Understanding OTT and the Future of Entertainment
What DOES “OTT” mean and why is it important? It’s a term often used in the home entertianment media recently. In short, it’s an acronym of “Over The Top” which describes video delivery which relies on internet-based streaming rather than an Over-The-Air broadcast or via a cable or satellite system. (Look: Wikipedia!) It’s a term which is being used with greater and greater frequency as digital streaming of entertainment grows. This new approach to accessing video content is already in play, in a big way, with some demographic segments:
The so-called “Late Millennials” group between the ages of 18 to 24 prefers online TV. This group spends about 33% of their TV time watching TV online and 29% watching via broadcast and cable. …[T]his particular distribution of viewing is unique to this segment because consumers in the 25-to-34 age group are watching more broadcast online. The percentages continue to favor TV as age goes up.
Those Late Millennials are on the forefront an entertainment revolution. OTT has the potential to be a huge game changer, for both for consumers and for producers. In fact, at 2013’s CES, this next step in the evolution of video entertainment was already apparent. In a summary of his take-aways from the event which Jeff Stabenau, Giant’s President, shared with the Giant team, he said,
The future of watching TV…and it’s fair to argue we are already in the future…will consist of selecting which channel app you want to watch and calling it up. There will no longer be a distinction between a channel-specific app, a network app, a bundled group of content, or your Time-Warner box. They will all be options to watch on your big, bright new UHD screen. Netflix, Amazon, Apple and Roku will all sit next to an ESPN and HBO app, and right alongside a FiosTV app or TW Cable app. We will choose what content we want to watch, when we want to watch it. Choice, control…these trends will come into full fruition.
OTT has the potential to provide content owners (aka content distributors) with unprecedented direct access to viewers AND unprecedented ability to establish and maintain a direct relationship with those viewers. This will disrupt, nay, even destroy an entire industry which has flourished by distributing MORE than the customer needs, and making them pay for it, because that customer has no other choice. It’s a danger to every cable and satellite system.
The goal is obvious but generally left unstated: to provide content offerings rich and varied enough to replace cable TV. Who needs cable if the Apple TV offers all your favorite shows instead? Why pay for premium channels when you can rent movies on demand from your Xbox 360? Why bother with overpriced cable channel packages when you can watch every MLB, NBA, and NFL game directly on your PS3? There is a nation of potential cord cutters o
OTT will also put an enormous amount of choice and economic power into (or back into) the hands of consumers. Think of it: You’re a sports fan. Every month you pay over and above the “Enhanced Standard Cable Basic” to get your sports package. And in doing so, you’re directly subsidizing lots of programming, from The Wiggles to Paula Deen. (That just isn’t right.) What if you could choose a la carte the channels you wanted? Instead of buying a basket of “entertainment” of which only a small portion interested you, you’d be able to pick and choose what YOU wanted. Good news for the consumer, but bad news for those cable operators and satellite providers. The opportunity is huge. ...[T]he number of companies involved in OTT delivery will grow and the proportion of those businesses substantially invested in OTT technologies will more than double over the next 3 to 5 years. Here at Giant, we’re already talking with clients, planning OTT strategies and even building mechanisms which will help our clients get a head start in this new world. From a digital store which will replace DVD-based, “lesson-by-lesson” instruction to “any screen, anywhere” Advertising-based Video On Demand (AVOD) initiatives which monetize content via ad-supported channels on smart phones, set-top boxes, smart TVs and responsive websites, we recognize that the future of entertainment will no longer be found in the C-suites of highrises or the broadcast booths of networks. Instead it’ll be in the hands of the viewer who will wields that remote or controls that app which delivers just what they want, when they want it. The next wave of digital entertainment? Decoded — it’ll be personal entertainment, delivered over-the-top. (A previous version of this post appeared in August, 2014.)