The Bright Future of OTT: An Innovative Model for OTT Monetization

It is impossible to talk about the growth of OTT around the world without talking about the advances that have allowed this phenomenon to take hold. Several factors are driving this trend: growth in broadband coverage, making services more affordable; lower costs for computers, tablets and cell phones, especially in developing markets; increased access to new technologies that allow seamless streaming of content; the ability to get video on large connected TVs; new apps and streaming services; and increasingly rich, diverse, high-quality content.

How is OTT content being streamed to TVs?

Various types of OTT devices facilitate this.

Streaming boxes
Smart TVs
Game consoles
Set-top boxes
Blu-ray players
Let’s take a look at which of these devices are the most popular and what factors are influencing the OTT device market.

OTT devices

Smart TVs and streaming boxes are the most popular OTT devices on the market today. Samsung, Sony and LG are some of the brands vying for greater market share in the smart TV space, while Roku, Google, Apple and Amazon are focused on the streaming box market. Gaming consoles are not far behind, with Playstation, Wii and Xbox enjoying the majority of market share.

But why is this market so fragmented? Devices like Blu-ray players are not primarily designed for OTT streaming; users buy them to enjoy their favorite movies and shows by plugging a CD or USB stick into the device and connecting it to their TV. But these players were sold with Internet streaming capabilities built in, and as users began consuming more content on OTT platforms, they turned to whatever device they chose to stream that content. They didn’t go out and buy an OTT device specifically.

The same is true for viewers who use set-top boxes. They initially bought these devices to watch pay TV, but as connected TV became more popular, companies like Virgin and Vodafone added smart features to their set-top box offerings. With easy access to devices that help them watch their favorite TV channels and OTT content, users don’t have to buy a separate device for OTT streaming.

Those who watch live streams on OTT platforms prefer to do so via a streaming box than those mentioned above, as video quality is critical to them. Devices that specialize in OTT streaming are much better in terms of quality. About 91% of this audience group owns a streaming box to watch live streams.

The future of the OTT device market

When users started streaming content on OTT platforms, they did so on one or two apps. But today, with the number of options available and disconnection increasing, they are streaming content on multiple platforms. As OTT viewing becomes their default behavior, they will inevitably move to a device dedicated to streaming, and the future of streaming boxes looks bright.

One factor to consider here is that for OTT streaming, software is more important than hardware. In this respect, the OTT device market is similar to the smartphone market, where the choice is clearly between software such as Android, Windows and iOS. But that wasn’t always the case. There was a time when hardware was more important, such as when BlackBerry introduced the qwerty keyboard.

Innovative models for OTT monetization

OTT content providers now need to experiment with different models to address customer needs and attract new subscribers. You have subscription (SVOD), advertising (AVOD) and transactional video on demand (TVOD) models. All three models have essential drawbacks and benefits, but in the long run, a network’s content library and viewer demographics will determine which model is the best fit.

Over the next eight to ten years, streaming services will grow more dramatically than we’ve seen to date, with more content being created for viewers to enjoy. There has never been a better time for content creators and brands to be in the upcoming golden age of OTT streaming, and XMediaTV is here to help. You can contact us here.