TV. 

Get in touch with us if you are on the lookout for options and would like to learn more about how the Kaltura TV Platform can address all your needs. We will gladly share our industry insights, knowledge, and recommendations to bring your OTT service to the market and make it sit on the same shelf as the Netflixes, Disney+, and Amazon Prime Videos of the world.  

Get in touch with us if you are on the lookout for options and would like to learn more about how the Kaltura TV Platform can address all your needs. We will gladly share our industry insights, knowledge, and recommendations to bring your OTT service to the market and make it sit on the same shelf as the Netflixes, Disney+, and Amazon Prime Videos of the world.