In 2022, consumer spending and digital video ad revenue from OTT media services reached nearly USD120 billion. Global OTT media services market crossed USD117.5 billion mark and predicted to grow at a CAGR of 14.56% through 2028. Widespread internet availability and proliferation of mobile devices, tablets, and smart TVs are rapidly fuelling the rise of OTT media platforms. The immersive platform is garnering more interest than traditional viewing habits due to flexibility of the internet and newness in service offered by the top content publishers. The consistent growth of OTT space is expected to grow as access to entertainment becomes more convenient, economical, and accessible for users.
Users have multiple options of OTT platforms that viewers can choose, which has led to increased competition among the market players. While some OTT platforms are focused on offering exclusive content, others are providing subscription at cheaper rates, which are attracting viewers across the globe. New market entrants are leveraging linear format models such as FAST and vMVPD, investing in original content creation, and undertaking hybrid monetization strategies to target customers with unique offerings. Even sports brands are shifting to OTT platforms to make live sports more accessible to streaming customers and the trend is expected to rise throughout 2023.
As per research, time consumption for OTT video of the global user has reached to 6 hours weekly, which provides OTT platforms unique opportunity to expand and improve their services and reach more audiences. Some of the major OTT platforms are Netflix, Apple TV+, Amazon Prime, Hulu, Disney+, HBO Max, etc. In 2022, Netflix earned a total revenue of USD31.6 billion, growing from USD3.6 billion a decade ago. Whereas Amazon Prime’s revenue grew from USD4.1 billion to USD5.16 billion from 2021 to 2022. Hulu and Disney+ revenue from streaming services valued at USD10.7 billion and 7.4 billion respectively in 2022. Currently, North America has the largest share in the global OTT media services market, owing to increasing penetration of high-speed internet and growing usage of smartphones in United States and Canada.
Here are the trends influencing the OTT media services market, globally:
OTT Platforms Focusing on Localizing Content
Improved internet penetration and rise in smartphone adoption are helping OTT platforms attract viewers from beyond metropolitan cities. Including local and regional content on OTT platforms have benefitted OTT platforms, resulting in increased consumer engagement and new subscribers. Besides, offering regional content allows the platform to reach and cater diverse audiences based on their tastes and preferences. Local content resonates more with youngsters from small towns and villages and hence OTT platforms are creating high-quality content. The local content is also becoming increasingly popular among global audiences due to unique story telling and character portrayal. For instance, Squid game, a Korean drama series featured on Netflix became one of the most watched show globally within just a few weeks after its release. Other non-English series such as Dark (Germany), Money Heist (Spain), All of Us Are Dead (South Korea), Babylon Berlin (Germany), among other turned out to be smashing hits, breaking global records in terms of viewership. Hence, the localization of content is a growing trend over which the OTT platforms are capitalizing upon.
Rapid Adoption of Smart TVs
In 2019, the smart TV sales accounted for more than 200 million units worldwide and the number is expected to grow as high as 266 million units by 2025. In United States, more than 51 million households or 54% Wi-Fi connected homes stream over-the-top video content on their television as Americans are developing fondness for streaming. The convergence of accessibility and control is causing a stir in the streaming media industry. People working from home feel strained towards using laptop or mobile devices for accessing OTT videos and smart TVs present a convenient platform .Moreover, smart TVs are becoming more affordable, and manufacturers are improving viewing experience by differentiating themselves.
Rise of Free Ad-Supported Television (FAST) Streaming Services
As media companies have started introducing their streaming services, consumers are getting frustrated for paying for multiple services. Although consumers are shifting to more internet-delivered, on-demand services, consumers still have an appetite for different kinds of content that traditional linear broadcast used to offer. Hence, subscription fatigue and rising inflation are driving customers to shift towards FAST platforms, a form of streaming television which provides viewers content for free, but viewers cannot skip advertisements. FAST services host a large library of content, which makes them attractive to cost conscious consumers looking to meet their entertainment needs. The advertisement revenue from these platforms is expected to reach USD9 billion by 2026. Some of the big players in the FAST market such as Roku, PlutoTV, Peacock, Amazon Freevee, Tubi, among others. Pay TV providers are increasing their presence by investing in FAST (Free Ad-supported Streaming TV) platforms. More than 1400 FAST channels and 30+ FAST services are available today, which could lead to more continued growth in OTT market penetration and revenue.
Increasing OTT Collaboration with Brands
Content available on OTT platforms ensure greater continued engagement with viewers, providing them a variety of options to binge on. Undivided attention, longer watch times, and low costs are pushing brands to take OTT route for reaching consumers’ hearts. In recent times, brand placement in OTT shows has become prevalent and viewers respond indifferently or even positively to this since it does not hinder with their viewing experience. For instance, a popular American science fiction show on Netflix features brands like HP, Porsche, Apple, and other different car, computer and beverage brands. In another series, Sex Education, the characters interact with products from different brands such as Casio, Asos, Netflix, Apple, etc. The branded integrations allow deeper engagement with the platform audience and longer shelf time, which help in gaining audience attention and trust. Recognizing audience’s behaviour through engagement metrics, shows binged on, audience’s watchlist, etc., brands are gauging behavioral data through data science and trying to personalize communication, leading to enhanced and engaging experience with subscribers.
Sports Content Provider Expand into OTT Platforms
OTT platforms are inclining towards sports more than ever. Many platforms such as Prime Video, Hulu, and others have started leveraging the ever growing sports streaming sector to attract new viewers and retain the existing ones. The global sports live streaming is projected to surpass USD93 billion by 2030, owing to the rise in internet-based streaming content consumption and rising usage of smart device. Live streaming sports not only helps in increasing audience engagement but also help in the word-of-mouth promotion of OTT platforms. OTT apps allow viewers to live stream on their social media platforms and share their opinions while interacting with other sports enthusiasts.
Way Ahead
As the competition amidst the OTT media service players continues to grow, companies are experimenting with tiered subscription models and offering extra features such as early access to new releases, offline viewing, etc. Some OTT platforms offer discounts for those who bundle multiple services together. OTT platform’s fate and success will depend on how they acquire new subscribers, retain the existing ones, and at what cost. In the coming years, the prevalence of 5G would accelerate the adoption of OTT platforms owing to their high-speed connectivity.
According to TechSci Research report on “OTT Media Services Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, 2018-2028F, Segmented By Type (AVOD, SVOD, TVOD), By Device Type (Smart TVs & Set-Top Box, Mobile Devices & Computers/Laptops, Gaming Consoles & Streaming Devices), By Region, By Company”, the global OTT media services market is projected to grow at a significant rate during the forecast period. The market growth can be attributed to ease of viewing through different devices and platforms and availability of a wide range of streaming content.