Ooyala Report: OTT market far from saturation

The report – which draws on Ooyala’s own data and analysis as well as research conducted by other organizations – also underscores that viewers of all ages are increasingly adopting streaming services as their primary source of TV content. While Boomers and the Silent Generation (those born before World War II) remain the lifeblood of traditional broadcasters, they too are increasingly adopting over-the-top (OTT) and video on demand (VOD) platforms.

2018 was a year of significant change in the broadcast industry. There was a surge in M&A activity, an increase in the amount of time consumers spent with SVOD and AVOD content and a significant decline in pay-TV subscribers in North America as viewers changed how they watch TV… OTT jumped into the mainstream. There’s even more change in the cards for 2019.Among US adults 50-64, OTT viewing increased 45% between 2016 and 2017; among US adults 65+, viewing was up 36%.The report also postulated that mobile platforms will be a significant factor in OTT consumption in the future, given that estimates say video could make up as much as 90% of all 5G traffic.

For OTT, that means faster and smoother delivery of video, no buffering, higher resolution, and a better, more engaging experience for users; for AVOD companies specifically, it will foster the collection of better, deeper data that could be used to better personalize advertising,” said the report.

The lesson for traditional broadcasters, the report noted, is to adopt the mindset of a diversified media company – as more programmers and distributors are joining, rather than fighting, the push into OTT.

Subscription and ad-supported OTT services are steadily replacing traditional content delivery, and there’s no end to the opportunity to create connections with a global audience,” said Ooyala principal analyst Jim O'Neill. “OTT is not traditional TV. It thrives upon consumer choice, often random interaction, and the convenience of viewing when, where and on what device a consumer chooses. It thrives upon its own ability to iterate in order to respond to the changing conditions of the new TV environment.”

Meanwhile, as mobile viewing soars, it turns out that screen size still matters to the majority of consumers. A full 40% of US consumers who replaced a TV between October 2016 and October 2018 said they wanted to purchase a bigger screen, per The NPD Group. And consumers are going all-in on 4K UHD, driven largely by SVOD services, like Netflix, and the promise of 4K and UHD content from major sporting events, like the Winter Olympics and the FIFA World Cup.

“Content owners have seen a massive increase in the demand for their products,” continued O'Neill. “That will continue as OTT services push out across the globe and original content maintains — and grows — its value. It’s becoming increasingly important for media companies – both big and small – to closely monitor and control the content supply chain.”

New OTT Services Aren’t Saturating the Market, they ARE the Market

Is the influx of new OTT services creating saturation in the market? Not by a long shot. While there’s likely a limit as to how many SVOD services users really are ready to pay for, that upper limit hasn’t yet been reached. And, as we see more channels become available a la carte, that limit may continue to rise, especially as younger consumers — who see streaming as the norm — grow older.

Consider:

• Nielsen says Americans watch in excess of 8 billion hours of content monthly on connected TV devices alone
• Netflix claims its original movie, Bird Box, was viewed by 45 million accounts in its first week
• Pew Research Center reported that 61% of 18-29 year olds watch TV primarily via streaming services
• 47% of adults 22 to 45 watch no content on traditional TV platforms
• Among all adults 28% said they “usually” use a streaming service to watch TV, up from 20% a year earlier

Ooyala State of the Industry 2019 report

‍Source: Rapid TV News