OTT video service providers must climb the learning curve quickly in order to keep the doors open. Often, content license terms require companies to grow revenues quickly in order to cover minimum guaranteed payments for their content. In a very real sense, the profitability clock is ticking from the time that they open their doors. Pay-TV providers also are taking careful note.
Being on the cutting edge is exciting... so long as you are not the one getting cut. The global expansion of over-the-top video services has been rapid and extensive, but not always successful. Besides Netflix, Amazon and Hulu, three of the top OTT video players in the world, many new service providers have entered the market, particularly over the past six to nine months. Yet most have struggled to find success.
Importantly, not all of the companies that are scrambling for users and profitability are small players that are new to the consumer marketplace. Companies with deep pockets -- including Target, Samsung and Verizon (via a partnership with Redbox) -- have struggled to find traction with OTT video services.
Even Netflix, Hulu and Amazon have experienced difficulties in global expansion. Hulu pulled out of the Japanese market in 2014. Amazon, looking to expand through the acquisition of UK-based LoveFilm, discontinued its OTT offering in the Nordic countries in 2013. Netflix has had to acquire local language content and learn the nuances of each market that it enters. Even so, Netflix has yet to achieve the penetration in global markets that it has in the U.S.
Today, with many new services emerging across global markets, players in the OTT space have to find ways to stand apart from traditional TV services, as well as other OTT services, in order to survive.
From the article "The Great and Tragic Lives of OTT Video Service Providers" by Brett Sappington.
