A Picture Of The Future In OTT

March 15, 2019

The sports and entertainment industry have changed profoundly in the past decade. In 2010, Netflix was just getting into streaming, and you could only really watch baseball online. As 2019 dawns, traditional media empires worldwide are in panic mode, with even their golden goose (live sports) dying.

Consumers have never had better choice at such a great price. What does this mean for everyday people and business interests alike? In this piece, we’ll explore the future of OTT streaming, and what it means for the sports/entertainment business.

What is OTT?

OTT stands for over-the-top, which refers to internet alternatives to traditional broadcasting mediums. OTT examples include TV show/movie distributors like Netflix, messaging services like WhatsApp, and VOIP providers like Skype.

We expect these market segments to grow tremendously in the years ahead. However, sports streaming has the potential to outclass them all.

Why is OTT increasing in popularity?

As the purchasing power of Millennials outweighs that of declining Boomers, their spending habits are shifting towards OTT. According to an American survey, Millennials watch sports via streaming services at a rate double that of Generation X. In the UK, a BBC study found 65% of Millennials streamed EPL matches illegally at least once per month.

Why is this happening? Unlike past generations, the internet has given them choice. Ever since companies like Netflix offered customers the ability to watch TV on demand, Millennials have been leaving cable/satellite providers en masse.

However, one offering had been holding steady: live sports. Until recently, this was one of the last aspects of television on which broadcasters had a monopoly. Slowly but surely, even this wall is beginning to crumble.

Many sports leagues, from Major League Baseball in America to the English Premier League, have started streaming services. OTT providers like Amazon and Hulu are incorporating sports into their lineup.

Live sports delivery on OTT services is still in its infancy

Demand from Millennials is clearly driving growth. However, it hasn’t come without its share of growing pains – on Hulu, technical issues cut off the final minutes of the 2018 Super Bowl.

In November 2018, a  play event took place between Phil Mickelson and Tiger Woods. Dubbed ‘The Match’, there was a delay caused by a last-minute error in payment processing software. Organizers were forced to drop the paywall, resulting in millions in lost revenue.   

With continued improvements in bandwidth, though, it won’t be long before streaming services dominate the delivery of live sports. Millennials love sports as much as older generations, which means that the future of OTT will heavily involve this genre.   

What sports have been shown on OTT platforms?

With tonnes of sports-focused OTT services starting up recently, viewers can now watch every sport online. Because of these services, people can watch baseball, football and even cricket around the globe without having to pay a dime for cable.

Major League Baseball was the pioneer in this field – they pilot-tested a game stream between the Yankees and Rangers in 2002. The next season, they stood alone as the only sports league with a for-pay sports streaming service. ESPN followed up with ESPN3 in 2005, which provided on-demand access to games 30 days after airing.

However, due to bandwidth limitations, serious progress wasn’t made until the early 2010s.  By then, advances in network technology and fibre optics allowed the transmission of high-resolution video.

Because of this, players like SKY Sports (football/soccer), sports leagues (NHL/NFL/MLB/NBA/etc), and OTT platforms (Hulu/DAZN/etc) have streamed games with ever-increasing quality. And they're only getting started.

Esports is another category that is rapidly emerging. Covering everything from League of Legends to World of Warcraft, their furious action has captivated audiences worldwide. Twitch was the pioneer in this niche – from 2011 onward, it was the place for video game content. It still is, but other OTT platforms have begun to rise.

YouTube Gaming is Twitch’s primary rival, but establishment media has started to get in on the action as well. For instance, Spanish broadcasting company Mediapro launched its own OTT Esports channel in October 2018. As Millennials and Gen Z comprise a higher percentage of active consumers, Esports views will only go up.      

Where is OTT sports delivery popular?

Americans live, eat, and breathe sports. 40% of young people are involved in athletics. 63% of all Americans watch sports regularly. The OTT sports streaming revolution began here.

Accordingly, it’s no surprise that the USA is the hottest market for the OTT delivery of sports content.

WatchESPN, NBCSports.com, and OTT platforms like Hulu are just a few ways tech-savvy Americans get their fix.

The United Kingdom and the European Union is another big market for OTT sports. SKY Sports and BT Sport have exclusive rights to broadcast Premier League football in the UK. Every weekend, millions of subscribers tune in online to watch football, and, as mentioned earlier, many more watch illegally.

Sports are the future of OTT in India

With internet bandwidth improving worldwide, OTT sport content providers are becoming viable everywhere. This trend includes India – with services like Hotstar and Sony LIV, fans in the world’s populous country have legit options.

These providers carry all the sports Indians follow fervently. Cricket, football, field hockey – they’re all there. With scores of OTT platforms already operating in India, there is demonstrated demand for this product. Consulting firm Boston Consulting Group agrees – by 2023, revenues will grow from $500 million to over $5 billion USD. Given the appetite of Indians for live sports streams, it will account for a sizable portion of that growth.

How can one sign up for an OTT service?

Signing up for a sports-focused OTT platform is easy. On TSN Direct, an OTT provider in Canada, you can access their content for $C20 per month. In less than five minutes, you can watch anything from Blue Jays baseball to tier II junior hockey. Not all providers are that pricey, though. In India, where wages and salaries are lower, leading OTT providers like Hotstar offer subscriptions for less than ₹200 per month.

However, those looking to save also have no shortage of free options. If you’re an Esports fan, video game streams happen around the clock on Twitch. CBC.ca streams two hockey games on Saturday during Hockey Night in Canada. Want it all at your fingertips? Websites like StreamTime.tv offers all the free Esports and athletics you can handle.    

OTT is the future of entertainment industry

People used to plan their lives around their favourite TV shows. Now, video on demand and around the clock content has made it easy to tailor content to one’s lifestyle.

This shift in consumer habits has hit the cable industry like an earthquake – according to Fortune, Comcast logged its fourth straight quarter of subscriber losses in April 2018. The stock of cable provider Charter Communications plummeted 15% on Friday, April 27th.

At the same time, the fortunes of leading OTT providers has been surging. Unsurprisingly, Netflix led the way, gaining 1.96 million subscribers in Q1 2018. HBO Now logged 2.4 million subscribers in 2016, a total which tripled the previous year’s take.     

What does the future of OTT advertising hold?

While many OTT platforms are ad-free, the allure of advertising revenue has led some to embrace it.

Free streaming services like The Roku Channel, Xumo, and Twitch are presently supporting themselves with ads. Hulu has a cheaper subscription option that runs commercials on occasion. And recent reports indicate Netflix may add a low monthly subscription fee for ad-supported programming.

Let’s break down each of these below.

Has OTT advertising been successfully implemented?

Of all existing OTT platforms, Hulu has had the greatest success in implementing advertising. While they haven’t broken down the number of customers subscribed to each plan, inside sources say most are on the ad-supported tier.

This plan is the cheapest offered by Hulu, costing $5.99, two dollars less from last year’s price of $7.99. This cut was made to attract Netflix customers, who endured an 18% price increase last quarter.

Some upstarts on the web have taken the principle of ad-supported streaming even further. Currently, the Roku Channel offers free TV shows/movies – they make money by running ads and charging for premium content.

Twitch also operates on this model. Unless you have a subscription, a 30-second ad runs when a viewer accesses a specific stream.

Demographics and statistics related to OTT streaming

Consumers around the world are shifting from pay TV to OTT service providers. OTT statistics 2018 paint a clear picture of where things are going. A study conducted by eMarketer predicts that cord cutters will represent 20.2% of the American population in 2022. That’s up from 9.8% in 2017 – chilling numbers for legacy media companies, but exciting ones for the OTT industry.

What is driving the change? Millennials are often cited – however, boomers haven’t ignored these platforms entirely. A recent Canadian media survey estimates 40% have an OTT subscription, although it isn’t clear how many stream sports.

What about OTT sports streams? According to management consultancy Mckinsey & Company, twice as many Millennials (56%) stream sports than Gen X’ers (27%), despite identical OTT adoption stats. As younger generations make up a more significant portion of consumers in their prime earning years, platforms that offer sports stand to benefit.

OTT conferences offer an opportunity to network, compare notes

As the OTT industry gains serious steam, opportunity is in the air. To give media professionals a chance to learn, network, and make deals, organizers have established numerous OTT conferences. A quick look at the OTT events 2018 gives you an idea of how big this media niche has become.

From the OTT Executive Summit to the SportsPro OTT Summit, executives, decision makers, and innovators go to these events. At the latter conference, speakers from brands like F1, SKY Sports, and even Twitter drop knowledge on their experiences in the field.

Are you looking to build relationships in this rapidly evolving field? Attend an OTT event in 2019, as you’ll find professionals seeking what you have to offer.

The future is bright for OTT media delivery services

We have reached a tipping point in the growth of OTT streaming services, especially those focused on sports. Whether you are looking to save money on entertainment, or you’re looking for a hot business opportunity, OTT is where it’s at in 2019 and beyond.

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