Industry gurus predicted in 2017 that OTT service market revenues would more than double from an already impressive US$ 22.9 billion in 2017 to a whopping US$ 48 billion by 2023. Meanwhile, IPTV operators’ revenues that were running at US$ 9 billion in 2015 will have almost halved to US$ 4.7 billion by 2023. So, what conclusion can be drawn from that? Well, it means that OTT is rapidly replacing IPTV.
In this article, we’ll explain what OTT is and compare it against existing services such as IPTV, satellite, and cable. We will also discuss the reasons why demand for them is trending upward.
What is OTT?
Over-the-top, or OTT, streaming platforms offer subscribers linear TV, video-on-demand, and other media content types delivered online over the top of another platform. While it may require a paid subscription, OTT is often significantly cheaper than equivalent satellite or cable TV packages.
Because all the content is already uploaded onto web servers, OTT subscribers do not need to waste time downloading files. Moreover, real-time media streaming is possible on various device types, including computers, tablets, gaming consoles, smartphones (Android and iOS based), and TV set-top boxes like Apple TV and Android TV.
How do OTT platforms work?
With OTT, access to the service is provided via dedicated applications and websites. Through these, subscribers have access to a massive library of content that includes multitudes of movies, TV programs, music, and radio programs.
Several OTT business models are available, the two most common being:
- AVoD (advertising VoD)
The AVoD model offers subscribers free video content, with revenue for the service provider generated through drop-in commercials. - SVoD (subscription VoD)
SVoD is a fee-based model where subscribers purchase a subscription, affording them access to content for a predetermined time. Compared to AVoD, SVoD subscribers enjoy commercial-free viewing and the ability to select movies, TV shows, etc., from a catalog.
Certain OTT providers offer retail access to their content, where customers pay only for what they are interested in. For example, under the TVoD model, subscribers rent the content, with access to it being granted for a preset time. However, under the electronic sell-through (EST) model, they purchase a digital copy of the content, which is theirs to keep.
What sets IPTV and OTT apart from one another?
IPTV services leverage internet protocol (IP) technology. The service provider fully controls content distribution and decides what subscription packages include and how much they cost. As IPTV delivery is linked to the IPTV receiving device’s hardware address, subscribers can only access content from their homes.
Conversely, with OTT, the provider and subscriber are completely independent of the internet provider. As such, the subscriber can access content from any geographical location with internet access.
Are many OTT services currently available?
Set-top box rental advantages and disadvantages
OTT services are plentiful. Currently, there are over 1,000 providers worldwide, with around 600 of those spread throughout Europe and the United States, with new ones appearing all the time.
In fact, currently, three-quarters of Americans have at least two OTT subscriptions, and the total number of users worldwide is now approaching two 2 billion. Of course, COVID-19 did see a significant increase in OTT subscribers, and while things have eased off a little since then, OTT is still very buoyant and will remain so for the foreseeable future.
What makes OTT so popular?
OTT’s popularity can be attributed to several factors. For example, OTT service providers don’t need to invest heavily in developing and maintaining infrastructure compared to cable or satellite TV companies, so they are able to keep their subscription costs down. Furthermore, OTT platforms are more convenient, as anyone with an internet connection and a playback device can watch their favorite content wherever they happen to be.
