Parks Points

Differentiation in the OTT Video Market Space

by David Mitchel | Oct. 20, 2016

Think back to the last time you rode one of the more extreme rollercoasters at an amusement park. Now, you have an idea of the current market space in OTT video, one that is characterized by extreme volatility and rapid changes.

Various OTT services are attempting to create differentiation in a market space that has become saturated due to low barriers to entry through pricing strategies and content offerings. Hulu introduced an ad-free premium subscription (for most content), Netflix has experimented with its pricing models, and emerging players employ combinations of subscription, ad-supported, and transactional services. The end goals of these efforts is to maximize both revenue per user and subscription retention.

Content exclusivity is emerging as the critical value component to the consumer. Original programming like Marvel’s Daredevil (Netflix) and Transparent (Amazon Prime) form one approach, and exclusivity agreements on previously produced programming, such as Hulu’s exclusivity agreement with Sony Pictures to become the exclusive subscription streaming home to Seinfeld forms another approach.

For emerging services, churn is going to be an ongoing issue due to the hypercompetitive nature of the industry. The services that are able to find the best pricing and content mixtures will be the ones that maximize revenue per user and rates of subscription retention.

% of U.S. Broadband Households Paying for OTT Subscription

David Mitchel

David Mitchel

Research Analyst

David Mitchel is part of the Parks Associates Consumer Analytics research team. He studies market and consumer trends in a number of areas, including Access & Entertainment, Connected CE, Energy Management, Connected Home Systems, Digital Media, Digital Health, and Mobile Devices.

Prior to working at Parks Associates, David spent 5 years working in a variety of marketing roles, gaining experience in a variety of industries. He earned a BA in Communication from the University of Arizona and an MBA from Thunderbird School of Global Management.

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