The video streaming market is super dynamic with all sorts of factors to consider. Check out some of Parks Associates' highlights from our research on the State of the OTT Market.
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We hope to see you at Future of Video soon! Parks Associates’ fifth annual Future of Video: OTT, Pay TV, and Digital Media, December 12-14 at the Marina del Rey Marriott, features industry leaders from Sony, Xperi, VIZIO, Amazon, Sinclair Broadcast Group, Disney Streaming, Crackle Plus, Samsung TV Plus, and more. Future of Video sponsors includes Adeia, MediaKind, Friend MTS, Quickplay, SymphonyAI Media, Comcast Technology Solutions, and Metrological, a Comcast Company
Competition at an All-Time High
With OTT competition at an all-time high, services are continually trying to differentiate their offerings through a broad range of original and exclusive content. Holiday content along with subscription promotions can help streaming services attract new subscribers while keeping current subscribers engaged. It also allows consumers to access streaming services at a lower price point. This may be more important for consumers now than previously due to inflation. While the holiday season may cause a spike in subscribers, the challenge is to keep them on board beyond December. The coming months will tell how successful streaming services are at leveraging holiday content and seasonal promotions to attract subscribers and grow revenue.
As more services compete for subscribers, the industry has experienced growth of massive content expenditures, bundling, hybrid business models, and an increase in the number of M&As. To make their goods more of an appointment-watching experience, SVOD providers are experimenting with additional elements including live-streaming TV.
Live content is among the most coveted and valuable content, and streaming players are evaluating models to monetize live content within the streaming ecosystem. Increasingly, streaming customers are showing acceptance of the traditional live-linear television viewing experience online. The popularity of live linear experience is causing SVOD services to explore live content.
Collective Dominance of The Disney Bundle
The collective dominance of the Disney Bundle, which includes Hulu, Disney+, and ESPN+ is clear. Taking all the Disney-owned streaming properties together, for instance, Disney reaches 52% of households, second only to Netflix.
In contrast to Netflix's recent subscriber losses, Disney+ claimed record subscriber growth between April and June 2022, garnering over 14 million users during the period. As the fourth quarter of 2022 approaches, recent Disney content releases and announcements, as well as company news and streaming updates, might help Disney maintain its upward momentum and further distinguish itself in the competitive online video industry.
Content Aggregation: Look to the Cable Days
The role of a content aggregator is not new. In the pre-streaming era, cable companies would provide simplified payment structures, bundles, guides, and other aggregation services. Given the expanded variety of accessible content and the number of providers, the streaming ecosystem needs to include these same capabilities. Aggregators fulfill this function by generating customized viewing profiles that consider all content across services.
Building Incremental Revenue
As the OTT service landscape becomes more competitive and the viewer base is more fragmented, service providers are searching for new ways to build their incremental user base and related income. Transactional offerings can provide OTT services the perfect primary or complementary avenue to highlight key special or exclusive content and diversify revenues. When it comes to viewing new movies, the majority prefer to watch them at home using an entertainment service provider.
More Consolidation is Coming
Mergers, acquisitions, and consolidation in the entertainment industry are as old as the industry itself. However, the entertainment industry is at a peak of service fragmentation with hundreds of direct-to-consumer video services available in the US alone, and 38 new services launching just since 2020. The video services market is primed for consolidation.
Despite the pandemic, there has been no shortage of mergers and acquisitions. Acquisitions are becoming one of the only options for streaming firms to compete in the face of a limited amount of accessible material. As a result, traditional media businesses are attempting to compete by consolidating.
Acquisitions are becoming one of the only options for streaming firms to compete in the face of a limited amount of accessible material. As a result, traditional media businesses are attempting to compete with big tech by consolidating
As more subscription services enter the market, Ad-based services are a popular choice for consumers who do not want to pay for another video service. Ad-supported OTT services aspire to be a fundamental player in a market dominated by subscription services. The pandemic heightened interest in free ad-supported services, which were already on the increase.
In the first quarter of 2021, more than half of ad-based customers mentioned the absence of a subscription fee as a motivation to utilize the service. Parks Associates data from Q3 2021 shows that 31% of broadband households, or about 34M households, watch ad-based OTT services.
As advertising budgets shift away from traditional pay TV and toward online video, ad-based service providers have revenue opportunities through new content distribution partnerships. Ad-supported services have the potential to encourage diverse watching and expose linear programming to younger viewers who predominantly consume on-demand content. Ad-based services are becoming more popular in the over-the-top (OTT) industry thanks to seamless ad integration and visually attractive content libraries.
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